The Tax Ombud and Taxpayer Rights

The Tax Ombud and Taxpayer Rights

Some of the constitutional rights and obligations of South Africans when engaging with Public Administration are contained in chapter 10 of South Africa’s Constitution. The Constitution requires of Public Administration (i) a high standard of professional ethics; (ii) efficient, economic and effective use of resources; (iii) the provision of impartial, fair, and equitable service; and (iv) transparency and accountability. The South African Revenue Service (SARS), as a Public Administration agent, is bound by the Constitution. The Tax Administration Act, which also established the Office of the Tax Ombud, is one of the measures that gives effect to these constitutional requirements, especially as they relate to tax administration.  

Although South Africa has one of the most efficient and modern tax administration systems globally, it is imperative to provide taxpayers with a fair, independent, and impartial complaint process, which could not be resolved through the normal complaint channels. As a result, the Office of the Tax Ombud was established on 1 October 2013 to enhance the tax administration system and provide a redress channel for taxpayers who had exhausted the normal SARS complaint mechanisms. The Office of the Tax Ombud was created with reference to best practice internationally and modelled on the systems of Canada, the United States of America, and the United Kingdom.

The Tax Ombud is independent, impartial, and autonomous from SARS, and deals with taxpayer complaints against SARS which could not be resolved through SARS’ normal channels. The Office of the Tax Ombud supports the Tax Ombud in fulfilling this mandate. Retired Judge Bernard Ngoepe was appointed by the Minister of Finance as the first Tax Ombud for a three-year term which ended 31 September 2016. Judge Ngoepe’s term was further extended to 31 September 2019. The Tax Ombud is assisted by the Chief Executive Officer (previously Advocate Eric Mkhawane who retired from this role at the end of April 2019), and experts in, amongst others, tax law, complaint resolution, communications and outreach. The Office of the Tax Ombud assists to provide a simple and impartial channel to resolve a service, procedural or administrative dispute of a taxpayer that have unsuccessfully endeavoured to resolve the issue through SARS’ complaint management channels.

The Tax Ombud’s mandate is to review and address taxpayer complaints regarding service, procedural, or administrative matters resulting from SARS’ application of a Tax Act. In addition, the Tax Ombud may review, on request of the Minister or at the initiative of the Tax Ombud with the approval of the Minister, systemic and emerging issues related to a service matter or the application of the provisions of the Tax Administration Act or procedural or administrative provisions of a tax Act. The Tax Ombud is mandated to provide an efficient, independent, impartial, and fair complaint channel for taxpayers. The  Tax Ombud aims to strengthen taxpayers’ confidence in tax administration, through rational and fair decision making and actions, operating autonomous from SARS, dealing with complaints promptly and efficiently, acting fair at all times, maintaining strict confidence unless authorised by the taxpayer, and ensuring service excellence, and procedural and administrative fairness by SARS. The mandate of the Tax Ombud excludes reviewing legislation or tax policy, SARS policy or practice generally prevailing, other than to the extent that it relates to a service matter or a procedural or administrative matter arising from the application of the provisions of a Tax Act by SARS. The mandate also excludes a matter subject to objection and appeal under a Tax Act, except for an administrative matter relating to such objection and appeal, or a decision of proceeding in or matter before the tax court. The Tax Ombud may not review a matter that arose before 1 October 2012, unless the Minister requests the Tax Ombud to do so, although the Minister has granted the Tax Ombud such approval.

The taxpayer must follow a specific process to lodge a complaint. The process includes obtaining a complaint form, visit the Office of the Tax Ombud or contact the Office by telephone, fax or email to request a copy of the complaint form. The form must then be completed, and the necessary information gathered. The factual situation must be presented in chronological order. The form must include all relevant SARS reference numbers and, if escalated to a SARS branch, the name of the branch, date and person. Complaint forms must be signed and dated. Taxpayer representatives must confirm their authority to act on behalf of their clients through a completed power of attorney. If the evidence does not support a complaint, the matter may be closed. However, the taxpayer will be afforded an opportunity to substantiate the complaint or provide the necessary evidence. A taxpayer complaint must be submitted to the Office of the Tax Ombud within a reasonable time after SARS has completed its review of the complaint. The Tax Ombud will investigate the complaint and decide how to deal with it if it falls within its mandate, or advise of alternative remedies.

The Office of the Tax Ombud approaches its complaint resolution process through reviewing a taxpayer’s complaint to determine whether it falls within its mandate, how it will be managed, and preparing a preliminary assessment of the complaint. The complaint, supporting documentation, outcome of a preliminary investigation and/or recommendations is then sent to SARS. SARS’ response is then evaluated and, if appropriate, the complaint is investigated further. The Office of the Tax Ombud will then send the taxpayer a “close-out report” which summarises the outcome of the complaint and, if appropriate, recommending further action. The recommendations of the Office of the Tax Ombud do not bind the taxpayer or SARS. However, if not accepted by the taxpayer or SARS, reasons must be provided to the Tax Ombud within 30 days of notification of the recommendations and may be included by the Tax Ombud in a report to the Minister or the Commissioner in terms of section 19 of the Tax Administration Act.

The approach of the Office of the Tax Ombud considers the facts, the law, and the Constitution. The Office of the Tax Ombud strives to resolve complaints within 15 business days of acceptance. Taxpayers should ensure that they have exhausted SARS’ internal complaint resolution mechanisms before approaching the Tax Ombud, unless compelling circumstances exist for not doing so. Factors that the Tax Ombud must consider to determine whether “compelling” circumstances exist include whether the request raises systemic issues, whether exhausting the complaint resolution mechanisms will cause undue hardship to the requester, or whether exhausting the complaint resolution mechanisms is unlikely to produce a result within a period of time that the Tax Ombud considers reasonable. To exhaust the available complaint mechanism, a taxpayer must have lodged a complaint with the SARS Complaint Management Office.

The Tax Administration Act mandates the Tax Ombud to review a complaint and, if necessary, resolve it through mediation or conciliation, act independently in resolving a complaint, provide information to a taxpayer of the mandate of the Tax Ombud and the procedures to pursue a complaint, follow informal, fair and cost-effective procedures in resolving a complaint, facilitate access by taxpayers to complaint resolution mechanisms within SARS to address complaints, identify and review systemic and emerging issues related to service matters or the application of the provisions of this Act or procedural or administrative provisions of a tax Act that impact negatively on taxpayers, and recommend to SARS how to resolve the complaint. These matters include SARS’ service or procedural or administrative provisions of a Tax Act. The Tax Ombud has the authority to determine, independently of SARS, how a review should be conducted and whether a review should be terminated before completion. As mentioned, the Tax Ombud may only review a request if the requester has exhausted the available complaint resolution mechanisms in SARS, unless compelling circumstances exist for not doing so.

The Office of the Tax Ombud is legally obliged to protect confidential taxpayer information and all staff sign an Oath of Secrecy. The Tax Ombud and any person acting on its behalf may not disclose any information obtained by or on behalf of the Tax Ombud, or prepared from information obtained by or on behalf of the Tax Ombud, to SARS, except to the extent required to perform its functions and duties under the Act. SARS must grant the Tax Ombud access to information relating to the Tax Ombud’s powers and duties.

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The Tax Ombud and Taxpayer Rights