How Can I Get Taxpayer Relief?

If you have a tax debt then there is no doubt that you have thought about how you can get taxpayer relief (in other words treated fairly by CRA [Canada Revenue Agency] in a way that you can do the right thing and survive). There are different ways to get taxpayer relief and how you do it will depend on your personal circumstances. In this blog we will review the top 3 ways that you can get taxpayer relief
 

  1.  If you can substantiate that you have suffered extreme financial hardship, medical problems or a natural disaster (that contributed to your tax problem) to the satisfaction of the CRA, the CRA may grant forgiveness of interest and penalties under the TaxpayerRelief Program. This involves a lengthy approval process and you must be able to prove the claims in your application. This is a viable option to achieve taxpayer relief but not everyone is approved – this kind of application should be made on your behalf by a tax professional. But beware, there are no second chances, and if done incorrectly the first time your chances of success a second time are all but diminished.

 

  2.  You can also achieve taxpayer relief by coming up with a way to pay your tax debt. The relief you will experience once the financial stress of worrying about how you will pay your tax debt cannot be quantified. There are many financial solutions to raise the funds to pay your tax debt, such as mortgage products. A skilled organization that specializes in CRA negotiation can not only help you to raise the funds to pay your tax debt but can also negotiate a direct and final monthly payment plan with the CRA that you otherwise could not negotiate on your own.

  3.  You can also achieve taxpayer relief by making a proposal to the CRA. When making a proposal to the CRA, and depending on your personal and financial circumstances, you may be able to reduce the size of your tax debt. If your proposal is accepted, you will be able to make a low monthly payment that you can afford, the interest that has been accumulating on your tax debt will be frozen and CRA collection action in most cases will cease. 

Taxpayer relief can come in many forms – both financial and personal. Facing a debt you can't pay, especially to the government, comes with stress, anxiety, depression and a myriad of other health and relationship problems. Be fair to the CRA and to yourself. The best way to do this is to face your tax problem and get taxpayer relief!

To see if you qualify for taxpayer relief please visit www.taxsolutionscanada.com or call 888-868-1400.

 

What is a CRA Requirement to Pay?

A CRA Requirement to Pay is a very powerful enforcement action that the CRA uses to collect a tax debt or to motivate a taxpayer to file a past due return.

With no advance warning to you, the CRA sends a Requirement to Pay Notice to any of the following parties who may owe you money or who may hold your assets.  The Requirement to Pay Notice informs them of your tax debt.  For example, the Requirement to Pay Notice orders the bank to immediately freeze all your bank accounts. Money in the account is then forwarded to the CRA to pay off the debt. A Requirement to Pay may also be sent to an employer, requiring them to garnish a portion of an employee’s wages in order to pay off the tax debt. In both situations, the person receiving the Requirement to Pay is legally required to comply or face having to cover the amount themselves.

A CRA Requirement to Pay will likely cause a number of problems:

1.      Disruptive to businesses because it eliminates cash flow.

2.      Extreme financial hardship to individuals and businesses.

3.      It can strain relationships with creditors because pre-authorized payments will be returned, which will trigger both NSF fees from the bank and the creditor.

4.      It can damage your relationship with your bank once they learn that you have a tax problem. 

There are ways to get a bank account unfrozen. However, once a CRA Requirement to Pay has been issued to the bank, if the CRA learns that funds were in the account that was frozen, they will be even less likely to discuss the removal of the Requirement to Pay. You will need a professional CRA negotiator to go in and work towards getting the CRA Requirement to Pay lifted. This can be achieved by showing that the CRA Requirement to Pay is interfering with your basic ability to live and pay for basic necessities of life like food and shelter, through negotiating a voluntary payment plan, or by leveraging other programs that will legally require the CRA to lift the Requirement to Pay.

You can entirely avoid a Requirement to Pay Notice by dealing with all your corporate and personal tax issues.  Regardless of how far behind your filings are and how much you owe, a professional experienced in managing these situations can guide you and work on your behalf to resolve these issues. 

The faster you get a Requirement to Pay lifted and your account unfrozen, the better off you will be - but it is not something that you will likely be able to accomplish on your own.

If a Requirement to Pay has been issued against you, we can help. Visit www.taxsolutionscanada.com or call 888-868-1400.

 

The 2012 Canadian Tax Deadline is Quickly Approaching – Are You Ready?

The 2012 Canadian income tax filing deadline is almost here.

April 2013 is the Canadian tax deadline for your 2012 personal income tax return. 

If you are operating a business in Canada the Canadian tax deadline for businesses is June 15^th, 2013. But if you are going to owe taxes the estimated amount of taxes that you anticipate that you will owe must be paid to the CRA by April 30^th, 2013.

So, what if you know you are going to owe income or business taxes once you file and don’t have the money to pay the taxes? Well, not filing is certainly not the answer. A very common mistake by Canadians is to attempt to hide and deliberately miss the Canadian tax deadline. They are afraid that once they file their returns the Canada Revenue Agency will demand to be paid in full.

