The South African Revenue Service (Sars) plans to crack down on defaulting taxpayers in an effort to make revenue collection more efficient in the downturn and reduce this year's shortfall, estimated at R70-billion.

Taxpayers have been warned to get their affairs in order.

From next month, Sars is taking harsh measures to deter tax avoidance will include:

• Making failure to pay a criminal offence;
• Asking employers or bankers to debit defaulting taxpayers' accounts if payments are not made in periods stipulated;
• Employing skilled specialists, such as auditors, to monitor high net-worth individuals earning R7-million and more a year to ensure they pay their taxes;
• Imposing penalties for outstanding returns from R250 a month for those earning up to R250 000 a year to R16 000 a month for those earning more than R50-million; and

Penalising defaulters with recurring monthly penalties for each month tax returns are outstanding, for up to 35 months.

Sars commissioner Oupa Magashula said the previous penalty regime was "lenient".

Sars took legal action on 81k taxpayers

"We are confident that with this penalty regime we will have a positive effect on compliance."

In the 2007-08 tax year, more than 5.3 million returns due to Sars were outstanding, and it had to take legal action against 81 000 taxpayers.

Magashula said that of the 5.3 million outstanding, at least three million were income tax returns, one million PAYE returns, and just more than one million were VAT returns.

With the old system, tax evaders were charged R300 to R1800 once off for outstanding tax returns. Very few had enforced debit orders from Sars.

Magashula said the administrative work to implement the penalties began before the global financial crisis, and the penalties were not merely a plan to lessen the effects of the recession. They were here to stay.

"No one knew that the tax revenue would plummet the way it did." But, he said, the penalties could be avoided by compliance.

Impose penalties on repeat offenders

"We are not taking (just) any money out of the economy ... we are taking what is due."

Sars said that in the interests of fairness it would first impose the new penalties on repeat offenders who did not get their tax returns in order by 20 November.

"In order for us to be able to handle the volumes, we need to take a bite we can handle," said Magashula.

"We don't believe that we are doing anything different, and we are not shedding any tears from collecting money from those that are not compliant.

"We believe not going after those people is the unfair thing to do," he said.

Taxpayers with a number of outstanding returns can expect an ITP34 notice (Income Tax Penalty 34) in the mail if they do not make arrangements for their outstanding taxes.

Sars said that taxpayers penalised under the new regulations could apply for relief, but only if their noncompliance was due to "reasonable or exceptional circumstances".

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