On a lighter side of tax: But serious nevertheless! - It was a rainy day

The system had come a long way. The Commissioner of Taxes opened the program. The balance outstanding was 14 bn short. It was the 15th of the month. 15 more days to go and the numbers would be in. Judgment out. And the press would comment. Like they always do. The angst gripped his stomach. He had to meet the target. He did not fail, and not this time, on the eve of much political jubilation about to take place. The system delivered the truth-plain and simple. 1 bn per day. That was a lot. The rainy day had arrived. What was in store. He thought – quickly, decisively. He pressed the buzzer to call his P.A. She immediately came in … marched in … note pad at the ready.


The system had come a long way. The Commissioner of Taxes opened the program. The balance outstanding was 14 bn short. It was the 15th of the month. 15 more days to go and the numbers would be in. Judgment out. And the press would comment. Like they always do. The angst gripped his stomach. He had to meet the target. He did not fail, and not this time, on the eve of much political jubilation about to take place. The system delivered the truth-plain and simple. 1 bn per day. That was a lot. The rainy day had arrived. What was in store. He thought – quickly, decisively. He pressed the buzzer to call his P.A. She immediately came in … marched in … note pad at the ready.

“Please convene a meeting in an hour with my executive committee. The heads of collections, inspections and additional assessments must come armed with ‘to the minute’ report backs … Thank-you.”An hour later.
“Gentlemen. Ladies… We are 14 bn off our budgeted collection. I … we, are not going to fail. We have 15 days left. That is 1 bn per day. What do you have in store for me?”

Collections started. They had pulled all steps out. All additional assessments exceeding 1 m had been contacted, threatened and in some instances executed through bank account and creditor account attachments. Resistance was forthcoming from about 8% of their collections total involving some die-hard corporates’ who had all put forward convincing submissions that the additional assessments were incorrect, in fact or in law. And that the Commissioner was obliged (despite his discretion) to suspend payment, pending resolution of the dispute. The amount affected exceeded 20 bn.

“Are non of these taxpayers prepared to settle for smaller sums?”

The head of collections looked blank. It wasn’t her responsibility. She glanced at the head of additional assessments.

“Well .. huh … Mr Commissioner, the list is made up of predominantly major corporates. We have drummed up assessments, made up alleged outstanding taxes (the capital portion) 200% penalties in all cases, with on average an additional 40% interest over the average 5 year revised assessment period. Between these parties, we have an average 1 bn additional assessment per taxpayer. All have put forward submissions that penalties and interest should be remitted as there has been no intention to evade or avoid tax. In all cases they say that the reason for the revised assessments is interpretation of the law differences between them and us. A large portion of capital relates to the deductions claimed for writing off intellectual property. As you know the Department of Finance commissioned a report from an independent professional association to research and give guidance on the tax deductibility of this intellectual property. The report says that our legal interpretation to date is wrong. If we are to insist on our legal interpretation, they have guided us to how to amend the legislation. The report, of course, is confidential.”

“Mmm … what do you recommend …”

Passing the envelope …

“I believe that if we attach a weighting to the correctness of our legal interpretation, 100 being the strongest and .0 being the weakest, I believe we sit at about 20, in light of the commissioned report … of the 20 bn, we should attempt to collect 4 bn …”

“Fine … please get the department heads to approach the taxpayers concerned … Investigations, what have you got …”

The head of legal reflected on the discussion that had just taken place. How clever their leader had been. 5 years ago there was nothing in the law books that entitled the Commissioner to even contemplate negotiated settlements. The specialized investigation units with their aggressive approach to closing the tax gap that had developed over the years, had created the depth of potential taxes to collect … the strategic planning done 5 years earlier had paid dividends. 15 days before the financial year-end – it was a rainy day!