During the 2016 Tax Season, the Isssues around Special Stoppers has become a major issue in the payout of refunds to taxpayers. Please read the extract below for more information.
Letter Published by SAICA – 23 September 2016
SAICA is aware of the current significant frustration experienced by members regarding the SARS 'Special Stopper' verification process. Our initial understanding was that the problem was limited to refunds. It now appears that the problems are much broader and more complex than was originally anticipated. We are, as matter of urgency, trying to get clarity on the root cause of the problem and we are seeking to find a solution with SARS to prevent further frustration. We have noted that this problem is affecting a large multitude of persons who are instructed to visit SARS branches for seemingly no reason on multiple occasions, with some members being informed that no verification was required. This situation exacerbates the frustration as SARS branches have been flooded with people resulting in long queues and delays.
We also continue to note that taxpayers are experiencing increasing frustration in obtaining VAT refunds. It is further noted that the frustration mostly stems from deferral procedures that do not seem to adhere to standard procedures resulting in matters such as multiple requests for verification documents, journals being passed to negate refunds, multiple requests for bank detail confirmations, and refunds being withheld for audits on other tax matters. As these matters are seemingly not in accordance with standard procedure it complicates member’s ability to use the remedies available in law.
We are engaging with SARS along with the other recognised controlling bodies at the highest possible level. We understand that this matter must be resolved with the utmost urgency. In the interim, we advise our members to log their complaints with the SARS Complaints Management Office (0860 121216) and to then escalate the matter to a higher authority such as the Tax Ombud once that remedy has been exhausted.
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Notice published by SAIT: 20 September 2016
Update: SARS Special Stoppers
We note that the issue of refunds remains of great concern to you and your clients (see also the SAIT Member Alert 1 September 2016). We are sending this alert to, once again, inform you that you are not alone in your concerns. The issue of refunds is a widespread issue based on the myriad of complaints we are receiving daily (and further based on our discussions with other key recognised controlling bodies). The most urgent concerns relate to ITR12’s, with VAT refunds being an ongoing issue.
In a nutshell, the main problem is the required verification of details for ITR12 returns. Setting aside the various rumours giving rise to the problem, taxpayers are being required to re-verify pre-existing details that have long existed on the system. This verification must be performed directly by the taxpayer, with tax practitioners being forced to the side-lines. Verification must often be repeated while refunds remain continually stuck in the system. Provided below are some samples of the ongoing scenarios.
- Taxpayers with returns assessed without verification have been known to have their refunds reversed a few days later and their verification indicator changed to “required”.
- After a finalisation letter is issued, a refund should ordinarily be paid to a taxpayer with valid banking details within +- 1 week. The reality differs. After waiting some time (duration differs), the taxpayer/practitioner will query the refund with SARS, only to be told that a “Special Stopper” has been placed on the refund. This stopper is said exist because of high fraud risk, meaning that the taxpayer needs to visit his or her local SARS office with supporting documents. The practitioner may not come to the SARS office on the taxpayer’s behalf.
- After visiting a SARS branch with the requested documents, taxpayers are finding that their refunds are still not being paid out. They follow up with SARS or their practitioner – only to be told that they need to visit a branch with proof of their banking details. Many of these taxpayers have used the same bank account for many years and their details have remained untouched (and are reflecting as VALID on the SARS system).
- We have received reports that even after visiting the SARS branch with supporting documents and banking details, SARS then advises the taxpayer that further problem exists so the taxpayer will need to revisit the branch.
We also note that certain taxpayers are having increasing frustrations in obtaining VAT refunds. A greater percentage of businesses are finding that their refunds are being stopped until further information is provided to SARS. The same information often has to be provided multiple times. If the information is deemed sufficient, different information requests follow. The net result is a continual drain on tax practitioners feeding the SARS computer system while taxpayer frustration grows as cash-flows become disrupted.
We are engaging with the other recognised controlling bodes and SARS at the highest possible levels. We understand that this matter must be resolved urgently. In the interim, we advise our members to log their complaints with the SARS Complaints Management Office (0860 12 12 16) and to move onto the Tax Ombud once that remedy has been exhausted.
Notice published by The SAIT on 1 Sept 2016.
SAIT is currently receiving an influx of queries from members regarding refunds due to taxpayers and requests by SARS that the taxpayer must personally bring supporting documents to a SARS office.
The technical team has raised this issue with SARS Head Office and we are awaiting feedback.
Below is an extract of the letter that was submitted to SARS on behalf of our members:
“A tax practitioner submits an individual’s return of income (ITR12) by using the efiling system. A request is then received and the supporting documents are submitted through the efiling system. In most instances a completion letter is then issued by SARS.
When the tax practitioner or taxpayer follows up to determine when the refund will be made SARS responds by saying that a “special stopper” was placed on the taxpayers account. The tax practitioner or taxpayer is then told that he or she must go to SARS with all the supporting documents together with banking details and proof of address.
We don’t understand why this is required. The supporting documents were submitted as was required. It was also received by a SARS official as the letter of completion would otherwise not have been sent. The bank details and address of the taxpayer were not changed and the proof now required, has therefore been provided earlier.
We understand that SARS can, in terms of section 190 of the Tax Administration Act, hold back the authorisation of a refund. In terms of section 190(3) that can only be done until “such time that verification … has been finalised”. Clearly the letter of completion is confirmation that the verification (review) has been finalised and the ‘special stopper’ cannot be used to delay the refund.”
Please note that as soon as we receive feedback from SARS, the information will be published in the next Technical Mailer.
This notice was published by The SAIT on 1 Sept 2016.