SARS eFiling Identity Theft
The fraud involves using taxpayer eFiling profiles to create fictitious refunds or divert actual refunds.
The former is done by submitting fictitious returns on random taxpayers’ profiles and changing relevant banking details, resulting in refunds which are paid into bank accounts of those perpetrating the fraud.
In addition to the submission of fictitious returns, in some instances individuals perpetrating the fraud are redirecting valid taxpayer refunds into different bank accounts, by changing the banking details on the taxpayer’s profile. There have also been cases of fictitious IRP5 certificates being created to facilitate submission of the fictitious personal income tax returns.
From a value-added tax (VAT) perspective, there have been a few cases reported of unauthorised VAT registrations, followed by the submission of fictitious VAT returns in order to create refunds due to the taxpayer, to be paid into the incorrect bank account. Fictitious returns are also being submitted in respect of valid VAT registered taxpayers.
SARS is working directly with the affected tax practitioners to address specific cases.
SARS has also provided its assurance that it shares all concerns in this regard and it has taken steps to mitigate the taking of profiles. According to recent engagement, SARS advised that there have been no new incidences of such profiles being moved after additional checks and balances have been put in place by SARS and thus far 3 different categories of cases have been reported.
SARS indicated that it has set up a dedicated team that has been focused on this risk, to deal with the cases/taxpayers impacted by these events.
It remains unclear how fraudsters are getting access to taxpayer profiles and even tax practitioner profiles where clients’ details are changed. SAICA has requested SARS to investigate the matter given the short timeframes during which details are being changed, including banking details. SARS has noted that it has not found any reason to regard this as a breach of its systems, and in SARS’ view, every tax practitioner and taxpayer can place reliance on the eFiling system.
As Taxpayers please be cautious against third parties using or obtaining access to your eFiling profile logins as you could potentially be held liable for losses resulting from such action.
We urge you to please take note of the following:
As Tax Practitioners, we have further raised concern with respect to who will bear the liability for any valid refunds paid into incorrect bank accounts where valid refunds were diverted.
In this regard, SARS has advised that it has taken steps to rectify any cases where returns have been filed with malicious intent. Where refunds have been paid, SARS has provided its assurance that steps will be taken to recover such amounts.
SARS has indicated that it has tightened up its processes regarding the verification on registration of new profiles and more validation checks will now take place. Further checks have also been implemented before a refund will be paid and some tax practitioners have already noted a higher incidence of verifications as well as recalled refunds.
We await formal communication from SARS and will keep you as the taxpayer updated as this matter develops.
Alternatively, please get in touch with an office close to you.