Dealing with SARS debt

Do you owe SARS? First thing to remember is that, it is a criminal offence to submit a tax return without making the necessary payment provisions in terms of Section 234(2)(d) read with subsection (k) of the Tax Administration Act (hereinafter referred to as the TAA). In addition to this, it is a criminal offence for a person (businesses included) to willfully and without a just cause to fail and or to neglect withholding and paying to SARS an amount of tax as and when required under a tax Act as prescribed in section 234(2)(k) of the TAA.

When you owe SARS, there are a couple of options available to you.

Options Available to Service Your Debt

• Pay full balance outstanding within seven days.
• Request with reason and proof to pay in instalments in terms of section 167 of TAA.
• Request with reasons and proof to compromise the debt in terms of section 200/201/202 of the TAA.
• Where the debt is disputed or there is an intention to dispute the debt, apply for the suspension of debt in terms of section 164 of the TAA.

Requesting for Payment Arrangement

To avoid penalties and interest it is best to file returns and make payments on time. If you unable to fulfil the SARS debt obligation, in certain circumstances SARS can reach an agreement with the business to defer the tax debt for later payment or for payment by instalments.

This agreement, however, is subject to a qualifying criteria. SARS may enter into a payment agreement only if:

• The business suffers from a lack of assets or liquidity which is certain to be remedied in the future.
• The taxpayer anticipates income or other receipts which can be used to satisfy the tax debt.
• Prospects of immediate collection activity are poor or uneconomical but are likely to improve in the future.
• Collection activity would be harsh in the case and the deferral or instalment agreement is unlikely to prejudice tax collection.
• The taxpayer provides the security as may be required.
• All outstanding returns and/or recons are submitted.

Inability To Pay SARS Debt?

SARS has enacted several debt collection options at their disposal for those taxpayers who do not pay their tax debt. These options include:

• Collect the money against any third party in terms of section 179 the TAA
• Issue a Civil Judgement Court against the taxpayer
• Attach the assets of the taxpayer
• Hold the directors/members/related parties liable for the debt
• Sequestrate/liquidate the taxpayer
• Preserve the assets against the debt

In these tough economic times, it is common for business to encounter cashflow problems that may render the business unable to meet the current and future financial obligations. While cashflow remains an issue, unfortunately SARS continues to charge the applicable penalties and interest, further exacerbating the debt.

It is becoming increasingly important to engage a qualified tax professional immediately with matters of this nature. In this regard, The Accounting Village, strives in a number of tax specialists that deal with these matters timeously and decisively. Please make contact with us here.