Are you at your wits’ end because the South African Revenue Service (SARS) can’t provide a satisfactory answer to a query? Perhaps you’re due to receive a tax refund, but, for some unknown reason, the amount is never paid into your bank account. The good news is that you have recourse to the Office of the Tax Ombud, an independent body accountable to the Minister of Finance.
The office was established in October 2013 in terms of the Tax Administration Act. Its mandate is to provide redress for taxpayers who are unable to resolve a complaint with SARS. It is important to understand that you can complain to the Tax Ombud only once you have exhausted SARS’s internal complaints-handling mechanisms, the ombud, Judge Bernard Ngoepe, says.
SARS’s formal complaints-resolution mechanism is called the Complaints Management Office (CMO). You must obtain confirmation that the CMO received your complaint, as well as a reference number. If the CMO does not resolve the complaint to your satisfaction within 21 working days, you can complain to the Tax Ombud’s office, Judge Ngoepe says.
He says only if there are compelling circumstances will his office address a complaint before SARS has been given an opportunity to resolve it – for example, if a large number of taxpayers will be severely prejudiced if the matter if not addressed urgently.
Apart from the requirement to try first to resolve a complaint with SARS, the Tax Ombud is mandated to address only certain types of complaints. These have to do with poor service, or if you believe that SARS did not follow its own procedures, or did not apply the provisions of any tax law correctly.
You cannot, therefore, complain to the Tax Ombud that your tax assessment, or any interest or penalties, is too high, in the hope that the ombud will reduce the amount in your favour.
Judge Ngoepe says that if you are unhappy with your tax assessment, you must lodge an objection with SARS, and if the objection is disallowed or partially allowed, you can lodge an appeal.
The dispute would then be referred to alternative dispute resolution, the Tax Board or the Tax Court, depending on the circumstances. If you are not happy with the decision of the Tax Board or Tax Court, you can appeal to the higher courts. Once a final decision has been made and there is no further option of appeal, the assessment will be final, and you must abide by the relevant court’s decision.
The Tax Ombud does not have any discretion or jurisdiction to overrule decisions by any court.
You also cannot complain to the Tax Ombud about a matter that involves a party other than SARS – for example, if you are unhappy with the service provided by your tax practitioner, or if you believe your employer has deducted the incorrect amount of pay-as-you-earn tax (PAYE).
Judge Ngoepe says that, when reviewing a complaint, his office can make recommendations only – in other words, its decisions are not binding on either SARS or the taxpayer. All recommendations are included in his annual report to the Minister of Finance, he says.
The ombud does not have the power to impose a penalty on SARS if it rules in favour of a taxpayer, Judge Ngoepe says.
Your complaint to the Tax Ombud can concern any type of tax, not only personal income tax, and all types of taxpayers – individuals, trusts, businesses – can approach the ombud for relief.
Ngoepe says his office endeavours to finalise a complaint within 15 working days from accepting the case. The office will advise you if it will take longer to finalise the complaint. There is no fee for lodging a complaint, and you do not have to appear in person for the complaint to be resolved. Your tax practitioner can lodge a complaint on your behalf, as long as a power of attorney is submitted with the complaint form. You can email or fax your complaint to the office.
Complaint forms can be downloaded from the Tax Ombud’s website, www.taxombud.gov.za, which sets out the procedures for lodging a complaint.
Lodging a complaint with the ombud’s office does not remove your obligation to pay any outstanding tax, penalties or interest. Although the ombud’s office can propose that collection be stayed, only SARS has the authority to suspend collection.
Judge Ngoepe says his office is still finalising its annual report for the 2015/16 financial year. However, he says there was a significant increase in complaints compared with 2014/15. In the 2014/15 financial year, about 75 percent of complaints were resolved in the taxpayer’s favour. This percentage increased in 2015/16.
AMENDMENTS IN THE PIPELINE
Proposals aimed at enhancing the independence and effectiveness of the Tax Ombud have been included in the draft Tax Administration Laws Amendment Bill, which was published for public comment this week.
The proposed amendments to the Tax Administration Act provide for:
• The Tax Ombud to be appointed for a term of five, instead of three, years. The term may be renewed, as is currently the case. Judge Bernard Ngoepe told Personal Finance that his office’s request for the term to be extended was based on a study of similar institutions within and outside South Africa, which found that, in most cases, ombuds were appointed for five years. The longer term will make it easier to recruit people with the right qualifications to the position, he says.
• The Tax Ombud to employ staff without having to obtain the consent of the Commissioner of the South African Revenue Service (SARS), as is currently the case.
• The Tax Ombud to control its own budget, which is approved by the Minister of Finance. Currently, the expenditure connected with the running of the office is paid out of SARS’s funds.
• The mandate of the Tax Ombud be extended to include the investigation and review, at the request of the Minister of Finance, of any systemic issue related to SARS’s service, the application of the Tax Administration Act, or the procedural or administrative provisions of a tax law. Judge Ngoepe said his office had requested that it be empowered to conduct such investigations on its own initiative. But, because of fears that this could result in it abusing its powers, the proposal requires the minister to request the investigation.
• If SARS or a taxpayer does not accept a recommendation by the Tax Ombud, they must provide the Tax Ombud with reasons for rejecting the recommendation. Decisions by the Tax Ombud are not binding on either the taxpayer or SARS. Currently, either party can reject a recommendation without having to provide a reason for doing so. In its explanatory memorandum, National Treasury says the proposed amendment will enable the Tax Ombud “to review the reasonableness of the reasons, to inform future action”.
Judge Ngoepe said the proposed amendments have been requested by his office, as well as stakeholders in the taxation sector, in order to strengthen the Tax Ombud’s independence from SARS.
The draft Tax Administration Laws Amendment Bill can be downloaded from the home-page of the National Treasury website, www.treasury.gov.za. The public has until August 8 to submit comments to [email protected]
• Contact the Tax Ombud on 0800 662 837 or 012 431 9105. You can fax complaints to 012 452 5013 or post to PO Box 12314, Hatfield, 0028. Email to [email protected]