SARS gives taxpayers a lifeline – with a catch

A new SARS process offers financially strained but compliant taxpayers a faster, structured way to reduce and settle unaffordable tax debts.

However, experts stress that taxpayers need expert guidance, since taking advantage of this lifeline comes with strict legal criteria, extensive documentation, and the risk of aggressive enforcement.

Jashwin Baijoo, Associate Director and Head of Strategic Engagement & Compliance at Tax Consulting South Africa, explained that the South African Revenue Service (SARS) has two main commitments.

First, it is committed to delivering seamless taxpayer service. Second, and even more important, is its commitment to collecting as much tax revenue as possible.

According to Baijoo, the taxman’s latest initiative, the “Expedited Tax-Debt Compromise Process”, serves both of these objectives.

In a media statement issued on 30 September 2025, SARS stated that it has various collection mechanisms at its disposal.

At the same time, it acknowledged that taxpayers who owe tax debt may often find it difficult to settle their debt due to financial challenges.

“With this new tax debt write-off process, SARS aims to provide an efficient, supportive mechanism to enable compliant taxpayers to resolve their debts swiftly,” Baijoo said.

“This announcement marks a commitment by SARS to expedite the tax debt compromise process, facilitating faster resolution and fostering greater cooperation with Recognised Controlling Bodies (RCBs) who represent tax practitioners.”

As SARS explained, taxpayers sometimes find it difficult to settle overdue tax debts, often due to financial constraints.

“Whilst this new process may make the facilitation of debt write-offs easier for tax practitioners, on behalf of their clients, many taxpayers remain unaware of what their “debt relief” options under the tax laws are,” Baijoo said.

He explained that taxpayers have two options, namely the Deferral of Payment, and, more favourably, the Request for Compromise of Tax Debt.

“A Deferral of Payment is quite simply put, a payment arrangement with SARS. What this means practically, is the entire tax debt amount is paid to SARS, but in monthly instalments, and includes interest and penalties,” he said.

The Request for Compromise is aimed at aiding taxpayers to reduce unaffordable tax debt by means of a Compromise Agreement, which is entered into with SARS.

“Where SARS is approached correctly, and the taxpayer’s financial circumstances warrant it, a tax debt can be reduced, and the balance paid off in terms of the Compromise,” Baijoo explained.

Navigating legal potholes

Baijoo stressed that, contrary to a lot of ads seen in the market, no tax debt relief mechanism results in a 100% write-off of your tax debt, but paying something instead of everything is a clear win.

“As highlighted by the revenue collector themselves, SARS employs various mechanisms to collect outstanding debts,” he said.

“These tried and tested mechanisms are employed where taxpayers neglect their compliance obligations, deliberately acting in a contravention of a tax act.”

As beneficial as this type of leniency may sound, Baijoo cautioned that there are stringent legal criteria for a taxpayer to meet.

These apply before the taxpayer is even eligible to engage SARS in tax debt negotiations and have their tax debt reduced to a more affordable amount.

If SARS is not correctly legally engaged, SARS’ Debt Management Team, in conjunction with either the SARS Asset Forfeiture Team or Sheriff of the Court, have certain enforcement rights.

These bodies are empowered to initiate a number of collection proceedings against the non-compliant taxpayer, including, but not limited to:

• Collection of outstanding tax debt via third-party appointment i.e., an employer, bank, or debtor
• Issuing of a judgment and credit bureau blacklisting
• Attachment and auction of taxpayers’ assets
• Asset repatriation of any offshore interests
• Forced liquidation or sequestration of the taxpayer’s estate

“It is the complexity, documentary burden to be discharged, and aggressive stance SARS have taken on legal collections, that necessitate you choose your very own ‘A-team’ to negotiate in your favour,” Baijoo said.

Assembling the A-team

Since a person’s tax compliance is often a sensitive topic of discussion, Baijoo stressed that their team needs to be headed up by a specialist tax debt attorney.

“Not only does this guarantee legal professional privilege, but also ensures you are correctly armed to legally take on SARS, and win,” he said.

“Practically what can be seen in daily SARS engagements, is a strength on procedure and policy from SARS officials.”

However, Baijoo explained that where SARS is strong on internal protocol, they tend to fall short on legal aptitude.

“In the ideal world, SARS’ turnaround timeline would be honoured, however where they take longer than permissible, a legal letter placing them on terms often does the trick,” he said.

With the legal side covered, he explained that it is important for the attorney to work hand-in-hand with a seasoned accountant who knows the ins and outs of financial reporting.

“This will ensure SARS’ documentary requirements are properly fulfilled and your case is stated in numbers and words, to your best advantage,” he said.

Baijoo added that taxpayers need to keep in mind that SARS has a laundry list of financial information to be submitted to even consider writing off someone’s debt.

“With time of the essence, in this case, ‘bigger is always better’ as more hands on deck make for quicker resolution,” he said.

One problem is that taxpayers are often unaware of the full financial risk they face when dealing with SARS.

“But it is important that taxpayers have an understanding when it comes to a tax debt; what it means, how it comes about and how SARS can legally reduce the amount you owe them,” he said.

“Law-abiding taxpayers who seek to address their tax debts are able to remedy their non-compliance and save their businesses by playing open cards with SARS.”

Enlisting the correct tax debt negotiation “A-team” could assist taxpayers in successfully navigating the intricacies of the tax debt relief mechanisms.

Apart from enlisting the right tax debt negotiation “A-Team”, Baijoo said taxpayers should take action sooner rather than later, before SARS comes knocking.