Is it Worth Investing Your Time and Effort into a Taxpayer Relief Application?

Tax debts typically come with serious penalty and interest charges. Fortunately, as its name indicates, the Taxpayer Relief program (formerly known as fairness) allows taxpayers to apply for relief from penalty and interest charges. Individuals and businesses can request remission of penalties, arrears interest, and/or waiver of the accruing interest.

The legislation also enables taxpayers to request acceptance of late, amended, or revoked elections; as well as make requests for refunds or reductions in amounts payable that are beyond the normal reassessment period.

Getting relief from penalties and or interest, or acceptance of a statute barred reduction can often save folks huge money and make a life changing difference.

How to apply for Taxpayer Relief?

Filing a Taxpayer Relief application requires the completion of an RC4288 form (available on the CRA’s website) or submission of a letter outlining the specifics of the request. The Agency has the discretion to grant relief from penalty and/or interest when the following types of situation prevent a taxpayer from meeting their tax obligations:

·         extraordinary circumstances;

·         actions of the CRA;

·         inability to pay or financial hardship;

·         other circumstances

If filed using the correct form, with sufficient supporting documentation, a response from a Taxpayer Relief Officer can take anywhere from 4 months to 1 year or more depending  on the program’s workload. The decision-making criteria used for determining who will be granted relief are:

·         taxpayer’s history of compliance;

·         whether the taxpayer knowingly allowed interest to accrue on a debt;

·         whether the taxpayer exercised reasonable care and was not negligent in conducting their affairs; and

·         whether or not the taxpayer acted quickly to remedy any delay or omission.

Taxpayers often request relief on the basis that “I cannot afford to pay my taxes, so I did not file my tax return, and then the CRA assessed me big tax debt, I can ask for relief because I had no money.” Big mistake. Failure to file a tax return is a criminal offence which can result in prosecution, so you should always file. Before an application is made to the Taxpayer Relief program, all outstanding returns must be filed up to date, otherwise the CRA will not even consider the application.

If you’re thinking that the Taxpayer Relief Provisions may be an option for you, do some research or speak to a tax solutions professional about how to construct the best argument for relief. And you should always make arrangements to pay the penalties and interest in any case in order to stop the interest clock from ticking should the request be denied. However, if you are not satisfied with the Officer’s decision, you may apply for a second-level review and there is an option for judicial review if the second-level review is unfavourable.

The Taxpayer Relief program is a great option, if you qualify, to reduce penalties and interest. Ready to file? Call Tax Solutions Canada today at 1 888-868-1400.

Can You File an Objection and a Taxpayer Relief Application at the Same Time?

When you have been assessed and notified of a tax debt owing, it can be incredibly difficult to navigate the expectations and requirements with regard to the Canada Revenue Agency (CRA). This is especially true if you disagree with the assessment or if you believe circumstances existed which made it hard to comply with the Income Tax Act. If you find yourself in this position and wish to file an objection or apply for Taxpayer Relief, you can. But what if you want to do both? This is where things get even more difficult.

Notice of Objection: this is the formal process you follow when you disagree with a Notice of Assessment, Notice of Reassessment, Audit or a Determination. It outlines why you feel the assessment is incorrect and ideally provides proof explaining why CRA should change their decision. CRA determines the outcome after considering your objection. Depending on your circumstances it could take CRA many years to reach a decision. A great example of this is individuals who have gotten caught up in charity tax schemes. There are many cases before the courts and we have seen clients who have had objections held in abeyance as far back as 2005 pending the outcome of similar cases that are before the courts.

Taxpayer Relief Application: this is a program where you can apply for relief from interest and penalties. You may qualify for relief in the following circumstances: You are facing and can substantiate severe financial hardship, a documented medical problem, a death of an immediate family member, a disaster like a flood or fire, an error on the part of CRA or some other extraordinary circumstance.

Because you may only potentially be granted relief for 10 years back from the date of the application (not the tax year in question), many wonder if they the can file an objection and an application for Taxpayer Relief at the same time to get the relief application on record right away.

According to CRA, “If an assessment or reassessment for a tax year is issued by the CRA in a later year, or if an objection or appeal filed by a taxpayer may take considerable time to resolve, the taxpayer should send in their request for any potential relief before the 10-year time limit for that tax year expires.”

What does this mean? Well, if it looks as though your objection will take a significant period of time, or if the date you file is close to the 10 year-time limit, it is smart to file both at the same time.  Even with the impacts of the Bozzer v. The Queen decision of 2011, which gave the Minister leave to consider even those applications for relief concerning a tax debt more than ten years old, it is smart to file before you get to this point.

Now this is not to say that CRA does not commonly make mistakes or have employees who don’t even understand the agencies policies.

Here is a great example. We had a client who filed an objection and Taxpayer Relief application in the same month in 2011. In 2012 the objection was rejected. By 2013 there still had not been a decision made on the relief application. In 2013 we began paper-trailing the situation and dealing with the Taxpayer Relief division who said that the relief application was not processed because you cannot file an objection and an application for relief at the same time.

Not true. You absolutely can! Through demonstrating the circular citing that and leaning on the Taxpayer Relief division we were able to get a decision on the application expedited. This is why it is so difficult for individuals and business owners to deal with CRA. If you don’t understand their policies and procedures they will just do whatever they want and until you fight for your rights – you will continue to be railroaded.

So, can you file an objection and a Taxpayer Relief application at the same time? Yes. Should you? Absolutely. Where CRA is concerned – time is never your friend!

For more about filing an objection and a relief application at the same time please contact Tax Solutions Canada by calling 1-888-868-1400.