Nicolette Dirk, finance writer, Justmoney.co.za
SARS has appealed to taxpayers to be cautious when approached by “tax advisors” who guarantee them a tax refund on submission of their income tax returns.
SARS has seen an increase in fraud cases involving personal income tax returns where “tax consultants” promised clients substantial tax refunds in return for a ‘cut’ of up to 50% of the refund. They then submit fraudulent tax returns on behalf of the taxpayer to SARS.
“Anyone who guarantees a taxpayer a tax refund may be misleading them and should be avoided,” said SARS.
Cases of fraudulent tax filing
SARS warned that the activities of suspected syndicates are particularly prevalent at this time as the deadline of 22 November 2013 approaches for the 2013 Tax Season.
On 5 September 2013, SARS conducted raids in Mpumalanga which resulted in the arrests of 28 people who had submitted fraudulent income tax returns on behalf of at least 200 individuals. Private individuals were involved in an income tax fraud syndicate, which aimed to defraud SARS in just over R7 million.
In these cases, taxpayers were persuaded by the suspected fraudsters to hand over personal information like bank account numbers, their log-on details and passwords for eFiling so that revised tax returns could be submitted on behalf of the taxpayer and fraudulent refunds claimed.
Marc Sevitz (pictured left), co-founder of online virtual tax assistant TaxTim, said most times taxpayers who become victims of such fraudsters are not aware of these illegal activities because they do not understand the process and fully trust these so-called tax advisors.
In another case, Lusindiso “Maxwell” Mhlwatika, a tax practitioner, was arrested in 2010, after he fraudulently claimed tax refunds for various public sector employees who he approached.
He allegedly did this by submitting fraudulent tax returns on their behalf, claiming that they were entitled to tax deductions for, among other things, working abroad, working from home and having disabilities or medical expenses.
He is alleged to have charged individual taxpayers between R400 and R1100 in fees, in return for which he used their eFiling usernames and passwords to submit the fraudulent returns.
The monetary loss to the fiscus was approximately R1.5 million.Sevitz said that when it comes to disability claims, a taxpayer would need to apply for this directly through SARS.
He allegedly did this by submitting fraudulent tax returns on their behalf, claiming that they were entitled to tax deductions for, among other things, working abroad, working from home and having disabilities or medical expenses.
He is alleged to have charged individual taxpayers between R400 and R1100 in fees, in return for which he used their eFiling usernames and passwords to submit the fraudulent returns.
The monetary loss to the fiscus was approximately R1.5 million.Sevitz said that when it comes to disability claims, a taxpayer would need to apply for this directly through SARS.
“When it comes to working abroad, you can’t just assume that you won’t be taxed for that period. It involves a lot of legislation,” said Sevitz.
SARS urged taxpayers not to fall for conmen who promise them guaranteed tax refunds. “The only way a refund can be “guaranteed” upfront is if fraudulent information is submitted in a tax return.
This places the taxpayer at serious risk of being arrested for fraud – because taxpayers are ultimately responsible for tax returns submitted in their name, even if by third parties,” said SARS.
This places the taxpayer at serious risk of being arrested for fraud – because taxpayers are ultimately responsible for tax returns submitted in their name, even if by third parties,” said SARS.
Sevitz added that another warning sign is if your tax advisor wants a large amount of up to 50% of your return. “There is usually a flat rate charged that is between 5% and 10% of the return.
In these cases another warning sign would be when you receive a significantly higher return from SARS than you have in the past,” said Sevitz.
Guidelines on how to fill out your tax form:
• If you are registered for eFiling you can make use of the Help-You-eFile function on the eFiling website. This allows you to be in direct contact with a SARS Call Centre agent while they complete their tax return online.
• If you are not able to use eFiling, visit any SARS branch, with all the relevant documents, and a SARS official will submit your tax return electronically free of charge.
• For more assistance on completing your tax return form visit TaxTim.