The SA Revenue Service (Sars) said a recent scam with promises of medical expense refunds was not new. Employees were promised refunds on fabricated claims if they paid the trickster 20percent of the refund.
“We mitigate this risk through the use of third party data. In the current filing season, we have gone to the extent of pre-populating the information and reduce the ability of manipulating information outside the norm of acceptable variances against what appears on the medical aid tax certificates.”
A Sars spokesperson said where discrepancies arose, they were flagged for verification or an audit.
Sars has also warned taxpayers about tax preparers who promise them refunds in return for a percentage of the refund.
“Fraud is often committed in the name of the taxpayer by claiming fraudulent expenses. When Sars does identify this fraud the taxpayer will be liable for the full debt as well as penalties,” Sars warned.
Chris van Dyk, a legal adviser for the SA Institute of Tax Professionals (SAIT), said their code of conduct specifically stated that charging a contingency fee for the completion of tax returns was not an acceptable form of remuneration for tax practitioners. SAIT members were expected to adhere to the code of conduct.
“We are aware of the fact that this is a contentious issue and that there is a prevailing practice in the market to charge a contingency fee on completion of tax returns. These fees are generally based on a percentage of the refund due to the client.”
Van Dyk said the underlying principle was that this practice might amount to a “perverse incentive” on the part of a practitioner to claim for items he would not normally do in order to enlarge his percentage fee.
Chérie Carstens-Petersen, a marketing and stakeholder co-ordinator at SAIT, said in her experience alarms go off (when) a practitioner charges the taxpayer a portion of the refund.
“If you only have a salary that is taxed correctly by your employer, you should not be receiving a big refund,” she said.
“If you do not have any qualifying deductions such as medical aid credits, pension fund, retirement annuity or provident fund contributions, or a travel allowance against which you can claim kilometres travelled then the chances are slim that you will be receiving a refund.”
She said taxpayers should ask the preparer how he/she got to a refund if they do not have any of the qualifying deductions.
It is important to establish whether you are dealing with a registered tax practitioner. Carstens-Petersen said people should ask to which professional body the person making the “refund promises” belong to.
“If your practitioner is behaving badly and you know which professional body he is registered with, you can follow the relevant body’s disciplinary process which involves a sworn affidavit and supporting evidence.”
Tax season closes on October 31 for non-provisional taxpayers and for those provisional taxpayers who opt to file at a branch.
All Sars branches will also be open from 8am until 1pm on Saturdays to allow taxpayers to make use of self-help kiosks to electronically file their personal income tax returns.