SARS Debt Outsourcing - Here come the Debt Collectors
SARS Debt Management Department is now outsourcing the SARS Debt collection of debts older than five years to external debt collectors. The aim here is that the debt collectors will assist SARS with collecting on overdue accounts. SARS has communicated that a list of these SARS Debt Collectors will be published on the SARS website.
Important to note is that this starts as from October 2023. We have all been experiencing and reading about the shrinking tax base, economic challenges, over 1200 businesses closing in 2023 and scramble for cash, and this has manifested itself in how SARS is closing absolutely every gap to bring in revenue and ensuring it improves its system so that it can meet the target set for it by the fiscas.
If you have SARS Tax Debt or any outstanding tax returns with SARS, you should make sure you submit and pay your outstanding tax returns as soon as possible. The administrative penalties can accumulate to thousands if the tax compliance goes unattended and not everyone is lucky when asking for remission of penalties as conditions do apply.
There is no way around compliance, the only way is through it. A firm like Zeelie Professional Accountants SA can assist you with bringing your accounting and tax work up to date and obtaining tax compliance.
The risk of non-compliance for businesses and individuals cannot be ignored because SARS will be knocking on your door if you don't comply.
We wrote a blog recently about SARS collecting from the Tax representatives and how information on bank transactions is already known to SARS. Read here. This means the longer you delay getting your affairs in order the deeper the compliance hole you are digging for yourself.
Frequently asked questions
Answers as per SARS Website:
Is SARS allowed to appoint Debt Collectors?
- According to SARS Act section 5(1)c, it allows SARS to obtain the service of any person to perform any specific act or function necessary or expedient to perform its function.
- The recipient of the taxpayer information is required to protect and preserve the secrecy of that information in terms of section 67(4) of Tax Administration Act (TAA). In fact, SARS has implemented strict control measures to ensure that no taxpayer personal information is compromised by this process.
Why was it necessary for SARS to appoint external Collection Agents?
- This was necessitated by the internal capacity and capability constraints, high debt write-offs, and an ageing debt book. Outsourcing is only one of several actions implemented to manage this.
- Other actions include the appointment of internal staff, improving internal skills and capabilities, and enhancing policies, processes, systems, and data.
When will SARS appoint these Collection Agents?
- The first step is to proactively engage and assist taxpayers to settle their obligations, or if they have financial difficulties, to set up an appropriate arrangement for payment.
- Consequence-based collection steps and targeted enforcement, including debt outsourcing, are only implemented against taxpayers that are unwilling to comply.
What process will SARS follow before handing over tax debts to Collection Agents?
- The first step is to proactively engage and assist taxpayers to settle their obligations, or if they have financial difficulties, to set up an appropriate arrangement for payment.
- Consequence-based collection steps and targeted enforcement, including debt outsourcing, are only implemented against taxpayers that are unwilling to comply.
How will I know that my account was handed over to a Collection Agent?
Non-compliant taxpayers SARS will receive a final notification via a formal SARS communication of their account being outsourced to a collection agent. Notify taxpayers via email that their debt was handed over.
What do I do if I receive a SARS notification that I will be handed over?
Make payment arrangement or settle your debt.
Queries must only be emailed to SettleMyDebt@sars.gov.za, quoting your tax reference number, contact number, and other relevant details you consider necessary.
How do I make payments after receipt of this letter?
You may contact SARS to arrange for any of the following options based on your personal circumstances:
- Payment in instalments – where you are unable to pay the full amount.
- Suspension of the debt – where you intend to submit or have submitted a formal dispute.
- Apply for a compromise of a portion of the tax – This will be approved if it provides a higher return to the fiscus other than liquidation, sequestration, or other collection measures.
- Voluntary third-party appointment (TPA) – where you instruct SARS to collect directly from any of your debtors to pay-off or settle your debt.
How do I guard against scammers posing as SARS appointed Collection Agents?
- Verify your tax number using your e-filing profile. Scammers are most likely to use incorrect/wrong tax reference numbers.
- Do not make payment into any third-party account EXCEPT SARS account using approved SARS Payment Options
What will happen if I fail to respond to the notification letter and decide to not pay-off or settle my debt?
- SARS will hand over your account to the Collection Agent to collect the outstanding debt.
- Alternatively, SARS may enter a civil judgement against you in which case a warrant of execution may be issued for the Sheriff of the Court to attach and sell your assets, or any other avenue to collect the debt in accordance with the provisions of any applicable SARS legislation.
How can I enter into a Debt Compromise with SARS?
Firstly it is important to note that it is a criminal offense not to submit a tax return or refusing to make the necessary payment on your taxes or to withhold payment from SARS as per the Tax Administration Act.
What payment options are available to pay SARS Debt?
- Pay full balance outstanding within seven days
- Request with reason and proof to pay in instalments ITO of section 167 of TAA
- Request with reasons and proof to compromise the debt ITO of s200/201/202 of the TAA
- Where debt is disputed/there's an intention to dispute apply for the suspension of debt in terms of s164 of the TAA
What can happen if I don't pay my Tax Debt?
If after all the collection efforts have not been honoured, SARS will institute enforcement collection actions as follows:
- Collect the money against any third party in terms of section 179 the TAA
- Issue a Civil Judgement Court against the taxpayer
- Attach the assets of the taxpayer
- Hold the directors/members/related parties liable for the debt
- Sequestrate/liquidate the taxpayer
- Preserve the assets against the debt
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