Article written by Adv. Carien van Dijk, tax director of The Supremacy Group
The 2018 tax season officially opened in South Africa on 1 July 2018, allowing individual and provisional taxpayers to submit their tax returns. Being almost a month in the tax season, numerous tax practitioners have taken to social media to talk about a new action that SARS has started to implement, which is referred to as a “Refund Verification”.
During the submission of our own clients’ tax returns, we have also noticed the same action being applied by SARS. The action referred to entails SARS finalizing the tax return, issuing an assessment, but before the refund is then paid out to the taxpayer, a SARS letter will be issued to the taxpayer requesting additional verification information – allowing SARS an additional 21 business days to verify the information before processing the refund for payment. This action falls outside the normal return verification or audit process, and for many in the industry it seems to simply be a means of delaying the payment of tax refunds.
There are nevertheless many reasons why a tax refund would be delayed after submission of the tax return:
- SARS issued a request for verification of the return or an audit or an inspection;
- there is tax debt due by the taxpayer for previous periods;
- there is historical tax returns outstanding; or
- the bank details and/or personal information of the taxpayer is outstanding or not accurate (remember they can cross check this with the information on record with your employer / bank / insurer / credit bureau etc.).
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The above is further confirmed in the SARS Service Charter, issued by SARS before the start of the tax season, wherein SARS endeavors to pay the current tax year’s refund within seven business days of finalizing the final assessment issued, provided that there is no tax debt due by the taxpayer; nor any outstanding tax verifications, inspections or audits; and all SARS administrative control processes and other required obligations have all been met by the taxpayer.
In light of the above, you might be wondering what can a taxpayer therefore do if they realize that the tax refund is delayed? Firstly, check if any of the abovementioned delaying factors are the possible cause, if found that they are not, you will then need to follow the following process:
- Phone SARS contact centre to ask for a reason, if no reason can be supplied, request them to escalate the query (which will take up to 21 business days) and ask for a case number;
- If it is not resolved, lodge a compliant with SARS on eFiling using your latter case number, which will take a further 21 business days;
- If still not resolved, you will then be allowed to submit a compliant with the SARS Ombudsman directly.