Take a Break from Your Tax Problem

We all know how stressful a tax problem can be to deal with – and how hard it can be to find out exactly how you should be dealing with it. Not to make light of the situation by any means, but why not take a break from that stress and educate yourself at the same time?

We’ve created a tax and CRA crossword puzzle with some common tax terms to give your brain a break but also give you some important information.

Test and expand your knowledge here: http://ow.ly/E8eWg.

For more about what you need to know and do to deal with a tax problem, be it a tax debt, a tax audit, or impending CRA enforcement action, please call Tax Solutions Canada today at 1-888-868-1400.

Student Faces $11,000 Bank Account Garnishment Over a Disputed Tax Amount

You do everything right. You go to school, get excellent grades, qualify for scholarships – it seems like you’re on the fast track to success. Then CRA pops up and issues an $11,000 bank account garnishment that financially cripples you. This was the case with Heather Gilberds, a PHD student at Carleton University.

In May of this past year, Yahoo Finance Canada published an article about Ms. Gilberds and the actions that ensued at a result of the initial issue. According the Yahoo Finance article:

1.      Ms. Gilberds received more than $45,000 in scholarships in 2010 – this should have been tax free as Ms. Gilberds was a full-time student.

2.      Ms. Gilberds used a tax filing service to file her returns and unbeknownst to Ms. Gilberds they filed the wrong forms for at least three tax years. This led to a re-assessment to CRA of over $11,000.00.

3.      Since this time, Ms. Gilberds has been back and forth with CRA and the tax preparation company she used to prepare the returns.

While Ms. Gilberds was under the impression that the returns were being investigated/re-assessed, CRA collections came along and issued a Requirement to Pay, which is essentially a bank account garnishment, seizing the $11,000.00 that was alleged to have been owed.

According to the article, Ms. Gilberds is not seeking to obtain representation to deal with her problem with CRA which is what thousands of taxpayers involved with CRA do each year.  In Ms. Gilberds’ case she was possibly gtrying to preserve her cash after $11,000.00 was taken. Here is the issue: no matter the dispute, unless you have filed an Objection or your matter is before the court, CRA will continue to pursue you to collect unpaid tax debts. This can include a wage garnishment, contacting your business’ customers to pay directly to CRA (called a Requirement to Pay), freezing your bank account, placing a lien on your home and much, much more.

All without a warning or a hearing.  Any other creditors would need a court order.  Not CRA.

When a CRA problem flares up, it is best to disclose as little as possible to them and seek representation not by tax preparers, but by a company that specializes in dealing with CRA problems. You can access the full Yahoo Finance article here https://ca.finance.yahoo.com/news/ottawa-student-says-cra-took-11k-her-unjustifiably-155317677.html.

If the CRA has frozen your bank account, or if you are currently dealing with any kind of collection and enforcement action from CRA, call Tax Solutions Canada today to find out about how to get back on solid ground: 1-888-868-1400.

Revenue Canada Admits Its Letters and Notices are Confusing – So It Is NOT “ALL YOUR FAULT”

The well known site ca.finance.yahoo.com has just published a well-written article.  The full link is: https://ca.finance.yahoo.com/news/revenue-canadas-letters-full-gobbledegook-090000176.html.

Did Canada Revenue Agency really need to hire a consulting firm (from the USA no less) to tell them the obvious?  Of course not, but a rant over wasted taxpayer funds and inept management of critical government departments will not help you.

According to the article, CRA has admitted that their letters are confusing and difficult for many to understand: “A study of the agency last month confirms the millions of communications that bureaucrats send to taxpayers each year are poorly organized, confusing, unprofessional, unduly severe, bureaucratic, one-sided and just plain dense.”

Does this sound familiar? Here is what will help you:

Tax Solutions Canada focuses entirely on disputes and resolutions with CRA.  Our professional team deliberately includes ex-CRA senior talent who now work on your side of the table.  They know where to look in the documents and how to get CRA to give clear and unambiguous answers.

It is abundantly clear to us that many of the taxpayers who have been sent to us by their accountants and lawyers got into the problem because they did not know what to do.  Scary as it sounds, some of these accountants and lawyers were confused by the documents they had received from CRA.  We hear stories like: “but look, the Notice/Letter/Statement did not say I owe money or needed to make installments”.  Well it did say so, just not in a way that a taxpayer would understand. 

It is our view that with this documented admission by CRA a taxpayer who now owes significant interest and penalties because they did not understand a Notice/Letter/Statement that was badly worded and laid out in a confusing way has clear grounds to apply for relief from interest and penalties.

