Dispute Resolution Remedies
Dispute resolution provisions include the rules for dispute resolution in section 103 of the TAA which governs ‘’the procedures to lodge an objection and appeal against an assessment or decision under Chapter 9 of the Act, the procedures for alternative dispute resolution and the conduct and hearing of appeals before a Tax Board or Tax Court.’’ (Government Gazette No 37819, 2014). In summary, dispute resolution remedies available to taxpayers are:
1. Request the Commissioner to provide reasons in respect of assessments;
2. If taxpayers wish to dispute the assessment after SARS’s reasons have been evaluated, they can submit a notice of objection (NOO).
3. If the Commissioner disallows the NOO, a taxpayer can appeal by submission of a Notice of Appeal (NOA).
4. If the Commissioner disallows the NOA, a taxpayer can appeal by making use of the alternative dispute resolution process (ADR).
5. If the taxpayer so not want make use of the ADR process, or if no agreement can be reached with SARS after the ADR process has been finalised, a taxpayer can litigate the matter as follows:
(a) If the disputed amount is below R 1,000,000 a taxpayer can appeal to the Tax
Board for the initial hearing;
(b) If the disputed amount is above R 1,000,000 a taxpayer must appeal to the Tax
Court; (Government Gazette, Notice no 1196 of 2015)
(c) If a taxpayer does not accept the Tax Board’s decision he/she can approach the Tax
Court.
(d) If the taxpayer wishes to appeal the decision of the Tax Court, he/she may
approach a higher court.
Dispute resolution remedies
Request for reasons
The provisions of PAJA applies only to ‘administrative actions’ taken by ‘organs of state’ and therefore a taxpayer must show that the Commissioner’s conduct constituted administrative action as envisaged by section 33(1) of the Constitution. One of the functions of the Commissioner provided for under the SARS Act is to issue assessments in fulfilling its administrative mandate. The issue of assessments and subsequent dispute resolution outcomes by the Commissioner therefore falls squarely in the ambit of ‘administrative action’. As per section 2 of the SARS Act SARS is an organ of state: ‘’The South African Revenue Service is hereby established as an organ of state within the public administration but as an institution outside the public service’’. The Commissioner is therefore compelled by section 3(2)(a)(v) of PAJA to furnish a taxpayer with reasons if the taxpayer requests such.
In accordance with the provisions of PAJA, section 6(1) of the Rules (Government Gazette No 37819, 2014) prescribe that ‘’a taxpayer who is aggrieved by an assessment may, prior to lodging an objection, request SARS to provide the reasons for the assessment required to enable the taxpayer to formulate an objection in the form and manner referred to in rule 7’’, which must be submitted to the Commissioner no later than 30 days after date of assessment, subject to potential extension by a SARS official if reasonable grounds exist. Where a SARS official is satisfied that enabling reasons have been provided for the taxpayer to formulate an objection it has 30 days to notify the taxpayer. Where the opinion of SARS official is that enabling reasons have not been provided, SARS must provide the reasons within 45 days after delivery of the request for reasons.
The Commissioner has facilitated this obligation by adding the option on a taxpayer’s efiling profile to request reasons. Where taxpayers use efiling it is convenient and easily accessible on an efiling profile. Where taxpayers do not use efiling their only option is to visit a SARS branch or mobile tax unit and submit a request manually.
Submission of notice of objection (NOO) and notice of appeal (NOA)
As per section 104(1) of the TAA, a taxpayer aggrieved with an assessment may submit a NOO and section 7(1)(a) of the Rules provide that a taxpayer may also submit a NOO if in disagreement with the reasons issued by the Commissioner under section 6 of the Rules (Government Gazette no 37819) within 30 days after either date of assessment or date of delivery of notice under rule 6(4) of the Rules. Late objections may be considered invalid.
If a valid NOO has been submitted by the taxpayer, SARS must notify the taxpayer whether his NOO has been allowed or disallowed within 60 days after submission of the NOO, or where SARS has requested additional supporting documentation in terms of rule 8 of the Rules, within 45 days after supporting documentation has been received by SARS.
Where a taxpayer disagrees with the outcome of a NOO, he/she can appeal against the Commissioner’s assessment to the tax board or tax court under section 107 of the TAA within 30 days after delivery of the notice of disallowance of the objection and also indicate whether he/she wishes to make use of the ADR process or litigation.
The option to submit a NOO or NOA is easily accessible under an efiling profile. In cases where taxpayers do file their returns electronically, they will have to visit a SARS branch and complete and submit the NOO or NOA together with the necessary supporting documentation.
Making use of the alternative dispute resolution process (ADR)
As per Rule 13(1) of the Rules ‘’If the appellant has in a notice of appeal indicated a willingness to participate in the alternative resolution proceedings under this Part in an attempt to resolve the dispute, SARS must inform the appellant by notice within 30 days of receipt of the notice of appeal whether or not the matter is appropriate for alternative dispute resolution’’
Where the taxpayer so indicated, or where SARS determines that the matter is appropriate for the ADR process, and it is accepted by the taxpayer to continue in this vein, Rule 15(3) provide that the process must not exceed 90 days. It is also indicative from Rule 17(c) that the legislature had efficiency, as a characteristic of the process, well in mind when the ADR process was envisaged: “A person appointed to facilitate the proceedings under this Part has a duty to-… promote, protect and give effect to the integrity, fairness and efficacy of the alternative dispute resolution process;’’ I submit that, compared to litigation, the ADR process is less costly and more accessible by taxpayers.
Litigation
A taxpayer’s access to litigation is dependent (amongst other factors) on the tax value of the amount in dispute and the taxpayer’s accessibility to financial resources to appoint a legal representative. Tax matters referred to the Tax Board, Tax Court or higher courts attracts litigation costs which may deter taxpayers from following lodging disputes against the Commissioner.