Are you waiting on your SARS tax refund? You are not the only one!
According to the TAX OMBUD ANNUAL REPORT 2017/18, a staggering 35% of the complaints received by the tax Ombudsman relate to tax refunds, this being the highest type of complaint out of all received. So much so that in March 2017, the then Finance Minister, Pravin Gordhan, gave Tax Ombudsman, Judge Bernard Ngoepe, permission to investigate the unduly delaying of refunds by SARS as a systematic problem.
The report issued on the 28th of August 2017 found that for the period November 2016 to March 2017, the Tax Ombudsman received no less than 500 such complaints, half of which were validated.
In its conclusion, the report found that it was clear that the system allows for SARS to unduly delay the payment of verified tax refunds to taxpayers in certain circumstances. This has become a systemic issue as the system does not sufficiently protect taxpayers.
(Reference TAX OMBUD’S REPORT)
So what can you as the taxpayer do about your tax refund?
Well the first thing is to understand the tax submission and review process. Do not be complacent and give SARS an excuse to not pay out your tax refund, here is a brief summary of the procedure to be followed:
1. SUBMISSION OF YOUR TAX RETURN
Before submitting your return, make sure you have all the supporting information and documentation to back up all aspects of your return. Be vigilant and ensure that your tax return is complete and correct is every detail.
2. RECEIPT OF YOUR TAX ASSESSMENT
Once you have submitted your tax return to SARS and if you did so electronically via e-Filing, you should receive your assessment immediately (If not within the hour or so). This assessment is known as an ITA34. If you have submitted this manually, it may take longer for SARS to process.
The next step of your tax submission process will depend on the outcome of your return, and whether it results in you making a payment to SARS or whether SARS owes you a tax refund?
PAYMENT to SARS
Normally you are given a month to pay your outstanding tax, this does all depend on the specific date you submitted the return to SARS. The due date for payment is displayed on the ITA34.
REFUND from SARS
SARS are prescribed 21 business days to pay out your refund, although if you are one of the lucky ones, this may be earlier.
3. SELECTED FOR VERIFICATION
Note that even if your return reflected a payment was due to SARS, it can still be selected for verification.
In addition to this, being selected for verification does not halt the requirement to pay SARS the outstanding balance, it does however stop receipt of your tax refund. This will only be paid out once the verification has been finalized (receipt of completion letter received from SARS).
You will receive notification of your selection for verification from SARS via a notification letter, this will be received via the communication channels that you have indicated to SARS i.e. email or SMS.
You are then afforded 21 business days from the date of notification to submit your supporting documents to SARS. These can be uploaded via e-Filing or submitted manually at the SARS branch. In submitting these documents to SARS, assume that the person reviewing the documents is actively looking for an opportunity not to pay out your tax refund. Be meticulous in your preparation and make sure that it is presented in a neat and understandable manner.
SARS are then permitted 21 business days to review your verification documents in which case the following can happen:
- Receipt of a completion letter, meaning they are happy with the return and can proceed to pay out the tax refund. This is normally paid out relatively early (2-3 days), however 21 business days is prescribed.
- Receipt of an additional request for information, SARS may after reviewing your initial documentation request further supporting documents in order to verify aspects they consider to be relevant. You are then afforded the 21 business days to submit the additional documents and the verification process will effectively start over again.
- Receipt of an additional assessment, this is the most unfortunate of scenarios as in this case, SARS has made the decision to add an assessment to your account based on the information they received or did not receive.
4. LODGING OF A NOTICE OF OBJECTION (NOO)
You may within 30 business days, object to an additional assessment that you may have received. The Objection must state the reason why you are disagreeing with the assessment with all applicable supporting documents. SARS will then have 60 business days to process your objection and determine their conclusion. You will then receive the outcome decision by SARS, which could either be an acceptance or partial acceptance of your objection or the denial of the objection.
5. LODGING A NOTICE OF APPEAL (NOA)
Should you receive a denial of your objection noted above, or a partial allowance, you can take additional measures and lodge a notice of appeal. You have 30 business days to submit the NOA on receipt of the outcome of the objection noted above. SARS are then given 60 business days to process the appeal.
Now that you know the process to be followed, what can be done about it?
You have indeed followed the above procedures and SARS have still not held up their end of the deal, what now? There are avenues that SARS have put in place to rectify this, they are:
- Phone the SARS call centre, enquire about the reason for the delay in the tax refund payment or other procedural steps. If you are not satisfied with the response or the prescribed business days have lapsed, you can then request them to escalate this query. There is however a turnaround time for the escalation of 21 business days. Always remember to obtain your case number for the escalation case.
- Should you still not have any luck after the prescribed business days have lapsed, lodge a complaint with SARS on e-Filing using your case number above. Again this affords SARS a further 21 business days to respond
- Should you still not have any resolution, you are allowed to then submit a complaint to the SARS Ombudsman. This can be done on their website.
It is very important to note that SARS will not pay out a tax refund on your tax return should there either be:
- Outstanding tax debt due for previous periods
- Historical returns outstanding
- Outstanding requests for verification from previous periods or
- Banking details and/or personal information that is outstanding or invalid.
In conclusion, it is evident that knowing the system and how it works can work to your advantage in securing an early pay out from SARS. SARS have been found to be delaying the payout of tax refunds as noted in the report by the Tax Ombudsman.
If you need any help with the matters noted above, please contact us and we will be happy to assist you.