SARS Debt – Payment Arrangements and Compromises

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email

How To Handle SARS Debt For Clients Who Cannot Afford To Pay Due To Cash Flow Constraints

The following is applicable for companies and individuals.

The taxpayer has two options namely enter into a payment arrangement or a compromise agreement with SARS.

Payment Arrangement- is an instalment arrangement entered into with SARS. It allows you to pay the debt, including the interest and penalties incurred in instalments over an agreed period of time.

Compromise Agreement- is an agreement whereby the Taxpayer undertakes to pay an amount which is less than the debt owed to SARS. Based on past experiences, SARS does not generally accept less than 50% of the Capital balance as settlement. Capital is the debt owed without interest and penalties.

There are important factors to consider.

In order to enter into either agreement, the taxpayer should have no outstanding returns.

Entering into a payment arrangement does not cease the incurrence of interest on the outstanding debt. Taxpayers should be wary of this especially when considering an agreement over a prolonged period of time.

Compromise agreements call for an immediate settlement of the reduced debt amount. Taxpayers have to ensure that the funds are available to make such a payment.

It is of utmost of importance for the taxpayer to upkeep all current tax obligations as a default could result in the agreement being voided.

The application should be submitted to SARS debt management along with the relevant supporting documents.

It is advisable to contact the SARS assigned agent to the case as the submission needs to be made directly to that person. The contact details can usually be found on the final demand letter received.

Emails should be sent to [email protected] in the case where the details of the assigned case agent are unknown.

Remember to follow up every alternate day.

Be sure to always have senior review the application prior to submission.

Please see the collection of information forms for the payment arrangement and compromise.

Take note that the forms differ for businesses and individuals.

Documents For Individuals :

Documents For Companies :

More To Explore

Accounting

EMP501 – Employment Reconciliation Declaration

What Is It? It involves an employer submitting an accurate Employer Reconciliation Declaration (EMP501), Employee Tax Certificates [IRP5/IT3(a)s] to be issued and if applicable, a Tax Certificate Cancellation Declaration (EMP601). The three elements that must reconcile in order for your submission to be successful are the: Monthly Employer Declarations (EMP201s) submitted. Payments made (excluding penalty

Accounting

Receive Your Tax Number Via SMS

SARS has added a new web feature, that allows taxpayers to have their tax reference numbers sent to them via SMS. All the client needs to do is, click on this link: https://tools.sars.gov.za/soqs Fill out their personal details on the form. Select the “What’s My Tax Number? “option under the query type drop down. What

Do You Want To Boost Your Business?

drop us a line and keep in touch

Scroll to Top