CRA Prosecutions Even in the Holiday Season

We are well into 2014 now, but that doesn’t mean that the Canada Revenue Agency wasn’t working hard over the last few months to prosecute those they found to be non-compliant. During the holiday season, CRA, in true form, showed no mercy in their attempts to find and penalize average, hardworking Canadians. Even during the holidays, CRA prosecutions attacked Canadians. 

December 2013 CRA Prosecutions: 

·        In December, CRA announced that a Brampton woman and her father had been found guilty of tax fraud, resulting in fines of over $1.2 million for the former and almost $400,000 for the latter, as well as jail time. This comes as a result of charges laid due to failure to remit payroll deductions to CRA.

·        Also in December, a Woodbridge man was found guilty of failing to file GST/HST returns for his heating and air conditioning business. He was fined $1000 per count, for a total of $20,000. 

·        Yet another holiday season prosecution saw a Tottenham resident charged with one count of failing to file a personal income tax return, resulting in a fine.  

January 2014 CRA Prosecutions:

·        In January, a Brampton resident was found guilty of eight counts of failing to file personal and GST/HST returns. This resulted in a total fine of $8,000 with a time limit of 12 months to pay the fine. This came about after CRA found that personal and business tax returns had not been filed for various periods from 2002 to 2012.

·        Also in January, a Toronto resident was fined $6,000 for failing to file the 2008 corporate tax return for his flooring company. He was given 24 months to pay the fine. 

These cases represent just a few of the numerous CRA prosecutions over the holiday season – the daily prosecution of taxpayers does not stop. They demonstrate just how crucial it is to get your taxes in order when you have not been 100% in line with the filing rules.  

Owing money to CRA is not illegal, but failing to file your taxes is, and as these prosecutions show, no one is safe. As far as CRA is concerned, it doesn’t matter who you are or what time of year it is, if CRA thinks you owe them money they will assess you and do whatever they need to collect. This collection action against you is stressful enough but ongoing failure to comply can quickly lead to a criminal prosecution.  It makes obvious common sense not to turn a financial problem into a criminal problem.   

You have to act – the problem will not go away on its own.  If you have missed several filings you need to minimize the interest and penalties as well as avoid criminal prosecution. This is not a game and the consequences are serious.  Handled by an experienced professional you will get a fair solution that does not wreck your business or otherwise cause you stress and unnecessary financial hardship. 

To find out more about how to become compliant please contact Tax Solutions Canada by calling 1-888-868-1400.

Can My Bank Freeze My Account Without Notifying Me?

Imagine the shock you feel and the very real chaos in your life when you find out by complete surprise that your bank account has been frozen.  The most common question that people ask is “can my bank freeze my account without notifying me?” The answer is yes! The bank has to comply with the order of the Canada Revenue Agency (CRA) who has the unquestioned ability to go after anything that you have if they believe that you owe them money. If you owe taxes to CRA, the bank must immediately freeze your account or they will face penalties.  

Unfortunately, stories like that of Marion Hill are all too common in Canada. Marion was a diabetic retiree living off a fixed income. She had a small debt with CRA and tried to negotiate a repayment plan with them. The collector with CRA refused to entertain a repayment plan as they often do, and demanded payment in full. 

Not too long thereafter and without notice, Marion’s bank account was frozen and her assets were seized by CRA. Only after an exposé conducted by Global News did CRA agree to return the money they seized and work with Marion to get her financial assistance.

You see, Marion got lucky because a national news network agreed to air her story. However, there are thousands of people in Canada just like Marion who are not so lucky. We get calls daily from taxpayers who have had bank accounts frozen, wages garnished, liens placed on their homes, assets frozen and more.

Generally speaking, CRA won’t negotiate repayment plans unless the correct strategy is implemented by the taxpayer (or their advisor).  The job of the CRA collector is to collect the taxes now.  CRA have to be pushed to agree to a plan. Taxpayers who try to negotiate with CRA directly often find themselves no further ahead – and often far worse off.

A common CRA collection tactic used by CRA when they do not know what you have is to offer you some short term payment plan to get you to disclose your income, employer, assets, bank, etc. However, once that short term period is over, the CRA make unaffordable demands and when you cannot meet those demands they refuse to negotiate further and seize your assets including freezing your bank account.  Remember, CRA do not need a Court Order (like other creditors) - they can act aggressively and by surprise.

Watch Marion’s story at http://globalnews.ca/news/1097684/woman-whose-bank-account-was-frozen-gets-5k-refund/

If you have found yourself owing money to CRA that you cannot pay the way CRA wants to be paid or otherwise being treated unfairly, visit www.taxsolutionscanada.com to find out what you can do to get help without having to convince a national news network to air your dirty laundry.

