The South African Revenue Service (SARS) uses a mechanism called a Third Party Notice (AA88), which functions similarly to a garnishee order, to collect outstanding tax debt directly from a taxpayer’s employer or bank.
How SARS Third Party Notices Work
- Legal Basis: This action is taken under the Tax Administration Act 28 of 2011.
- Direct Collection: The notice instructs a third party (e.g., an employer, bank, or pension fund) who holds money on behalf of the taxpayer to pay that money directly to SARS in satisfaction of the tax debt.
- Employer’s Obligation: An employer receiving a valid Third Party Notice is legally obligated to comply and deduct the specified amount from the employee’s salary.
- Without Prior Court Order (sometimes): While a general garnishee order (or emoluments attachment order) from a normal creditor typically requires a court order signed by a magistrate, SARS has specific powers under the Tax Administration Act to issue a Third Party Notice directly to an agent (like a bank or employer) to collect outstanding tax debt.
- Notification: The taxpayer should be notified of the outstanding debt and the intended action, giving them a chance to make a payment plan. The third party (employer/bank) also receives the notice.
How to Dispute or Manage a SARS Notice
If you receive a Third Party Notice from SARS, you have rights and options to address it:
- Verify the Debt: Ensure the amount claimed is correct and you genuinely owe the tax debt.
- Contact SARS Immediately: The best way to manage this is to communicate with SARS and, if possible, establish a formal, affordable payment plan.
- Request Affordability Review: If the deduction amount leaves you without enough money to cover basic living expenses, you or your employer can notify SARS and request an affordability assessment. SARS can then cancel the original notice and issue a new one with revised, affordable terms.
- Challenge the Validity: You can challenge the notice if there are procedural errors, the debt is incorrect, or you were not properly notified. This may involve visiting a SARS branch or seeking legal advice.
- Legal Assistance: Consulting with a tax practitioner or legal professional can help you navigate the process, verify the order’s validity, and, if necessary, apply to the court to have it varied or set aside.
Prevention is key: Ensure your tax returns are filed on time and any liabilities are paid to avoid penalties and enforcement actions like Third Party Notices.
Can a payment arrangement be made with SARS?
You may request and enter into an instalment payment arrangement with SARS. It allows you to pay your outstanding debt in one sum or in instalments over time until you have paid your entire debt including applicable interest. This agreement however would be subject to certain qualifying criteria.
