There are numerous debt relief mechanisms available from SARS, with the most cost efficient of them all, being a Compromise of Tax Debt application (“the Compromise”), which is aimed at aiding taxpayers to reduce their tax liability by means of a Compromise Agreement (“the Agreement”) and helping to keep the cash constrained taxpayer afloat until some financial reprieve is in sight.
Where SARS is approached correctly, a tax debt can be reduced, and the balance paid off in terms of the Compromise, allowing some much-needed breathing room, and helping taxpayers all over the country to become tax compliant.
The effect of entering into a Compromise, greatly reduces the tax liability to an affordable amount while granting a much-needed reprieve, and so aids taxpayers on the road to financial recovery.
Once the Compromise is accepted by SARS, and the agreement duly executed, with payment being made as proposed by the taxpayer, the balance of the liability due to SARS is written-off by the revenue authority.