When entering into a tax dispute with SARS, taxpayers are often reminded by SARS of the very strict time periods and prescribed rules and procedures that must be followed by the taxpayer. And yes, taxpayers should comply with the procedures and time periods as failing to do so is likely to result in adverse consequences for the taxpayer. But does the same apply to SARS?
Yes. However, taxpayers, unlike SARS, does not have the power to, summarily, hold SARS to account for its failures to comply with time periods and rules. No, taxpayers, must jump through a few hoops in order to do so. Few taxpayers seem to know what SARS’s obligations are and what the time periods are which SARS must abide by in this context. Fewer still know how to hold SARS to account for such failures. Below is an overview of some of these obligations, periods and remedies available to taxpayers to hold SARS to account:
- If the taxpayer objected to an assessment, SARS must make a decision on that objection within 60 business days from date of submission of the objection. Whilst there are exceptions to this rule, these exceptions are also very tightly regulated, as it should be. SARS cannot simply, sit on an objection for months on end and not make a decision on that objection.
- When a taxpayer notes an appeal, after an objection has been disallowed, and the taxpayer opts for Alternative Dispute Resolution (ADR) (being in the alternative to litigation as a means of resolving the dispute), SARS has to advise whether it agrees to ADR as a means of resolving the dispute, within 30 business days from the date of delivery of the appeal. Taxpayers are often advised in these circumstances that SARS has 90 business days to resolve an appeal – this is plainly incorrect.
- If SARS makes a decision on an objection submitted by the taxpayer, whether that decision is to allow or to disallow an objection, SARS must provide the factual and legal basis for that decision. SARS has no discretion in this regard.
- If SARS wants to declare an objection submitted by the taxpayer as “invalid” they must do so within 30 business days from the date of submission of the objection.
- If a taxpayer requests reasons for an assessment or decision that is subject to objection and appeal, SARS must respond to that request. This is so even if SARS believes that reasons have already been provided. In fact, if SARS believes reasons have already been provided, they must respond by notice to that effect within 30 business days of receiving the request. If reasons have not been provided, they must provide the reasons within 45 business days from date of delivery of the request for reasons.
- Where a taxpayer has opted for litigation when filing an appeal (as opposed to Alternative Dispute Resolution), SARS must deliver something called a statement of grounds of assessment and opposing appeal within 45 business days from the date of delivery by the taxpayer of its appeal. There are a few exceptions to this rule though.
- If a dispute has been settled between a taxpayer and SARS on appeal through ADR, SARS must issue an assessment to give effect to the resolved dispute within a period 45 business days from the date of last signing of the relevant settlement agreement.
So what about it? What is the consequence for SARS for failing to comply with these obligations and time periods. In short, very little (at least when measured from the taxpayer’s point of view), unless the taxpayer takes appropriate action.
The most obvious remedy is to complain to the Complaints Management Office, or indeed the Office of the Tax Ombud. But then, what does this achieve? A slap on the wrist? Perhaps an apology? SARS complying after the taxpayer had to wait another two to three weeks for the complaint to be resolved? In the appropriate circumstances that might be the most viable (and even the most effective) option and may indeed be all the taxpayer really needs.
However, compare that consequence for SARS to that of a taxpayer who, for example, does not comply with the time period for lodging an objection for submission of an objection – that could result in the assessment being final meaning the opportunity to dispute the assessment is gone and tax bill absolutely payable. That doesn’t seem quite fair, does it?
An alternative course of action, in the appropriate circumstance, may be to seek final relief in the Tax Court, simply because SARS has not complied with an obligation or time period. If successful, that will mean SARS can no longer hold the taxpayer accountable for whatever the cause of the dispute was. Stated differently, it means the entire dispute is resolved simply because SARS has not complied with an obligation or time period. Now that seems a little bit more just, doesn’t it? However, it is not something taxpayers should rush into. Careful consideration should be given to the prospects of success of such approach, whether there is alternative, less “aggressive” remedy and what the prospects are of getting a cost order in favour of the taxpayer is (and indeed also the risk of a cost order against the taxpayer).
Suffice it, in conclusion, to state that taxpayers must ensure that SARS abides by time periods and comply with their obligations – it would be in their best interest to do so. Knowing how and when to do so may be crucial to securing a just and equitable resolution of a dispute with SARS.