The tax mediator publishes a draft compendium of taxpayers’ rights
The Office of the Tax Ombud (OTO) has been relentless in its pursuit of taxpayer rights and has had many successes in resolving taxpayer disputes with the South African Revenue Service (Sars). These include delayed refunds, unfairly imposed penalties and Sars tapping into a taxpayer’s bank account.
The Tax Ombudsman has now published a draft compendium of rights, providing information on the rights, entitlements and obligations of taxpayers.
This compendium is not, however, an enforceable “bill of rights”, “but merely a compilation of principles contained in various documents, including the Constitution, tax laws and other government documents”.
Obligations of the taxpayer, such as being liable for tax levied under the Income Tax Act, are not covered by this article.
The tax mediator summarizes the rights of taxpayers
A taxpayer has the right of access to informationsuch as obtaining any information in Sars’ possession regarding their tax affairs, and being clearly informed of Sars’ decisions.
the right to receive quality and timely service of Sars, and understand what Sars communicates. The taxpayer should have the right to report inadequate service.
the right to a fair, impartial and just tax system: for example, to ensure that the provisions of tax legislation are applied consistently, fairly and objectively, by an officer of Sars, free from any conflict of interest or bias.
To gain access to a court or other forum having proper jurisdiction to enforce its rights and privileges.
the right to pay only the amount of tax legally due to Sars, including interest and penalties. Any overpayment must be refunded. The taxpayer is required to pay the debt even if it is disputed according to the principle of “pay now, argue later”. However, the taxpayer can ask Sars to suspend the obligation to pay the debt until the dispute resolution procedure is finalized.
the right to privacy and confidentiality, and that any inquiry, inquiry or enforcement action by Sars is in accordance with the law. Taxpayer information may only be disclosed if the taxpayer authorizes it or if permitted by law.
the right to representationby securing the services of a representative to assist the taxpayer in his tax affairs and his dealings with Sars.
the right to finality: the taxpayer has the right to complete the verification, investigation, litigation and collection procedures.
the right to complain with the internal Sars or ATO Complaints Management Office without fear of victimization or intimidation.
the right to challenge any assessment or decision which is the subject of opposition and appeal, within the framework of the prescribed provisions and the rules of the dispute resolution procedure.
Read: Tax Ombud launches #TaxpayersRightsMatter campaign
Taxpayer rights are not only contained in tax legislation
Patricia Williams, a partner at Bowmans, provided Moneyweb with additional information.
She says that while this compendium is not enforceable, it will “hopefully encourage Sars to further meet its obligations and/or help the taxpayer understand what they should be entitled to expect…”
She notes that taxpayers in the customs and excise area also have duties, but since the OTO has no jurisdiction over customs and excise laws, her compendium omits types of customs and excise duty entirely. excise.
The right to finality, says Williams, extends beyond the specific provisions of a tax law and is incorporated into the rule of law (as part of South African common law) and recognized by the Constitution. In these circumstances, taxpayers may have definitive rights that extend beyond those set out in the Tax Administration Act (TAA).
(This is particularly important in the area of customs and excise, where the so-called “prescription” is usually based on when Sars begins the audit, as Sars can normally charge taxes for a period up to two years before the start of the audit, without any legal provisions relating to the period during which the Sars can continue to control the taxpayer.)
Williams notes that taxpayers have the right to challenge other decisions, through review under the Advancement of Administrative Justice Act (PAJA) or in terms of review of constitutional legality.
The PAJA provides that any administrative action that materially and adversely affects the rights or lawful expectations of any person must be procedurally fair, including that Sars give the taxpayer adequate notice of the nature and purpose of the proposed administrative action, and a reasonable opportunity to make representations, before a final decision is made.
It should be noted that Sars frequently acts “without giving notice, explanation and opportunity to make representations”.
Read: It can be exhausting to fight against Sars
“The tax ombudsman makes recommendations regarding complaints, which Sars sometimes agrees with, and sometimes doesn’t,” Williams says.
Even though the TAA stipulates that Sars must justify his decision within 30 days:[T]there is no mechanism for the tax ombudsman to enforce the time limit within which Sars responds, and no further recourse if Sars simply notifies the tax ombudsman that he disagrees with his reasons.
Williams provides an example of a case where the OTO identified a systemic issue due to Sars failing to issue Letters of Findings and/or Notice of Proposed Adverse Action, and submitted a formal recommendation to Sars to remedy the this problem. This case was finalized without resolution.
Ombud’s recommendations not binding on Sars
Williams suggests that the TAA be amended “to expand the tax ombudsman’s role as protector of taxpayers’ rights, including authorizing and requiring the tax ombudsman to go to court for a declaratory order in cases where Sars refuses to accept the recommendation of the tax mediator”. .
She adds: “This would provide real legal certainty on a contentious issue of taxpayer rights in a situation where the taxpayer has already sought to avoid the costs and/or difficulties of litigation by first complaining to the tax ombudsman. .”
To put it bluntly: what good is a vague list of unenforceable rights?
Attempting to enforce your rights legally, yourself, is extremely expensive and time-consuming, not to mention confusing and intimidating for most taxpayers.
This makes justice inaccessible to normal people.
“We need taxpayer rights that are effectively enforceable, with a ‘champion’ – who could be the tax ombudsman, subject to legislative changes – to help normal taxpayers enforce those rights,” says Williams.