Beware of bogus tax advisers promising you guaranteed refunds, the SA Revenue Service (Sars) has warned at the height of tax season.
The tax collector said it had seen an increase in cheating involving personal income tax returns where “tax consultants” or intermediaries had promised clients substantial refunds in return for cuts of up to 50 percent.
They then submitted fraudulent returns on behalf of taxpayers.
“The activities of suspected syndicates are particularly prevalent at this time as the deadline of 22 November 2013 approaches for the 2013 Tax Season,” Sars said.
On September 5, Sars and police had conducted raids in Mpumalanga and arrested 28 people who had submitted tax returns for at least 200 individuals. This involved more than R7 million.
“In these cases taxpayers were persuaded by the suspected fraudsters to hand over personal information like bank account numbers, their log-on details and passwords for eFiling so that revised tax returns could be submitted on behalf of the taxpayer and fraudulent refunds claimed.
“While the criminal prosecutions against the 28 individuals will be pursued before court, Sars is also in the process of taking civil actions to recover fraudulent refunds from the taxpayers involved,” Sars said yesterday.
It cited the case of Lusindiso “Maxwell” Mhlwatika, a tax practitioner, currently being heard in the East London Regional Court. Arrested in 2010, he allegedly approached various public servants.
Mhlwatika then allegedly submitted fraudulent tax returns, claiming that they were entitled to tax deductions for, among other things, working abroad, working from home and having disabilities or medical expenses.
He is alleged to have charged between R400 and R1 100 in fees, in return for which he allegedly used their eFiling usernames and passwords to submit the fraudulent returns.
He faces 290 counts of fraud and 145 counts of fraudulent tax assessments for evasion, involving about R1.5m.
Last Thursday, tax officials and police conducted a search and seizure as they gathered evidence in Bushbuckridge, Mpumalanga. Sars believes that hundreds of taxpayers were conned by a syndicate into providing their taxpayer information in return for a tax refund to which they were not entitled.
“Many qualified and registered tax practitioners offer important services to taxpayers by assisting them with their tax affairs and with submitting tax returns to Sars,” the tax authority said.
“Unfortunately, a minority of those might be dishonest. Additionally, some individuals pretend to be tax practitioners with the intention of defrauding Sars and the unknowing taxpayer.”
Taxpayers fall for conmen who promise them guaranteed tax refunds.
The only way a refund can be “guaranteed” upfront is if fraudulent information is submitted in a tax return.
“This places the taxpayer at serious risk of being arrested for fraud – because taxpayers are ultimately responsible for tax returns submitted in their name, even if by third parties.” - Daily News Reporter