Know your rights in terms of Tax Liabilities

High Court sets aside notice by SARS to debit a taxpayer’s bank account

In the recent case of SIP Project Managers (Pty) Ltd v The Commissioner for the South African Revenue Service (Case Number 11521/2020) (as yet unreported), the High Court set aside a notice by the South African Revenue Service (SARS) to a bank to debit a taxpayer’s bank account in terms of section 179 of the Tax Administration Act 28 of 2011 (TAA), and ordered SARS to repay the amount to the taxpayer.

WHAT ARE THE PROVISIONS OF SECTION 179 OF THE TAX ADMINISTRATION ACT OF 2011?

Collection of Tax Debt from Third Parties

1. 179. Liability of third party appointed to satisfy tax debts.— A senior SARS official may by notice to a person who holds or owes or will hold or owe any money, including a pension, salary, wage or other remuneration, for or to a taxpayer, require the person to pay the money to SARS in satisfaction of the taxpayer’s tax debt.
2. A person that is unable to comply with a requirement of the notice, must advise the senior SARS official of the reasons for the inability to comply within the period specified in the notice and the official may withdraw or amend the notice as is appropriate under the circumstances.
3. A person receiving the notice must pay the money in accordance with the notice and, if the person parts with the money contrary to the notice, the person is personally liable for the money.
4. SARS may, on request by a person affected by the notice, amend the notice to extend the period over which the amount must be paid to SARS, to allow the taxpayer to pay the basic living expenses of the taxpayer and his or her dependants.

IN CLOSING:

Before SARS can deduct any money from your bank account or any person that holds money on your behalf:

• There must be a tax debt.

  – Whether or not you dispute the amount. In terms of the “Pay Now, Argue Later” rule, the amount remains payable, unless you request the commissioner to suspend payment of the debt pending the outcome of your dispute with SARS if there is any.

• SARS must deliver to you a Letter of Demand at least 10 days prior to issuing a notice to a third party.

  – It being a bank, an institution, debtor or individual who holds money for or on your behalf.
  Thus, you have the right to have such money reversed if SARS deducts without serving you with a Letter of Demand.

• The Letter of Demand delivered to you must set out recovery steps to be taken should the tax debt not be paid.

  – The Letter of Demand must also advise of the relief mechanisms available to you should you not be able to pay the tax debt.

• The same Letter of Demand must also notify you of SARS’ intention to use collection methods such as third party appointment.
  – Thus before SARS can make use of such method.