Can You Negotiate With SARS? What to Do If You Can’t Pay Your Tax Bill

If you’re struggling to pay your tax bill, you may be wondering whether it’s possible to negotiate with the South African Revenue Service (SARS). The good news is that SARS does offer negotiation options for taxpayers facing financial difficulties. Understanding your rights and the available processes can help you avoid severe penalties and find a manageable solution.

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Can You Negotiate With SARS?

Yes, you can negotiate with SARS if you are unable to pay your tax bill in full. SARS provides several mechanisms to help taxpayers manage outstanding tax debts, including:

Payment Arrangements: You can request to pay your tax debt in instalments over time, rather than as a lump sum. This arrangement helps to ease the immediate financial burden and allows you to remain compliant with SARS.
Compromise of Tax Debt: In cases of genuine financial hardship, you may negotiate a compromise, which could reduce the total amount owed and potentially write off some interest and penalties. However, you must provide a thorough assessment of your financial situation, and SARS will evaluate your ability to pay.
Dispute Resolution: If you disagree with the amount SARS claims you owe, you have the right to lodge a dispute or objection. This process allows you to challenge the assessment and potentially reduce your liability.

What to Do If You Can’t Pay Your Tax Bill

If you find yourself unable to pay your tax debt, follow these steps to address the situation proactively:

Contact SARS Immediately

Don’t ignore your tax bill. If you fail to pay by the due date, interest will accrue, and SARS may initiate collection actions, such as using debt collection agencies, attaching your assets, or even blacklisting your name. By contacting SARS as soon as possible, you can explore payment options and avoid these severe consequences.

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Apply for a Payment Arrangement

You can formally request a payment arrangement with SARS. This allows you to pay off your debt in instalments over an agreed period. To qualify, you must:

Demonstrate a lack of assets or liquidity that is likely to be remedied in the future.
Show that you expect future income or receipts to cover the debt.
Ensure all outstanding returns are submitted.
Provide security if required by SARS.

You can apply for a payment arrangement via SARS eFiling, by calling the SARS Contact Centre, or by emailing the relevant SARS department.

Consider a Compromise Agreement

If you are experiencing serious financial hardship, you may apply for a compromise of tax debt. This process involves negotiating with SARS to reduce the total amount owed. SARS will assess your net worth and financial history, and may require you to pay a portion of the debt as a lump sum or in instalments. Note that past lavish spending can negatively affect your application.

Dispute the Assessment If Necessary

If you believe the tax assessment is incorrect, you have the right to:

Request reasons for the assessment.
Lodge an objection within 80 business days.
Appeal if your objection is not fully allowed.

You can also request a remission of penalties and interest in certain cases, especially if you can prove that non-compliance was not intentional.

What Happens If You Ignore Your Tax Debt?

Failing to address your tax debt can lead to serious consequences, including:

Collection from third parties (such as your employer or bank)
Asset attachment and sale
Blacklisting and court judgments
Travel and trading restrictions
Liquidation or sequestration of your estate

Tips for Managing Your SARS Debt

Be proactive: Address the issue as soon as you realize you cannot pay.
Stay compliant: Ensure all tax returns are up to date before applying for arrangements.
Seek professional help: Consider consulting a tax specialist to guide you through the negotiation process and improve your chances of a favorable outcome.

By understanding your options and acting quickly, you can negotiate with SARS and find a solution that protects your financial future.