While eFiling has played a crucial role in managing ones tax affairs remotely during the Covid-19 pandemic and lockdown, there are some discrepancies in the way SARS is handling disputes to tax assessments.
In some instances, taxpayers whose objections are not late are prompted on eFiling to motivate why their late objection should be condoned. Whats more worrying is that we have seen such objections being disallowed for being late (despite a senior SARS official presumably having applied his/her mind). Such unlawful disallowances by SARS seem to occur mainly where taxpayers have exercised their right to request reasons for the assessment before objecting.
Taxpayers have a right to object and, if necessary, appeal against assessments that they are aggrieved by. These rights are set out in chapter 9 of the Tax Administration Act and are governed by the Rules promulgated under section 103 of that Act.
The Act and Rules determine the dispute resolution processes and timeframes that SARS and taxpayers must adhere to. Taxpayers who do not comply with the Rules may forfeit their right to dispute an assessment. SARS is not subject to the same degree of sanction when it disregards the Rules, although a taxpayer may approach the Tax Court for default judgement if SARS does not remedy the default within a specified timeframe.
Taxpayers must submit their disputes timeously to safeguard their rights. An objection must be submitted within 30 business days from the date of the assessment. Where a taxpayer has already objected and the objection is disallowed, an appeal must be submitted within 30 business days from the date of the disallowance. Taxpayers who have not kept a close eye on their tax affairs during the lockdown will be pleased to hear that the days between 26 March and 30 April 2020 are not counted as business days in determining the above time periods.
Taxpayers may under certain circumstances request that a senior SARS official condone the lateness of an objection or appeal. Objections submitted more than 30 business days late and appeals submitted more than 21 business days late will only be condoned if the taxpayer can show that exceptional circumstances exist which gave rise to the delay. This is no easy task. Objections submitted less than 30 business days late and appeals submitted less than 21 business days late will only be condoned if reasonable grounds exist for the delay. SARS has made it clear that ignorance of the law (and therefore of the time periods in the Rules) will not be accepted as reasonable grounds and certainly not as exceptional circumstances.
Taxpayers may request reasons for an assessment to enable them to formulate an objection. A request for reasons must be submitted within 30 business days from the date of the assessment. Once SARS has notified a taxpayer of its reasons, the taxpayer has a further 30 business days to lodge an objection. In our experience it seems that the additional days occasioned by a taxpayers request for reasons are not always taken into account by SARS. Instead, eFiling automatically generates a notice of disallowance, citing the lateness of the objection as the reason.
For many taxpayers who are unaware of their rights and unable to afford proper representation, the matter presumably ends there. For others, a solution may be to lodge an additional objection against the disallowance. Although this allows taxpayers to motivate why the original objection was not late in the first place, it should not be necessary for taxpayers to spend time and resources in doing this. Such time and resources could have been spent on more worthwhile pursuits, such as trying to sustain or rebuild their business in these difficult times.
Erroneous notices generated by eFiling are confusing to taxpayers. SARSs systems should be in alignment with the law, in particular regarding the counting of days for lodging an objection, which should take into account the additional days where a taxpayer has exercised the right to request reasons for an assessment. Taxpayers in need of assistance should contact their tax advisors as soon as they notice something amiss in an assessment as time may be running out.