When you have a tax problem and are looking for help it is
confusing to know who to turn to. Many different types of professionals claim
to provide tax solutions – these include accountants, lawyers, tax
consultancies, debt companies and trustees. Each group points out why you
should use them and not the others – usually using fear tactics. Let’s review each type of
professional and how they contribute to resolving tax problems to see which may
be right for you.
Accountant
Accountants are generally excellent at preparing tax
returns. This is increasingly complex and it takes a lot of time and skill to
do this, not just accurately, but to also properly take advantage of any tax
minimization steps. Once returns are
filed and assessed most accountants consider their mandates completed. Good
accountants do not have a large number of clients with tax problems so they do
not have the experience in handling tax problems that can only come from a high
volume. Many accountants specifically
avoid taking an aggressive stand against CRA as all the returns they e-file for
clients are tagged to their name and it would kill their business if CRA
decided that there must be more problems in that accountant’s office so they
begin auditing more and more of their clients. Accountants chose to become
accountants because they like the detail and technical tax aspects. However,
being highly organized does not make them effective negotiators and masters of navigating
the dark passages at CRA.
Lawyer
Some lawyers specialize in the area of tax matters. Most are involved in high level planning of
tax structures and big corporate groups.
Some though do promote generally to people with tax problems. Lawyers become lawyers because they want to
fight for justice for their clients in Court.
That is all well and good but only when the other avenues have failed
and the cost is worth it. Remember: CRA
cannot afford to just roll over – they have the whole Federal Department of
Justice as their ‘free’ lawyer and they cannot risk losing so they will
fight. And your layer will fight – but
on your dollar. It makes no sense to
bring a lawyer into the process – it sends the wrong message: “I am here to
fight”. It is far better to start the
process off on the right note: “I am here to resolve my issue and I want to
have full access to the CRA programs that let me reduce interest, minimize
penalties and provide fair and reasonable repayment terms”. Of course, different personalities start
discussions in different ways. A wise
person once told me “you can so much more easily close the hand offered in
friendship into a fist than try and get the person to accept your open hand
from a clenched fist”.
Tax Consultancies
Generally, tax consultancies are organizations that
specifically specialize in resolving tax problems and handling CRA negotiations
for individuals and businesses. Unravelling complicated decisions, assessments
and problems with CRA are a specialty for these types of organizations. The
best of these organizations will have significantly experienced and recent
ex-CRA professionals. Both these aspects are pivotal when choosing the correct
consultancy to assist you. If they do
not have experience in the actual area of tax you know they are of no use. An ex-CRA tax auditor knows precious little
about the types of payment arrangements available at CRA and how they are
accessed, who approves them and where appeals get made. That same person though is an expert in helping
you navigate the perils of a tax audit.
Why recent experience? Because
CRA changes its policies and procedures.
What worked 5 years ago does not work now. The contacts at CRA have all retired, been
reassigned or promoted. You do not need
yesterday’s news – your problem is now.
This type of organization is not suited for someone who simply needs to
file an annual tax return or has been charged criminally.
Trustees in Bankruptcy
Of these 4 groups, the trustee in bankruptcy wields the most
power. Many tax lawyers advertise to scare taxpayers away from trustees because
a trustee can resolve many tax problems, without you needing to pay an
expensive lawyer. If a client cannot pay their tax debt and CRA is creating
financial chaos through collection action, a trustee can use their powers under
Federal law to immediately stop wage garnishments, lift frozen bank accounts,
etc… The trustee does not need you to have a bankruptcy to do this. Their
powers come directly from the Federal Government under a special license that
means they do not need CRA’s permission to do this. Just as quickly as CRA jumps on you the trustee
can remove them from your back. Trustees often work very well in conjunction
with the other 3 groups in cases where the client cannot pay the tax debt, so
while they compete with trustees, they also work with and refer clients to them
too. This is true of every single accountant, lawyer and tax advisory service
that works in the tax business. What causes many taxpayers hesitation is the
fear created around solutions offered by trustees. Yes – a bankruptcy or
consumer proposal will have impacts to your credit BUT nowhere near as bad as
you may imagine. Get the facts from the trustee – it is usually free.
The best thing to do when choosing the right tax
professional is:
1. Do
not respond to fear tactics or their advice about who you should not deal with. Each professional has their place in the
solution matrix.
2. Check
online to make sure that they have a good reputation.
3. Have
a face-to-face interview where possible.
If you have a tax problem and need help please contact Tax
Solutions Canada today by calling 1.888.868.1400.
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