CRA Taking Too Long to Respond? Could Be Your Ace in the Hole to Qualify for Taxpayer Relief

The Taxpayer Relief provision is a program that CRA offers to people who want to apply to have all or some of the penalties and interest associated to a tax debt removed. Generally speaking you may qualify for Taxpayer Relief if: 

·        You have endured extreme financial hardship

·        There has been a death or serious medical problem in your immediate family unit

·        There has been a disaster such as a fire or flood

·        CRA has erred in some way

·        There is some other compelling extraordinary circumstance 

It is not as simple as just saying that you qualify – you must be able to prove it which makes some grounds for relief easier to be approved on than others. 

We have seen one common occurrence where many taxpayers have been successful qualifying for Taxpayer Relief which deals with errors on the part of CRA. 

As you know, CRA is a massive bureaucracy and can take months or even years to process tax returns and other applications. We have all heard how CRA loses files, changes the person working on the file, the extension becomes someone else, etc. and so one ends up sitting on hold trying to find someone to speak to.  

Where the taxpayer disagrees with the tax assessment or the way penalties and/or interest have been applied the correct course of action to formally record your disagreement is to file a Notice of Objection. When a Notice of Objection is filed it can take CRA a really long time to process it. Sometimes this happens because of disorganization, sometimes this happens because of backlogs and sometimes this happens because you may have an Objection that is similar to another person’s Objection that is before the courts. CRA will sometimes wait for the outcome of court decisions on similar Objections before making a decision on yours. 

In the case of assessments that relate to an individual’s involvement in a charity scheme we have seen Objections sit on hold for up to seven years. So what happens if many years later the Objection is rejected? Then they will assess you for interest retroactively. This can cause your tax debt to double and even triple in size. 

This is an excellent example of a scenario where you could be successful when applying to CRA for Taxpayer Relief on the grounds that CRA has erred. Now with that said, if approved for Taxpayer Relief, they will only grant it for 10 years retroactively from the date that you applied, so it is vital that if you are filing an application with CRA and anticipate that it could take a long time to be approved that you file for Taxpayer Relief immediately. While your Taxpayer Relief application will not be processed until a decision has been made on your Objection, in our example, the date will be on record which will protect you from the time limitations as it relates to Taxpayer Relief. 

Now, just because you apply for Taxpayer Relief does not mean CRA has to approve you. Taxpayer Relief applications are approved at the discretion of the CRA which is why it is important that any application (Objection, VDP, Taxpayer Relief) or even the filing of a tax return is professionally documented, supported and followed-up. We recommend sending any pivotal documentation to CRA by registered mail. You will have the best chance to prove your grounds for relief if you have good documentation and evidence. 

For more information about applying for Taxpayer Relief please visit www.taxsolutionscanada.com or call 1-888-868-1400.

CRA Targeting the Middle Class

Yes folks, they are at it again! We routinely blog about CRA and the different groups that they target. This year alone CRA targets include condo flippers, those who operate POS (point of sale) terminals in their establishments, those who make charitable donations to certain identified charities and now it seems that the list of groups being targeted is expanding. 

According to The Financial Post and a number of other credible news publications, CRA currently has dozens of pilot projects underway targeting everyone from waitresses to used car salespeople and real estate agents. It seems to be an all-out assault on middle class income earners who generate some or all of their income through self-employment.

This is quite sad because these groups represent some of the hardest working sectors in our economy, yet with the flip of a switch they are dubbed ‘middle income tax cheats’ operating an ‘underground economy.’ The Financial Post reported that in St.Catherines there is currently a blitz against local servers in the food and entertainment industries.

Waiters and waitresses specifically: Make sure that you are keeping track of you tips and reporting them on your tax return. This is because, if your employer is increasingly recording them, CRA can learn of them whether or not you received them in cash and whether or not you deposited them into a bank account. Unlike the old times when people tipped in cash they now add it to their credit or debit terminal payment and the employer will pass it along to you (sometimes in cash) but the employer does not want to pay tax on this so he claims the payment to you as a valid tax deduction. Well, the employer’s deduction is your taxable income and CRA know about it.

Pay close attention to any and all correspondence that you receive from CRA. If CRA writes to you asking you for information this is your first indication that they are taking a look at you. CRA can conduct an audit or investigation without coming to your home or business and conducting a full blown audit. They may write to you asking you to clarify information on a past return. Pay attention to who wrote the letter. The letter may not indicate that the writer is an auditor. The title of the writer could be investigation or compliance officer. If this happens, seek professional tax advice (not from a tax preparer but an expert in tax problems) immediately as CRA could corner you into a re-assessment resulting in thousands of dollars in penalties and interest.

In the event CRA simply re-assesses you and assesses a tax debt, it is crucial that you act fast. You may file a Notice of Objection to object not only to the re-assessment but also to penalties and interest.

If you work in one of the targeted groups, declaring all income, maintaining clean books and ensuring that all of your returns are filed on time is a good measure to ensure that you come out on top in the event that you come under scrutiny.

At the end of the day stay smart, stay agile and if you think may have a problem, seek professional guidance immediately.

For more information about what you can do if you are being investigated by CRA please visit www.taxsolutionscanada.com or call 1-888-868-1400.