HOW TO SETTLE OUTSTANDING DEBT WITH SARS

HOW TO SETTLE OUTSTANDING DEBT WITH SARS

SARS has started to tighten the reigns in collecting outstanding debts. SARS can debit the taxpayers bank account for the outstanding debt, take judgement against the taxpayer, or charge the taxpayer on criminal charges. It is scary receiving letters from SARS demanding payment in 10 days, after knowing the implications of not paying the debt.

BUT not all is lost. The taxpayer has rights as well. And according to Section 167 and Section 200 of the Tax Administration Act a taxpayer can apply for a deferral of payment and or a compromise.

  1. DERFERRAL OF PAYMENT

SECTION 168. CRITERIA FOR INSTALMENT PAYMENT AGREEMENT. – A senior SARS official may enter into an instalment payment agreement only if –

  • The taxpayer suffers from a deficiency of assets or liquidity which is reasonably 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 particular case and the deferral or instalment agreement is unlikely to prejudice tax collection; or
  • The taxpayer provides the security as may be required by the official.
  • COMPROMISE OF TAX DEBT

SECTION 200. COMPROMISE OF TAX DEBT. – A senior SARS official may authorise the ‘compromise’ of a portion of a tax debt upon request by a ‘debtor’, which complies with the requirements of section 201, if –

  • The purpose of the ‘compromise’ is to secure the highest net return from the recovery of the tax debt; and
  • The ‘compromise’ is consistent with considerations of good management of tax system and administrative efficiency.

So, all is not lost a taxpayer can use these avenues to settle their debt with SARS. –