What Is an ITA88 and Why Does SARS Issue It?
An ITA88 is a directive issued by SARS to an employer, instructing them to deduct an employee’s outstanding tax debt directly from their salary. The primary purpose of this directive is to recover unpaid taxes efficiently by engaging employers as third-party collectors.
SARS issues an ITA88 when a taxpayer has an outstanding tax debt that has not been settled through conventional payment methods. This directive is legally enforced under Section 179(1) of the Tax Administration Act No. 28 of 2011. Under this Act, SARS is authorised to appoint a third party—typically an employer—to collect and remit the outstanding tax amounts on behalf of the affected employee.
Employers who receive an ITA88 must comply, as failure to do so can result in them being held personally liable for the unpaid tax amount.
Who Receives an ITA88?
An ITA88 is issued when an individual has an outstanding tax liability that has not been paid despite previous notifications from SARS. Employees subject to an ITA88 may not always be aware of their tax debt, especially if they have not received prior communication from SARS.
Employers are notified about an ITA88 directive via official correspondence from SARS, often through the e@syFile™ Employer system. Once notified, the employer is legally obligated to act on the directive and deduct the specified amount from the employee’s salary.
Employer Responsibilities Upon Receiving an ITA88
Upon receiving an ITA88 directive, employers must take the following steps:
- Review the Directive – Employers must check the details of the ITA88, ensuring they correctly identify the affected employees and the amounts to be deducted.
- Implement the Deduction – The instructed amount must be deducted from the employee’s salary in accordance with the directive.
- Remit Payment to SARS – The deducted amount must be transferred to SARS within the specified period to ensure compliance.
- Notify Employees – Employers should inform affected employees about the deduction and provide them with the necessary details.
- Provide Feedback if Necessary – If an employer is unable to comply with the ITA88, they must notify SARS promptly, usually via the e@syFile™ Employer platform.
Failure to adhere to these responsibilities can result in financial and legal consequences for the employer.
Employee Notification and Rights
When an ITA88 directive is issued, employees must be made aware of the deductions from their salary. Employees should take the following steps to protect their interests:
- Verify the Accuracy of the Tax Debt– Employees should check their SARS tax statement to confirm that the outstanding amount is correct. Mistakes or miscalculations can occur, so verifying the debt is essential.
- Exercise the Right to Dispute– If an employee believes that the tax debt is incorrect, they have the right to dispute it. They can lodge a formal objection with SARS and provide supporting documentation to challenge the claim.
- Negotiate a Payment Arrangement – If the debt is valid but difficult to pay in a lump sum, employees can contact SARS to negotiate a payment plan that allows for instalments instead of a one-time deduction.
The Legal and Financial Impact of ITA88
While ITA88 helps SARS recover unpaid taxes, it can also have significant financial implications for employees. A sudden salary deduction can create financial strain, especially if the individual was not expecting it. Employees must be proactive in managing their tax affairs to avoid surprises.
SARS has implemented third-party tax collection directives, including ITA88, as part of a broader effort to improve tax compliance and reduce outstanding debts. Though specific annual statistics on ITA88 directives are not publicly disclosed, SARS regularly reports on enhanced tax collection measures and increased compliance rates as a result of third-party appointments.
How To Avoid An ITA88
To prevent an ITA88 directive from being issued, taxpayers must take a proactive approach to their tax obligations. Understanding the common reasons for unexpected tax debt and adopting strategies to maintain compliance can help individuals and businesses avoid this situation.
Common Reasons for Unexpected Tax Debt
While an ITA88 is issued when SARS determines that tax debt remains unpaid, many individuals may not realise how such debts accumulate. Below are some common reasons why taxpayers might find themselves with outstanding liabilities:
- Administrative Penalties: SARS imposes penalties for late or non-submission of tax returns. Even if no tax is owed, failure to submit returns can result in accumulating penalties, which contribute to tax debt.
- Estimated Assessments: If a taxpayer fails to submit their tax return on time, SARS may issue an estimated assessment based on available information. These estimates can be inaccurate, often resulting in a tax liability that the individual may not be prepared for.
- Partial Payments: Some taxpayers may assume that making a partial payment towards their tax bill is sufficient. However, SARS continues to levy interest and penalties on the outstanding amount until the full debt is settled.
- Inaccurate Tax Filings: Errors in tax submissions, such as under-reporting income or incorrectly calculating deductions, can lead to additional tax assessments, often catching taxpayers off guard.
- Unawareness of Additional Assessments: SARS may conduct audits or reviews that lead to revised tax assessments. If a taxpayer does not actively monitor their SARS profile, they may remain unaware of additional amounts due until enforcement actions, such as an ITA88, are taken.
Proactive Strategies to Prevent ITA88 Directives
By implementing effective tax management practices, taxpayers can significantly reduce the risk of receiving an ITA88 directive. Here are key strategies to stay compliant:
- Timely and Accurate Tax Return Submissions: Ensure that all tax returns are filed on time and that the information provided is accurate. Regularly updating tax details can prevent miscalculations that lead to unexpected liabilities.
- Regular Account Reviews: Taxpayers should frequently check their SARS eFiling profile and other communication channels for any notifications, outstanding amounts, or updates. Staying informed allows for early intervention before debts escalate.
- Engaging Qualified Tax Professionals: Consulting with a tax advisor or accountant can help individuals and businesses remain compliant. Tax professionals provide insights into deductions, obligations, and changes in tax laws that could affect liabilities.
- Setting Up Payment Reminders: Marking key tax deadlines in a calendar or using automated reminders can ensure that tax payments are made on time. This simple step can prevent late payment penalties and interest accruals.
- Negotiating Payment Arrangements: If financial difficulties arise, taxpayers should proactively engage with SARS to negotiate a payment plan. SARS allows structured payment arrangements in certain cases, which can prevent enforcement measures like ITA88 from being initiated.
Avoiding an ITA88 directive requires consistent tax compliance and proactive financial management. By understanding how unexpected tax debt accumulates and taking steps to address obligations before they escalate, taxpayers can prevent salary deductions and other enforcement actions. Maintaining open communication with SARS, seeking professional guidance, and staying updated on tax responsibilities are essential strategies for long-term compliance.
Conclusion
The ITA88 directive is a legally enforced mechanism that allows SARS to recover unpaid taxes through employer deductions. While this process ensures tax compliance, it also places responsibilities on both employers and employees. Understanding ITA88, knowing one’s rights, and taking proactive steps can help individuals and businesses navigate tax obligations effectively.
At DCM Corporate, we provide expert assistance with tax compliance and ITA88 directives. If you need guidance on handling any directives, disputing tax debt, or negotiating a repayment plan with SARS, contact us today. Our team is here to ensure you meet your tax obligations with minimal disruption.