A Taxpayers’ Charter setting out the rights and obligations of taxpayers in South Africa was published for the first time during 1997. That Charter contained a statement of intent insofar as taxpayers’ rights in South Africa is concerned. On 19 October 2005 the SARS Client Service Charter was released setting out the levels of service that taxpayers could expect in their dealings with the South African Revenue Service (‘SARS’).
Currently, (at date of writing this article), neither the Taxpayers’ Charter nor the SARS’ Service Charter Standards can be located on the SARS website and it would appear to be a matter of ‘out of sight out of mind’.
It is appropriate to revisit the matter in light of the fact that the Internal Revenue Service (‘IRS’) in the United States of America announced on 10 June 2014 the adoption of a Taxpayer Bill of Rights that will become a cornerstone document to provide that country’s taxpayers with a better understanding of their rights.
The US Taxpayer Bill of Rights consolidates the various existing rights imbedded in the Internal Revenue Code and groups those into ten broad categories making them more visible and easier for taxpayers to find on the IRS website.
The National Taxpayer Advocate, Professor Nina E. Olson, similar to the Tax Ombud in South Africa, listed the desire to see a Taxpayer Bill of Rights released as a top priority in her most recent annual report to Congress, and stated as follows:
‘However, taxpayer surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS and even fewer can name their rights. I believe the list of core taxpayer rights the IRS is announcing today will help taxpayers better understand their rights in dealing with the tax system.’
The US Taxpayer Bill of Rights sets out ten rights which taxpayers have in their dealings with the IRS. The first right is that to be informed so that taxpayers know what they need to do to comply with the tax laws of the United States. In addition, taxpayers are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices and correspondence.
The taxpayer has the right to quality service which entitles them to receive prompt, courteous and professional assistance in their dealings with the IRS and to be spoken to in a way that they can easily understand.
The Bill of Rights lays down that taxpayers have the right to pay only the amount of tax legally due, including interest and penalties and to have the IRS apply all tax payments properly.
Furthermore, US taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions or to expect that the IRS will consider their timely objections and documentation promptly and fairly and to receive a response where the IRS does not agree with their position.
In addition, US taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including penalties and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers also have the right to take their cases to court.
Furthermore, taxpayers have the right to finality and they have the right to know the maximum amount of time they have to challenge the IRS’ position, as well as the maximum amount of time that the IRS has to audit a particular tax year or collect a tax debt. Related to this, US taxpayers have the right to know when the IRS has finished an audit.
The Taxpayer Bill of Rights sets out that taxpayers have the right to expect that any IRS enquiry, examination or enforcement action will comply with the law and be no more intrusive than necessary and will respect all due process rights.
In the US taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorised by the taxpayer or by law. US taxpayers have the right to expect appropriate action will be taken against employees and others who wrongfully use or disclose taxpayer return information.
In addition, taxpayers have the right to retain an authorised representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic in the event that they cannot afford representation.
This is unfortunately something that is lacking in South Africa and consideration should be given to creating non-governmental organisations which can provide assistance to those low income taxpayers who may need assistance in their dealings with SARS.
Finally, the Taxpayer Bill of Rights provides that taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay or ability to provide information timely.
Furthermore, US taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or in the event that the IRS has not resolved their tax issues properly and timeously through its normal channels.
It is hoped, that in time the Tax Ombud will be conferred the powers available to the Taxpayer Advocate in the USA to direct SARS from taking action against taxpayers until the Tax Ombud has reviewed the particular case.
In the media release published by the IRS it is indicated that the IRS will add posters and signs in the coming months to its public offices so that taxpayers visiting the IRS can easily see and read the information regarding the Taxpayer Bill of Rights.
Furthermore, a document summarising the rights that taxpayers have under the Bill of Rights will be mailed to taxpayers as taxpayers start to receive follow up correspondence regarding the 2014 filing season. The IRS Commissioner, Mr Koskinen, pointed out that the information contained in the taxpayer Bill of Rights is critically important for taxpayers to read and understand, particularly when they interact with the IRS.
It's accepted that the US Taxpayer Bill of Rights does not create new rights for taxpayers but rather seeks to highlight and showcase the rights for people to understand and become familiar with those rights and be in a position to enforce them in their dealings with the IRS.
In South Africa, the rights which taxpayers have in their dealings with SARS flow from the Bill of Rights contained in the Constitution of the Republic of South Africa and it is unfortunate that many taxpayers are not aware of the rights which they have in their dealings with SARS officials. It is also unfortunately the case that not all SARS officials are mindful of the rights which taxpayers have under the tax system.
SARS and the National Treasury should consider compiling and publishing a Taxpayer Bill of Rights similar to that in the United States, so as to remind taxpayers of the rights that they have in dealing with SARS and also serve as a useful reminder to SARS officials of the rights which they are required to adhere to in their interactions with taxpayers.
Dr Beric Croome, Tax Executive, ENSAfrica. This article first appeared in Business Day, Business Law and Tax Review, July 2014. Image created from www.irs.gov.