There are provisions in the Tax Administration Act 28 of 2011
(the Act) which allow the South African Revenue Service (SARS) to
recover a taxpayer's tax debt from a third party who either
holds money for, or owes money to, that taxpayer. This is a very
effective method of collecting taxes which can be done by a senior
SARS official serving a notice upon the third party requesting that
the money held or owed to the taxpayer be paid over to SARS.
A tax debt includes any amount of tax due by a person in terms
of a tax Act. The money being held for or owed to the taxpayer
could include the taxpayer's pension, salary, wage or
remuneration. The SARS notice for payment may include a request for
the third party to pay over money that the third party will hold or
owe to the taxpayer. In other words, the obligation can extend to
money that the third party has not yet received.
A common scenario is that an assessment is issued to a taxpayer,
and due to cash flow difficulties, he does not pay SARS when the
tax debt falls due. SARS, which will usually have the
taxpayer's bank account details, could serve a third party
notice on the taxpayer's bank, requesting that the funds held
in the bank account on behalf of the taxpayer, be paid over to SARS
to satisfy the tax debt. This could lead to undue hardship for the
taxpayer if, for example, the taxpayer's salary is paid into
his bank which, acting upon the notice, pays the monies over to
SARS leaving the taxpayer out of pocket and unable to pay for basic
living expenses for himself or his dependents. In these
circumstances, the Act does allow the taxpayer to request that SARS
amend the notice to extend the period over which the amount must be
If having received the notice, the third party does not pay the
money over to SARS in accordance with such notice, and for example,
pays it to the taxpayer or someone else, then the third party would
become personally liable for the tax debt. For personal liability
to be incurred, SARS would have to show that the third party
actually received the notice, and parted with money being held for
or owed to the taxpayer contrary to the notice.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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