SARS is coming after taxpayers’ bank accounts, salaries, and properties

A SARS letter of demand could lead to the taxman debiting banks, garnishing salaries or attaching property if South Africans do not act quickly.

Latita Africa COO Razael Manikus explained that a letter of demand from the taxman is like a financial fire alarm, jolting taxpayers into action to prevent the heat from turning into flames.

However, just because the consequences of non-payment can be dire does not mean South Africans should expect shrill sirens or flashing lights to alert them that they owe taxes.

The South African Revenue Service (SARS) typically uploads the letter of demand on a person’s eFiling profile and sends an email or SMS notification, provided the person has updated their contact details.

“Unfortunately, many taxpayers only realise they’ve received this when their bank account is already frozen or their salary garnished,” Manikus said. “At that stage, it’s very serious, but you can still solve the problem by acting immediately.”

It’s a formal notice issued when SARS believes someone owes tax. This can be due to a number of reasons, but some common causes include:

• Incorrect IRP5s or third-party data mismatches
• Unclaimed deductions not reflected correctly, such as medical aid or retirement contributions
• Undisclosed investment or rental income
• Penalties on late submissions or underpayments from previous years
• Reversed refunds after a SARS audit

According to Manikus, SARS often sends reminders before the official Final Letter of Demand. However, these reminders are courtesy communications and are not legally required steps.

SARS can send SMSes, emails, or eFiling notifications reminding taxpayers of outstanding balances. These are not legal letters and don’t trigger the 10-business-day enforcement countdown.

The purpose is to give taxpayers a chance to settle before formal debt collection begins. The final, and only, letter of demand is the first legal step in SARS’ debt collection.

This is issued via eFiling, email, or physical post to your registered address. It starts the 10-business-day period before SARS can take enforcement action, such as bank account debit, salary garnishing, and property attachment.

Act quickly or face the consequences

Manikus explained that SARS can, without further warning, deduct money from a taxpayer’s income via garnishee orders to their employer or clients.

The Revenue Service can also attach bank funds, withhold tax clearances and refunds, and get a court judgment that will blemish someone’s credit record. SARS can even refer taxpayers to the National Prosecuting Authority in cases of repeat non-compliance.

South Africans can log into their SARS eFiling profile to check under “Correspondence” to see when the letter of demand was issued. That marks the start of the 10-business-day response window.

Manikus urged taxpayers to review their statement of account to identify the source of debt and the tax period involved.

If the amount is correct and they can pay, they should do so immediately, using the payment reference number on the letter to pay SARS.

If they can’t afford to pay or need breathing space before disputing the amount, South Africans can apply for a suspension of payment.

This legal mechanism doesn’t cancel the debt but pauses SARS’s ability to collect, Manikus explained. Taxpayers can apply for a suspension of payment via eFiling or through their tax representative.

They should attach a statement of financial hardship and their latest bank statements, or a note explaining their intention to dispute.

“If you accept your debt but can’t pay in full, SARS may agree to a deferred payment plan with instalments,” she explained.

“Or you could negotiate a compromise of tax debt, where SARS reduces your debt if the full payment would cause you financial hardship.”

If taxpayers believe the assessment is wrong, Manikus explained that they can lodge a formal notice of objection on eFiling.

“You have 30 business days from the original assessment. Clearly explain the reason for your objection, and attach supporting documentation, such as invoices, proof of payments, or bank statements.”

“SARS aren’t trying to trick you. They only want what’s legally owed to them.” Following the correct procedures and timelines is crucial when receiving a letter of demand.

Don’t assume the problem will resolve itself; instead, speak to a qualified tax expert immediately, she added. Timing is everything.