SARS Issued a Third-Party Appointment Against Your Employee: What Employers Need to Know
When a SARS Third-Party Appointment lands in your inbox, it can create uncertainty, administrative pressure and uncomfortable conversations with employees. However, employers need to understand that these notices are not merely requests from SARS. They carry legal obligations that require prompt attention and action.
In this article, we explain what a Section 179 Third-Party Appointment is, what your responsibilities are as an employer, and how to manage the situation correctly while mitigating risk to your business.
What Is a SARS Third-Party Appointment?
Section 179 of the Tax Administration Act empowers SARS to appoint a third party to collect outstanding tax debt on its behalf.
In an employment context, SARS appoints the employer as its collection agent because the employer owes remuneration to the employee. The appointment is commonly communicated through an AA88 or ITA88 notice.
In practical terms, SARS is instructing the employer to deduct amounts from an employee's salary or wages and pay those amounts directly to SARS in settlement of the employee's tax debt.
Is Compliance Optional?
In short: no.
Once a valid Third-Party Appointment has been issued, the employer is generally legally obliged to comply unless it is genuinely unable to do so.
Ignoring the notice can expose the employer to significant risk, including:
Personal liability for amounts that should have been paid over to SARS.
Potential penalties and sanctions.
Additional scrutiny from SARS regarding the employer's compliance processes.
From a risk-management perspective, non-compliance is rarely the correct approach.
What Should Employers Do When a Notice Is Received?
1. Verify the Notice Immediately
Before taking any action, confirm that the notice is authentic.
Check:
Employee details.
SARS reference numbers.
Payment Reference Number (PRN).
Corresponding notifications on eFiling or e@syFile.
Official SARS communication channels.
As with any tax communication, employers should remain alert to fraud and phishing attempts.
2. Determine Whether You Can Comply
The first practical question is whether remuneration is currently payable to the employee.
Consider:
Is the employee still employed?
Is salary currently due?
Is the employer correctly identified?
Are there sufficient amounts payable to the employee?
Has the employee passed away?
If you cannot comply for legitimate reasons, SARS generally requires feedback within the timeframe specified in the notice, often within five business days.
3. Implement Payroll Deductions
If the appointment is valid and remuneration is payable:
Set up a dedicated payroll deduction code.
Deduct the specified amount from the employee's remuneration.
Record all calculations and deductions.
Maintain complete supporting documentation.
A payroll code such as "SARS Section 179 Third-Party Appointment" can assist with accurate recordkeeping and reporting.
4. Pay SARS Correctly and Timeously
When making payment:
Use the exact PRN reflected on the notice.
Ensure payment is made by the required date.
Retain proof of payment.
Reconcile payments against payroll deductions.
Proper recordkeeping is essential should SARS request verification in the future.
Can the Employee Instruct the Employer to Stop Deductions?
No.
One of the most common misunderstandings is that an employee can simply dispute the debt and ask the employer to stop deductions.
Employers should understand that:
An objection does not automatically suspend collection.
An appeal does not automatically suspend collection.
A payment arrangement request does not automatically suspend collection.
A dispute between the employee and SARS remains a matter between those parties.
The employer must continue complying until SARS formally withdraws the appointment in writing.
This is a critical point. A verbal request from the employee, a copy of an objection lodged, or even proof of correspondence with SARS is generally not enough to justify stopping deductions.
Only a formal withdrawal from SARS should trigger the cessation of deductions.
What Rights Does the Employee Have?
While employers have limited involvement in the underlying dispute, employees do have various rights and remedies available to them.
Depending on the circumstances, an employee may:
Request a payment arrangement with SARS.
Apply for a suspension of payment.
Lodge an objection or appeal.
Seek debt compromise relief where applicable.
Challenge procedural defects if SARS did not follow the correct legal process.
These matters should be addressed directly between the taxpayer and SARS or with the assistance of a qualified tax practitioner or tax attorney.
Common Employer Mistakes to Avoid
We often see employers placing themselves at unnecessary risk by making well-intentioned but incorrect decisions.
Avoid the following:
Ignoring the notice.
Delaying implementation while waiting for the employee to "sort things out".
Stopping deductions based solely on an employee's verbal request.
Taking sides in a dispute between SARS and the employee.
Failing to maintain an audit trail of deductions and payments.
Making payments using incorrect reference numbers.
Remember that SARS views the employer as a legally appointed collection agent once the appointment is issued.
CRUX Practical Advice
If your business receives a SARS Third-Party Appointment relating to an employee, we would usually recommend the following steps:
Verify the authenticity of the notice immediately.
Assess whether remuneration is currently payable.
Implement payroll deductions without delay where required.
Respond promptly if you are genuinely unable to comply.
Retain all documentation, calculations, correspondence and proof of payment.
Continue deductions until SARS issues a formal written withdrawal.
Refer employees to SARS or their tax practitioner regarding disputes.
Seek professional advice if there is uncertainty regarding the employer's obligations.
Final Thoughts
A SARS Third-Party Appointment can create operational and employee-relations challenges, but employers should remember that their role is generally straightforward: verify the notice, comply where required, maintain proper records, and avoid becoming involved in the underlying tax dispute.
The greatest risk is often not the appointment itself, but rather failing to respond appropriately.
By understanding your obligations and implementing a clear internal process, your business can remain compliant while reducing the risk of penalties and unnecessary disputes.
Need Assistance?
If your business has received a SARS Third-Party Appointment and you are unsure of your obligations, the CRUX Konsult team can assist with reviewing the notice, assessing your compliance requirements, and helping ensure that the correct payroll and payment procedures are followed.
Contact CRUX Konsult for guidance before a compliance issue becomes a costly problem.
Disclaimer: This article is intended for general informational purposes only and does not constitute tax or legal advice. Specific circumstances may differ, and professional advice should be obtained before taking action.
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