South Africans who receive a SARS Letter of Demand are being urged to act fast
Image: GCIS
South Africans who receive a SARS Letter of Demand are being urged to act, as ignoring it could lead to frozen bank accounts, garnished salaries, or even court judgments.
A letter of demand is a formal legal notice issued when SARS believes you owe outstanding tax. This could be due to incorrect IRP5s, unreported income, penalties, or reversed refunds following an audit.
Tax experts warn that many individuals only become aware of these legal notices once enforcement has already begun, often because the letters are uploaded quietly to eFiling and easily missed. They urge taxpayers to ensure their contact information is updated to receive timely notifications.
“Unfortunately, many taxpayers only realise they've received this when their bank account is already frozen or their salary garnished. At that stage, it’s very serious, but you can still solve the problem by acting immediately," Razael Manikus, COO at Latita Africa, said.
According to Manikus, even in these critical moments, taxpayers still have options.
"Log into your SARS eFiling profile to check the date when the letter of demand was issued (under ‘Correspondence’). That’s the start of your 10-business-day response window".
He advises taxpayers to “review your statement of account to identify the source of your debt and the tax period involved. If the amount is correct and you’re able to pay, do this immediately. Use the payment reference number on the letter to pay SARS.”
However, Manikus also warned taxpayers against ignoring the revenue service's letter, saying that "SARS can, without further warning, deduct money from your income via garnishee orders to your employer or clients".
"The Revenue Service can also attach your bank funds, withhold tax clearances and refunds, and get a court judgment that will blemish your credit record. In cases of repeat non-compliance, SARS can even refer you to the National Prosecuting Authority"
If immediate payment isn’t possible, Manikus says taxpayers can apply for a suspension of payment through eFiling. This pauses SARS’s ability to collect while the matter is being resolved.
"If you accept your debt but can’t pay in full, SARS may agree to a deferred payment plan with instalments. Or you could negotiate a compromise of tax debt, where SARS reduces your debt if the full payment would cause you financial hardship.
"You believe the assessment is wrong, lodge a formal notice of objection on eFiling. You have 30 business days from the original assessment. Clearly explain the reason for your objection, and attach supporting documentation (such as invoices, proof of payments, or bank statements)".