Additional measures were implemented to help taxpayers stay compliant – and if not for the ‘procrastinators’ the problem ‘could have been fixed’ by now.
In the run-up to this year’s filing season, employers are battling to meet the deadline for submission of their annual employer reconciliation declarations to the South African Revenue Service (Sars).
The deadline is Friday. Employers experienced glitches after Sars released an updated version of e@syFile, the software used to reconcile and validate the payroll data and electronic employee tax certificates submitted to Sars.
Employers submit monthly declarations, and the annual declaration (EMP501) reflects all the payments made in terms of employee pay-as-you-earn (PAYE) tax, Unemployment Insurance Fund (UIF) contributions, and employee tax incentive (ETI) and skills development (SDL) levies.
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System issues
The system error forced Sars to make additional channels and measures available to enable employers to submit their information on time, says Ettiene Retief, independent tax specialist.
The new version created “unexpected” issues where employers were unable to submit their EMP501 returns.
Following complaints from several recognised controlling bodies that represent tax practitioners, Sars acknowledged the problems.
It gave employers access to the older version when they could not solve their issues with the new version, and addressed issues through a dedicated email support channel.
Retief says the newer version might have been incompatible with specific anti-virus programmes used by employers or tax practitioners.
System updates by employer payroll systems may also have caused the incompatibility with e@syFile.
“There are also procrastinators. We have had two months to deal with issues – if people started engaging earlier, the problem could have been fixed already,” he adds.
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The go-between
The Sars e@syFile software plays “middleman” in the validation and reconciliation of the employer’s payroll system and the validation of the electronic IRP5 tax certificate that is submitted to Sars.
This enables Sars to pre-populate the tax returns of almost four million individual taxpayers, and those with more complicated tax affairs can submit their tax returns with correct tax information.
According to Sars, the three elements that must reconcile for employer submissions include:
- Monthly employer declarations submitted (PAYE, SDL, UIF and ETI);
- Payments made (excluding penalty and interest payments); and
- IRP5/IT3(a)s generated.
The chances of an extension of Friday’s deadline are slim. Sars only has a month to process the information and start pre-populating tax returns for the start of the July filing season.
“If one deadline moves, it moves everything and that causes its own complications,” says Retief.
Another system glitch that frustrated taxpayers and practitioners last month was the inability to upload documentation relating to value-added tax (Vat) returns. “As far as I am aware the issues were addressed.”
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Refund delays
André Daniels, head of tax controversy and dispute resolution at Tax Consulting SA, says taxpayers and tax practitioners alike are reporting a surge in delayed refunds.
Sars is citing “pending verifications or audits” – but only after a manual status check is performed.
“This is not a procedural glitch – this is a systemic failure with serious financial implications,” Daniels said in a recent statement.
In many cases Sars has requested further verification documentation without issuing any formal notification through eFiling or via email.
“Making matters worse, there is often no link available to upload the required documents because no verification or audit letter was ever generated.”
Daniels says even if the link is provided and documentation uploaded, additional assessments are subsequently issued, stating that the “burden of proof” was not discharged.
His advice to taxpayers is to act proactively and to confirm whether any verifications or audits have been raised behind the scenes.
He also advises taxpayers to use the dispute resolution steps to correct assessments where appropriate.
Retief notes that Sars is constantly upgrading, adding and changing its systems and programmes as part of its modernisation and digitalisation drive.
It is normal that there will be glitches.
Sars is generally alerted to problems and issues through the different representative bodies. “I know there were issues, but Sars was quick to respond and solve some of it.”
This article was republished from Moneyweb. Read the original here.
