Why is SARS Asking for Outstanding Tax Returns?

In 2024, SARS (South African Revenue Service) has become increasingly stringent about ensuring that taxpayers submit all outstanding tax returns, even those from many years back. This change in approach is causing significant frustration among taxpayers, especially since SARS is withholding refunds until these returns are filed. In some instances, SARS is requesting unfiled tax returns from as far back as 10-15 years, dating back to when taxpayers first registered for a tax number.

Block on eFiling Submissions Older Than 5 Years

This year, a notable change to the eFiling system has been implemented: submissions for returns older than five years are now blocked from individual profiles. Taxpayers attempting to file these returns are met with a message directing them to file at a SARS branch. This new policy has compounded the frustration for those trying to catch up on past returns.

Why Is This Happening?

Many taxpayers are unaware of their outstanding tax returns due to a few common reasons:

1. Previously Earned Below the Tax/Submission Threshold: In the past, SARS stated that taxpayers did not need to file a tax return if they earned below the minimum taxable threshold or only received one IRP5 from a single employer with no deductions and an income less than the specified thresholds for each year. However, with changing income levels, taxpayers might now exceed these thresholds, prompting SARS to request past returns to understand previous income declarations.
2. Employer Registration: Some taxpayers might have been registered by their employers for small jobs or temporary work without realizing it. This often includes students or informal workers. Since SARS has initial tax records but none since, they are keen on understanding what happened during the interim years.

Challenges with SARS Refunds

Taxpayers are also experiencing delays in receiving refunds due to two main scenarios:

1. No Audit: After filing a tax return and receiving the ITA34 with no request for supporting documents, a refund should typically be processed within 72 hours.
2. Audit: If a taxpayer is asked to submit supporting documents, they receive a Completion Letter stating "no adjustment made," after which a refund should be issued.

Despite these processes, many refunds are delayed due to the following issues:

• Verification of Banking Details: SARS may request taxpayers to verify their banking details, which can delay the refund process. Taxpayers should update their bank details on eFiling following the instructions provided by SARS.
• Submission of Old Returns: SARS is also requiring the submission of old tax returns dating back to 2008 in some cases, irrespective of whether taxpayers met the filing requirements in those years. This demand poses a challenge as many employers and taxpayers no longer possess these documents due to the five-year rule for retaining tax documents.

How to Resolve Outstanding Tax Returns

Taxpayers should take the following steps if they find themselves with outstanding tax returns:

1. Gather all available documents from the relevant years from their records or those of their employers.
2. If no documents are available, they should visit a police station and complete an affidavit explaining the lack of documentation.
3. Submit the outstanding returns using the available information or a nil return if no income was earned.

Tax A Sured (Pty) Ltd can assist taxpayers in filing old returns, even those blocked by the new eFiling system. By leveraging their Tax Practitioner profile, Tax A Sured can efficiently handle these submissions, ensuring taxpayers meet SARS's requirements without needing to visit a branch.