Tax dispute resolution revised

Tax dispute resolution rules have been revised and are meant to expedite feedback to taxpayers who have lodged an objection or appeal against a tax assessment or decision by the South African Revenue Service (Sars).

The new rules provide that a taxpayer may choose to have a dispute resolved in the alternative dispute resolution proceeding. If not, the tax board can deal with certain appeals. The matter may also be taken to the Tax Court, High Court and Supreme Court of Appeal.

The rationale for the new tax dispute resolution rules is twofold. The old rules were included in a section in the Income Tax Act, which was moved to the new Tax Administration Act. While the new rules explain the administrative process in a more comprehensive manner, the idea was also to protect taxpayer rights.

Taxes (Photo credit: LendingMemo)

Changes to tax dispute resolution

Whereas certain taxpayers have already been allowed to submit an objection electronically, the new rules specifically provide for the electronic submission of a document, notice or request to Sars, the clerk or the registrar via e-mail. Where a taxpayer uses the eFiling system, objections may only be lodged by using the NOO1 form on the eFiling system. In these instances Sars will respond by issuing a notice to the taxpayer’s electronic platform. This means that taxpayers would regularly have to check the eFiling system for feedback.

The basic rule that an objection must be delivered within 30 business days from the date of assessment still applies. Taxpayers are advised to request reasons for the assessment. Sars must now respond to a request for reasons within 30 to 45 [business] days. The taxpayer must deliver a notice of objection within 30 [business] days after delivery of the reasons.

The revenue service will have to notify the taxpayer of the allowance or disallowance of the objection and the basis thereof within 60 business days after delivery of the taxpayer’s objection. If a taxpayer is still unhappy he or she may appeal against the decision to the tax board or tax court. In such a case the notice of appeal must be delivered within 30 business days after the delivery of the notice of disallowance of the objection.

But what if taxpayers don’t receive feedback within the specified timeframes?

Taxpayers are advised to follow up with Sars in writing if feedback was not received as tax dispute resolution is a formal process and if the correct procedures are not followed the dispute may not be resolved.

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