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Can Sars really come after your bank account?

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January 27, 2025

TLDR: Nosipho Radebe interviews Kabelo Moutloatse, Latita Africa's Head of Accounting & Tax Debt.

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In the latest episode of the Power 98.7 podcast, Can SARS Really Come After Your Bank Account?, Nosipho Radebe speaks with Kabelo Moutloatse, the Head of Accounting & Tax Debt at Latita Africa, exploring the implications of tax debt collection by the South African Revenue Service (SARS). This blog summarizes the key takeaways from their discussion, delving into the process, legalities, and taxpayer options related to SARS’s authority to withdraw funds directly from bank accounts.

Can SARS Deduct Money from Your Bank Account?

Legal Authority of SARS

  • SARS's Authority Explained: Under Section 179 of the Tax Administration Act, SARS can legally recover outstanding tax debts by notifying third parties who hold accounts with taxpayers, including banks.
  • Initial Steps: Before any deductions can occur, SARS typically sends a final demand notice to taxpayers, outlining their outstanding debts and offering various payment arrangements.

Conditions for Fund Deduction

  • No Minimum Threshold: There is no set minimum amount for SARS to initiate deductions; if funds are available, they can seize the full amount owed.
  • Failure to Engage: If taxpayers do not respond or set up a payment plan, SARS can proceed with direct deductions from their accounts.

What Should Taxpayers Do If They Can't Pay in Full?

Options for Taxpayers

  • Alternatives Offered by SARS: Taxpayers facing difficulty in paying their full tax debt have several options:
    • Deferral of Payment: A taxpayer can arrange a deferred payment plan, paying their debt in installments.
    • Tax Compromise: For those eligible, this option allows taxpayers to negotiate a reduced total debt, settling for less than what is owed.

Eligibility and Required Documentation

  • Financial Information Required: To qualify for a tax compromise, taxpayers must provide extensive financial documentation, including:
    • Latest financial statements and management accounts.
    • Schedules of assets and liabilities.
    • Analysis of debtors and creditors.

What If You Don't Qualify for a Compromise?

  • Disputing Assessments: Taxpayers disagreeing with SARS assessments can dispute them up to the program stage, particularly if full payment would place undue financial strain on their operations.
  • Structured Payment Plans: Taxpayers can also negotiate structured repayment plans to gradually settle their debts.

Caller Experiences and Concerns

Real-Life Implications of SARS Actions

Two callers shared their experiences related to SARS deductions:

  • Caller Fano: Described her shock at unannounced deductions from her account without prior notice, underscoring the importance of keeping personal records updated with SARS.
  • Caller Karl: Expressed frustration over the handling of audits and how it impacts taxpayers, especially regarding penalties and interest.

Key Takeaways from their Experiences

  • Importance of Notification: SARS must provide a final demand letter before initiating deductions. Failure to notify may allow for complaints to be lodged with the tax ombudsman.
  • Time Considerations: Clear communication during audits is crucial to prevent unnecessary tax collection activities.

What Should You Do If Funds Were Wrongfully Deducted?

  • File a Complaint: If a taxpayer believes that SARS has incorrectly deducted funds without proper notice, they can escalate the issue to the ombudsman for investigation.
  • Maintain Clear Records: Keeping updated contact information with SARS can prevent missed notifications and unexpected actions.

Conclusion

This episode provides crucial insights into the workings of SARS, emphasizing the legal framework enabling them to act decisively against unpaid tax debts. Taxpayers are encouraged to understand their rights and available options in managing tax debts to prevent unexpected financial repercussions.

It's essential for taxpayers to stay informed, keep accurate records, and proactively engage with SARS to avoid unnecessary complications and financial strain.

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