The South African Revenue Service (Sars) has apologised for sending texts last week threatening taxpayers with penalties and prosecution if they did not submit their (allegedly) outstanding income tax returns.
The SMS, which was sent on 24 October to representatives of companies, read:
“Dear Tax Representative of [redacted], you failed to submit your company income tax returns with reference no. [redacted]. Failure to submit the returns is a criminal offence in terms of section 234, (2)(d) of TAA. [T]o avoid more administration penalties being levied against you, kindly submit all the outstanding returns wthin [sic] 10 days of this SMS. [S]hould you fail to submit the returns, we will initiate the criminal process and send you a Notice of Intention to Summons. Please ignore if you have since complied.”
The following day, Sars issued a media notice stating it would issue follow-up correspondence abouthe SMS.
On 26 October, Sars issued a statement apologising for the message, while warning that taxpayers who “continue to ignore reminders and fail to regularise their tax matters” will eventually have to answer for their continued non-compliance.
“The SMS message that was sent out earlier this week, in relation to outstanding returns, fell short of the high professional standard we seek to uphold. Sars therefore sincerely apologises for the manner in which this matter was handled, the frustration it may have caused honest taxpayers, and any inconvenience caused,” the statement said.
It said the SMS was intended as “a genuine and helpful reminder” to taxpayers to file their returns.
“Most taxpayers are honest and ordinarily appreciate such reminders. Honest taxpayers should not feel threatened by Sars, but, unfortunately, the way the message was crafted had this effect.”
Sars said it generally reminds taxpayers of their obligations and gives them an opportunity to comply before commencing legal action.
“Unfortunately, Sars’s reminders are ignored by some taxpayers, which means that their situation escalates to levels where legal action may be required. Even then, they are reminded about their obligation to file the outstanding returns.”
Both the taxpayer and the tax representative are liable
Tax Consulting SA says most of the texts were probably sent to the representative taxpayers of dormant companies that were deregistered with the Companies and Intellectual Property Commission but were not deregistered with Sars. The Sars record will show the recipient as being the responsible party legally on the hook for the non-compliance of the company.
The section in the Tax Administration Act (TAA) referred to in the SMS provides that a person who wilfully or without just cause fails or neglects to submit a return or document to Sars is guilty of an offence, and upon conviction is subject to a fine or imprisonment for up to two years. These criminal sanctions include “representative taxpayers” under the relevant provisions of the Income Tax Act, who include a public officer and a person who is responsible for paying tax on behalf of a taxpayer.
A representative taxpayer may be held liable for the tax liability of the taxpayer in his or her personal capacity if the taxpayer cannot settle the tax liability. However, this does not absolve the taxpayer of any liability, responsibility, or duty imposed under any tax Act. Therefore, both the taxpayer and the tax representative must answer to Sars.
Despite the apology, Tax Consulting says Sars has made it clear that it will stop at nothing to ensure compliance. “Non-compliant taxpayers and their representatives are warned that ignoring and hiding from Sars is a regrettable choice and one far more burdensome than filing their requisite tax return.”
