Over the past few
years, the Canada Revenue Agency (CRA) has made great strides in training its
collection agents in deploying different methods to collect money from taxpayers.
The tactics they deploy will depend on how strong their position is.
If they know what
you own, where you work, or where you bank, they will simply refuse to
negotiate with you and begin seizing your assets or garnisheeing your wages.
However, if they are unsure about what they know, or feel as though other
relevant information could improve their ability to collect, this is when the
games will begin. We use the word “game” but not in the fun sense. Put more bluntly they are CRA tactics (or
tricks) to get you to disclose the information they need, essentially making
you your own worst enemy.
Good Cop/Bad Cop –
This is played out in two ways. In the
first method the Good Cop contacts you and you think “wow! I got really lucky -
this CRA person is so helpful and polite. No pressure. They are telling me I
can get payment terms but to get me approval for this they need financial
disclosure. Ok.” So most people simply give the information because they
believe this is needed to get treated fairly.
Then the file gets transferred.
The Good Cop no longer has your file.
The Bad Cop is aggressive and tells you to pay them in full - in some
impossibly short time frame (like next week).
With all the information you gave the Good Cop, the Bad Cop can quickly
proceed to attack you by freezing bank accounts and retirement plans,
garnisheeing your income and registering liens on your home and vehicles. Remember, the Bad Cop does not need a Court
Order or even to provide you with a warning.
He has legislated powers to just swoop in and collect.
Another way this is
played out is that the Bad Cop gets to you first and is so aggressive with you
that they push you to the brink and you stop returning their calls or perhaps
you just hang up on them. One collector will terrorize you and then when you
are at your weakest, the next will come in like your best friend. In an attempt
to garner some relief, you may try to work with the ‘nice’ collector only to
see them remove their mask and reveal their fangs once you have disclosed
personal information to them in the hopes of a payment plan. This will lead to
face enforcement action, bringing us to the next tactic….
Financial
disclosure forms – this is when CRA indicates they will accept a short term
payment plan from you in exchange for proof that you can’t pay in full. They
will send you a financial disclosure statement and ask you to disclose your
income source and assets. When the short term payment plan expires (or you miss
a payment) CRA now has all the information it needs to attack you if you will
not pay according to their demands (rather than what you can fairly
afford). OR CRA decides that based on
your financial disclosure that they feel you can pay more or pay in full. At this point they will renege on the payment
plan and come after you.
No matter how nice
your CRA collector is, they are not your friend! They don’t feel sorry for you
and you don’t sign their paycheques. They have one mandate and that is to close
their file. Their file cannot be closed unless you pay in full or are bankrupt.
This does not mean
that an arrangement can’t be made with CRA that is fair and reasonable? It is
possible to negotiate a realistic payment plan, but unless you are a skilled
negotiator with many years of experience dealing with CRA collectors, trying to
do so could put you in worse shape.
The best thing to
do is get informed, do your research and talk to professionals who know how to
deal with CRA. Some important strategies when dealing with CRA include never
giving CRA cheques on your bank account – pay by money order or credit card –
and never just giving up a financial disclosure statement. Always beware, when
faced with collections action by CRA, of the good cop/bad cop tactics.
For more
information about how to get a payment plan in place with CRA visit www.taxsolutionscanada.com or call 1-888-868-1400.
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