The Tax Ombud: A Watchdog for Systemic Failures in the Tax System
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The Office of the Tax Ombud (OTO) is often seen as a complaints desk for aggrieved taxpayers, but that’s just part of its mandate. The real power of the OTO lies in its ability to address systemic issues, those recurring or widespread problems in the South African Revenue Service (SARS) systems that affect multiple taxpayers and undermine trust in tax administration.
While the OTO helps with individual service complaints, its systemic oversight role is where long-term accountability begins. If left unchecked, these issues don’t just delay refunds or complicate compliance—they erode the fairness and credibility of the entire tax system.
What Are Systemic Issues?
Systemic issues are problems in SARS’s systems, policies, or administrative processes that negatively impact many taxpayers—not just isolated cases. These could stem from flawed system design, inconsistent policy enforcement, or inefficiencies that delay or block access to tax justice.
The Tax Ombud can proactively investigate these concerns if they fall within the OTO’s mandate. If the issue lies outside of normal service complaints, the Ombud must get Ministerial approval to initiate an investigation—as provided under section 16 of the Tax Administration Act.
Key Systemic Issues Still Affecting Taxpayers
According to the OTO’s latest update (June 2025), the following systemic issues remain under investigation:
Delayed Refunds: VAT and Diesel
Refund delays remain a top concern, especially where SARS fails to clear refund stops within legislated timeframes. Diesel refunds are still handled in a separate system, requiring manual intervention that causes bottlenecks. The OTO has recommended a standalone return for diesel refunds and greater automation to ensure timely processing.
Dispute Resolution Delays
SARS often fails to adhere to deadlines for objections and appeals, which can drag out resolution processes and lead to interest and penalties for taxpayers. Although SARS has committed to process improvements, resolution remains slow.
Failure to Confirm Issued Correspondence
A critical gap exists in SARS’s ability to prove that notices and letters were sent. Courts have confirmed SARS’s obligation to deliver notices to the taxpayer’s last known address or their eFiling profile. The OTO has pushed for improved integration of electronic and manual systems.
Flaws in the Tax Compliance System (TCS)
The TCS dashboard may reflect non-compliance incorrectly, for example, when a taxpayer has a valid deferred payment or suspended debt. It also mistakenly flags fraudulent or minor amounts as non-compliance triggers. This impacts everything from tenders to bank applications.
Delayed Processing of Deferred Payment and Compromise Requests
SARS frequently misses its own 21-day deadline for responding to deferred payment requests and 90 days for compromise applications. These delays place undue strain on taxpayers, particularly small businesses.
Suspension of Payment: No Timeous Feedback
Requests for suspension of payment, critical during disputes, are often ignored beyond the 30 business day limit, which means SARS can continue debt collection even while the matter is in dispute.
Deceased Estates: Coding and Contact Delays
SARS takes too long to update records when taxpayers pass away. This includes delays in updating executor details and coding the estate correctly, leading to compliance confusion and stress for grieving families.
Repeat Verification Cases
In some cases, taxpayers face repeated verifications for the same risk flags, even after successful resolution. This inefficiency adds administrative burden without meaningful risk management.
The eight open systemic issues are:
Delays in Payment of Refunds
Delays in lifting stoppers and lack of timeframes for doing so.
VAT and Diesel refunds are declared on the same return but processed separately, causing delays.
Debt set-off and recovery steps taken despite suspension of payment requests.
Non-adherence to Dispute Resolution Timeframes and Related Issues
Non-adherence to timeframes relating to the objection process.
Non-adherence to timeframes relating to the appeal process.
Confirmation of Sent Correspondence
Issues with SARS's ability to confirm whether correspondence was sent to taxpayers, including both manual and electronic notifications.
Tax Compliance System (TCS)
Challenges causing undue hardship due to the design of the TCS, including:
Outstanding liabilities as low as R1 affecting compliance status.
System reflecting returns as outstanding even within submission timeframes.
Debts from fraudulent activities by SARS officials.
Inability to reflect compliance when payment arrangements or debt suspensions are in place.
Failure to Respond to Deferred Payment Arrangement Requests
SARS's failure to respond within the prescribed turnaround time of 21 days.
Failure to Respond to Compromise Requests
SARS's failure to respond within the prescribed turnaround time of 90 days.
Failure to Respond to Suspension of Payment Requests
SARS's failure to respond within the prescribed turnaround time of 30 business days.
Repeat Verification Cases
Inappropriate creation of verification cases following reduced assessments or repeated verifications with the same risk profile and documentation.
How Systemic Issues Are Identified
The OTO identifies systemic issues through:
Repeated taxpayer complaints
Trends flagged by tax practitioners
Stakeholder meetings (such as quarterly sessions with Recognised Controlling Bodies like CIBA)
Media and public commentary
Where an issue reflects broader harm or administrative failure, it can be escalated and officially investigated.
Raising a Systemic Issue: Here's How
Tax professionals and individuals can report possible systemic issues to the Tax Ombud. The OTO encourages submissions where:
The issue has affected more than one taxpayer
The problem persists despite being reported to SARS
There are signs of a broader administrative or policy flaw
You can submit a systemic issue directly via the OTO’s online form:
👉 Raise a systemic issue
Be sure to include:
A clear description of the problem
The affected SARS process (e.g., TCS, refund system)
Evidence or patterns showing that it affects multiple taxpayers
Why This is Important for You
As an accountant or tax practitioner, you are often the first to notice when a “glitch” in the system becomes a recurring roadblock across multiple clients. That’s where your role is essential, not just in advocating for your client, but in strengthening the integrity of South Africa’s tax system.
Here’s how you can contribute:
Stay informed about OTO rulings and findings.
Track recurring issues that appear across different clients.
Report systemic concerns via the OTO’s online portal.
Engage with CIBA’s technical support to escalate patterns for broader attention.
If you’ve noticed recurring issues in SARS systems that affect your clients, don’t stay silent. Raise your voice and help the system improve for everyone.
👉 Submit technical issues to CIBA via the online ticketing system under your member profile.
Join CIBA’s webinar with the Tax Ombud and learn about systemic investigations and how it can impact your work on 12 June 2025.
