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Johannesburg - The deductions of unpaid administrative penalties from salaries and bank accounts is a last resort that affects only a minority of non-compliant taxpayers, the SA Revenue Service (Sars) said on Thursday.
"The vast majority of compliant taxpayers who submit their tax returns on time and pay what is due to Sars will not be affected," it said in a statement.
The people who would be affected by administrative penalties were those who, for a number of years, had failed to submit returns - a key step for the smooth and efficient functioning of tax processes.
Sars commissioner Oupa Magashula last week warned that offenders would have money taken out of their accounts or deducted from their salaries.
Sars said the administrative penalty system became law on January 1 2009, after extended public consultation in 2008.
"In October last year, Sars warned taxpayers with multiple outstanding returns that they would be affected by the first phase of the system's implementation.
"These taxpayers were given a final opportunity to correct their non-compliance before penalties were imposed."
In January 2010, Sars issued a first round of penalties to about 230 000 taxpayers who had returns outstanding for multiple years.
Fair and reasonable
The penalties ranged from R250 a month per return outstanding to R16 000 a month per return, depending on the individual's income.
Notices were issued every month to inform taxpayers of the escalating penalties, Sars said.
To date, 31 273 taxpayers had paid R33.8m in penalties and 83 016 returns had been submitted.
About 180 000 taxpayers had failed to respond to the penalty notices, Sars said.
"Sars has always clearly indicated that the purpose of imposing the penalties is not to raise revenue, but rather to instil a broader culture of compliance among taxpayers."
It added it had emphasised that the key principle involved was fairness to the majority of taxpayers who honestly complied with their obligations every year.
"At the same time, Sars has been fair and reasonable to the non-compliant taxpayer as well.
"Before appointing an employer to deduct the outstanding penalty, Sars built into the process steps such an opportunity to apply for remission of penalty and an opportunity to lodge an objection."
If a taxpayer had requested the remission of an administrative penalty, collection steps would generally not be taken until Sars had dealt with the request.
Warned
"Non-compliant taxpayers were warned in October last year and again last week that in the event of penalties not being settled, their employers would be appointed as agents to deduct and pay over the outstanding administrative penalties due to Sars."
Taxpayers who had not provided their current addresses to Sars, as they were required to do in terms of the law, might not have received these penalty notices and were advised to provide their addresses as soon as possible.
Sars said the appointment of employers as agents was being done in terms of section 99 of the Income Tax Act.
"This section of the act has been the subject of judicial scrutiny, which has found that it is not unconstitutional and does not require a hearing before its application."
This was a measure Sars had had at its disposal "for a long time".
Sars said it would appoint employers as agents and inform them of the legal way to deduct the penalty from the taxpayer's salary.
"If the employer foresees an affordability problem, a mechanism will be put in place for the employer to communicate with Sars to reduce the amount to be recovered each month."
These mechanisms were over and above the mechanism that currently existed for the taxpayers to request remission of the penalties.
If the response from non-compliant taxpayers remained unacceptable, Sars would be forced to extend the appointment of agents to banks holding funds on behalf of these taxpayers.
"Sars believes that the non-compliant taxpayers concerned have been afforded more than sufficient opportunity to correct their non-compliance.
"It is simply not fair to the majority of compliant taxpayers that a minority should continue to get away with what is essentially a crime."
- Sapa
