Spotting the Difference
A legitimate SARS letter of final demand is issued under the Tax Administration Act and represents a serious escalation in the debt collection process. It usually follows previous communication regarding an outstanding tax liability and affords the taxpayer 10 business days to settle the outstanding amount.
The language is formal, consistent with SARS communication standards, and the document includes verifiable taxpayer identifying details such as your name, tax reference number, case number and stipulates the amount owed.
The letter further informs a taxpayer of various relief mechanisms available, such a Suspension of Payment request, a Deferral of Payment (payment arrangement), or even a Compromise of Tax Debt, where SARS will waive interest and penalties and allow the taxpayer to settle the capital liability due.
By contrast, the fake demands that have been circulating often contain various red flags, such as the omission of taxpayer information such as names, registered addresses and taxpayer reference numbers.
The fake letter of demand also requires payment, of an unspecified amount, to be paid within 24-hours as opposed to the legitimate 10 business day period.
It is also important to consider the e-mail address by which the fake letter of demand is received as the domain names will not mirror the legitimate “@sars.gov.za” domain name.
To authenticate SARS communications, taxpayers are recommended to verify the demand received by reviewing their eFiling profiles or contacting SARS directly. If the demand cannot be located on an eFiling profile, this warrants immediate caution.
The Seriousness of a Real Final Demand
Receiving a genuine SARS final demand is not a trivial matter. It signals that SARS has reached the enforcement stage of debt collection. If no response is received within the stipulated 10 business days, SARS may proceed to take recovery steps, including civil judgments which result in the Sheriff being instructed to attach and sell assets, or even third-party appointments such as a bank being instructed to deduct money directly from a taxpayers account and pay this to SARS in satisfaction of the tax debt.
The purpose of the final demand is to prompt compliance before such measures become necessary. Ignoring it can lead to rapid escalation, compounding both the taxpayer’s financial exposure and administrative burden.
Relief Options and Remedies Available
Importantly, receiving a final demand does not necessarily mean there are no remedies available. Taxpayers have several avenues to address the issue, depending on applicable circumstances.
Should a taxpayer disagree with their liability, they may suspend the recovery of the debt by submitting a Suspension of Payment request where there is a dispute, or an intention to dispute.
Where no intention to dispute exists, a taxpayer may enter into a payment plan in settlement of the debt over monthly instalments, or where financial hardship is so severe, even request SARS to write-off the interest and penalties, and settle the capital tax debt due to SARS.
These relief mechanisms are designed to restore compliance without resorting to punitive measures, provided that taxpayers engage with SARS promptly and transparently.
Do Not Ignore a Demand
Whether genuine or fake, the worst response to a SARS demand is inaction. A legitimate demand requires immediate attention, while a fraudulent one should be reported to SARS to prevent identity misuse and protect others from potential scams.
The so-called “head in the sand” approach almost always leads to adverse outcomes. If uncertain about a demand’s authenticity, verify it through your eFiling profile, the SARS Contact Centre, or your tax practitioner.
Acting promptly ensures you remain within the prescribed timelines and retain access to available remedies. Where a legitimate debt is due, engaging a qualified tax practitioner or tax attorney is strongly recommended to help assess your position, negotiate appropriate remedies, and ensure proactive tax compliance.