There are many consequences to missing the Canadian tax deadline:

1.     HST credits, Canada child tax benefit payments, and old age security benefit payments will be delayed.

2.     As soon as you miss the 2012 Canadian tax deadline the Canada Revenue Agency will apply a 5% penalty to the tax debt that you owe. In addition, the Canada Revenue Agency will charge a further penalty of 1% per month for up to 12 months.  And this is just the penalties.

3.    You will also be charged daily compound interest on both your tax debt and the penalties back to the date that the filing would have been due.

4.    If you were penalized for late filing in 2009, 2010 or 2011, and you miss the Canadian tax deadline in 2012, your late filing penalty may be increased to a 10% penalty just for missing the deadline and then 2% per month for up to 20 months.

5.    If you file late twice or more within a four year period you may be hit with a “repeated failure to report income” penalty of up to 20% of the total amount of income that was earned and not reported for the tax year in question.

6.   Worst of all, you could be criminally prosecuted for tax evasion.  The Canadian tax system relies on self reporting and punishes those who do not comply.

It is not illegal to owe money to the CRA but clearly filing late is not a good option. Of course it is scary because once you alert the CRA that you owe they will demand payment and can then start collection actions.

What to do?

1.    Acknowledge that you have a tax problem and stop delaying dealing with it as it will only get worse. 

2.    Do not attempt to fix this alone.  In the CRA you are dealing with an extremely complex set of Federal laws, internal directives and policies in a bureaucratic setting.  You can easily make your problem much worse by saying the wrong thing or not saying the right thing.  As you are already, from the CRA’s perspective, a “bad taxpayer”, seriously consider obtaining professional services from an expert in solving tax problems.

If you recognize that you have a tax problem the best thing that you can do is seek professional guidance. Once late tax returns are filed a tax problem is essentially a financial one. It is a smart choice to work with a professional organization that specializes in resolving tax compliance problems and who can qualify you for a program:

1.    To file late returns and avoid late filing penalties altogether.

2.    That, under certain circumstances, the CRA can agree to cancel interest and penalties.

3.    That will freeze the interest on your tax debt and enable you to repay the debt on a voluntary monthly payment plan that you can afford.

4.    That can reduce the principal tax debt that you owe.

Instead of missing the Canadian tax deadline for 2013, contact Tax Solutions Canada to come up with a plan to terminate your tax problem. For more information visit www.taxsolutionscanada.com or call 888-868-1400.

How to Get Rid of CRA (Canada Revenue Agency) Interest and Penalties

Many, many Canadians struggle with tax debt, so if you are one of them, you are not alone. When you have a tax debt that resulted from a late tax filing(s) or a re-assessment of a misfiled return or taxes owed from an audit of a past return, CRA interest and penalties can cause the size your tax debt to grow incredibly large.

A tax debt that you would have otherwise been able to pay can suddenly become so large from CRA interest and penalties that it is impossible to pay it (and in the time lines CRA wants). While most people are honest, the CRA treats everyone the same. So even if you made an honest mistake it will result in you feeling like a criminal.

When you owe money to the CRA they must demand to be paid in full. They will seldom agree to a monthly repayment plan when individuals try to negotiate with them directly.  Why?  Because there is a schedule in the Income Tax Act and the Excise Tax Act for how and when taxes must be paid.  If the CRA was too easy in giving out payment plans the fairness of the tax system (and the Government’s cash flow!) would be destroyed. The CRA frequently starts discussing a temporary payment plan with you and use good cop/ bad cop tactics to get you to disclose personal and financial information that they later use against you. Once you have said or shown something to the CRA you cannot take it back, it can be misunderstood by the CRA and used as evidence against you – making your problem worse.  In our collective years of experience the most difficult cases for us to handle are those where an amateur has already butchered the matter and shot holes in their own feet.

If you are in this situation, and while it can be stressful, know that it’s not hopeless. There are programs available that can eliminate CRA penalties and sometimes CRA interest and penalties.

One such program available through the CRA is the Taxpayer Relief Program. Under the Taxpayer Relief Program the CRA may cancel some or all of the CRA penalties and interest that they have assessed on a tax debt. If CRA penalties are reduced it will result in an overall reduction of both CRA interest and penalties because the interest will be eliminated on the penalties that are cancelled, retroactively.

There are only a few primary reasons that individuals qualify to have CRA interest and penalties reduced or removed:

1.Extreme financial hardship
2.Health issues – including addiction and mental health issues
3.Death
4.A natural disaster like a fire or flood
5.An error on the part of the CRA

How these primary reasons are presented and supported are critical.  It does not work on a trial and error system.  If the penalties and interest are a large amount for you you will likely need a person experienced in these matters to guide you.

If you think that you have grounds for taxpayer relief, it is important to proceed with representation. The Taxpayer Relief Program application process is an official one and if you want to have a shot at having relief of CRA interest and penalties granted you will have to provide substantial evidence and documentation to support your application. Some will be relevant, but some will not, which is why it is so important to have a professional prepare your application for you – it will simply improve your chances at success.

Properly taking advantage of programs like the Taxpayer Relief Program may enable you to get rid of CRA interest and penalties and will enable you to come up with a solid plan to put an end to your tax problem.

To see if you qualify under the Taxpayer Relief Program or to see what other options you may have please visit www.taxsolutionscanada.com or call 888-868-1400.