SARS chases taxpayer for one cent - IOL

The South African Revenue Service has instructed a tax payer to settle a R0.01 outstanding amount within 10 business days.

The South African Revenue Service (SARS) has reportedly issued a taxpayer with a final demand for an outstanding tax debt of just one cent.

Moneyweb reported that the unnamed taxpayer contacted the publication after receiving the demand, which instructed them to settle the R0.01 outstanding amount within 10 business days. The taxpayer supplied Moneyweb with a copy of the demand with identifying details removed.

According to Moneyweb, the notice also advised the taxpayer that they could apply to defer payment, dispute and suspend the debt, seek a compromise or apply for penalties to be waived once the capital amount had been paid.

The taxpayer told Moneyweb they believed the letter had been generated automatically and questioned whether there was human oversight of the correspondence being sent to taxpayers.

Moneyweb reported that this was not the first time a relatively small amount owed to SARS had caused problems for a taxpayer.

In another case cited by the publication, a taxpayer expecting a R323,000 refund discovered it had been blocked because SARS regarded them as being R50 behind on their pay-as-you-earn tax profile.

The taxpayer told Moneyweb that neither their accountant nor a SARS consultant at a branch initially understood why the refund had been blocked, and the matter had to be escalated.

Moneyweb also pointed to a more serious case it reported in 2022, involving a taxpayer assessed for R8.4 million for the 2016 to 2018 tax years.

The taxpayer disputed the assessments and applied for payment to be suspended while the dispute was resolved. However, SARS issued a final demand and required the disputed debt to be paid before the taxpayer could be considered tax compliant.

This jeopardised the company's ability to obtain export permits, bank credit facilities and government funding, according to the report. A subsequent court judgment found that SARS had failed in its obligations and disregarded the taxpayer's right to fair administrative action.

Moneyweb further reported that SARS had previously acknowledged mistakenly sending taxpayers final demands rather than reminders in 2013.

The publication said even very small debts could set SARS's collection powers in motion. If a debt remains unpaid, SARS can instruct a third party, such as a bank or employer, to recover money directly from a taxpayer's funds or salary without first obtaining a court order.

IOL has approached SARS to comment on whether it considers issuing a final demand for one cent reasonable and proportionate.

SARS was also asked whether there is a minimum amount below which it does not pursue outstanding tax debt, whether a one-cent balance could result in a taxpayer being regarded as non-compliant, and whether it could affect tax compliance status, refunds or lead to further collection action.

This story will be updated with the SARS response once received.