If you owe interest and penalties feel welcome to call and speak with one of our professionals – we want to hear your story and work for your fair treatment.

Time to make CRA accountable for bad work and not the taxpayer.

Tax Solution Alert - How Mayor McCallion’s Son Could Have Solved His Tax Problem

Remember Mississauga’s veteran and long-serving Mayor McCallion whose son who was the recent centre of controversy with respect to business dealings that led to a conflict of interest hearing against Mayor McCallion? While the conflict of interest allegations were later dismissed, Mayor McCallion’s son has managed to make the news again – only this time for an alleged problem that is all too common in Canada today – failing to file income tax returns.

Failing to file tax returns is far more common than you may think. Some folks get very busy, don’t think they will owe and so they don’t prioritize the filing of returns. Others fear that they will have to pay a large amount to CRA, which they cannot afford, so they think if they do not file their taxes it will buy them the time to come up with the money. Still others just find tax filing overwhelming – all the paper they do not understand or have misplaced…. There are a number of reasons people don’t file and some are deeply psychological.

In the case of Hazel McCallion’s son, a real estate agent, he allegedly failed to file tax returns for 9 years, leading to at least 50 charges by CRA. Late filing can quickly become the crime of tax evasion and common people are prosecuted regularly by CRA.

While we cannot speak specifically to Mr. McCallion’s case, which has yet to make its way through the courts, the real estate industry and real estate agents are certainly one group commonly targeted by CRA. It is an industry that alternates between feast or famine – yet the agent’s personal expenses just go on every day. Also, it is an industry where one can incur substantial tax deductible expenses.

Getting behind with filing tax returns can have a snowball effect and as each year passes the idea of filing those late returns and facing the massive tax debt (and penalties) that may ensue becomes a scarier prospect.

The good news is that you can get caught up without all the pain of penalties and interest.  Often with reasonable repayment terms and no criminal prosecution and public humiliation.

Has the CRA requested that you file returns for the tax year(s) in question? If yes, proceed to the next paragraph. If they have not yet contacted you to file, you may be able to file your late tax returns under the Voluntary Disclosure Program. You will have only one shot to make a successful application under this program and cannot afford to make a mistake with this. CRA can agree to accept your late returns and not assess penalties, interest or prosecute you for tax evasion.

If they have demanded that you file, then you must file. If you do not, CRA will likely at some point either notionally assess you (estimate what you earned and will owe and assess you for taxes based on these estimates) or prosecute you for tax evasion. It is not illegal to owe money to CRA. It is illegal to fail to file your returns. If notionally assessed, refile your returns to ensure that the tax year in question is reflecting accurate numbers. Once you file your late returns you will later receive an assessment from CRA. Once you receive your assessment, pay attention to penalties and interest that are charged and the types of penalties. Even if you filed your return voluntarily you can still file an Objection to CRA’s assessment of penalties. In the case of gross negligence penalties, CRA can assess them but we have had a lot of success in having them reduced or removed through an Objection because once the Objection has been filed it is the burden of CRA to prove gross negligence which is difficult for them to do when they are trying to argue with experience greater than their own – please see an expert in this field – and preferably someone who has worked at CRA in a senior role.

Even if you are fighting penalties – once you have an idea of what you will owe the next thing to do is look at strategies to deal with the tax debt. This may mean pursuing financing to pay the debt, making a payment plan with CRA or exploring other legal options to come to an arrangement that you can live with and that CRA will accept. Also, make sure that you are exploring other avenues to mitigate penalties and interest, such as the taxpayer relief program. We never advise trying to directly negotiate with CRA – this is best left to experienced tax professionals.

In the case of Mayor McCallion’s son – the consequences for the late filing could be a maximum fine of $25,000.00 and 12 months in jail for EACH count filed by the Minister.

You can read the full National Post article here: http://news.nationalpost.com/2013/12/20/peter-mccallion/?utm_source=dlvr.it&utm_medium=twitter.

For more about late filing and dealing with penalties and interest, please contact Tax Solutions Canada today at 1-888-868-1400.

Taxpayer Relief: No Tax Relief for Years Older Than 10 Years? The Court Doesn’t Think So

The taxpayer relief program enables you to apply for relief of interest and penalties in relation to a tax debt. When applying for taxpayer relief it is solely at the discretion of CRA to grant or reject your application. CRA can either cancel all of the penalties associated to a tax debt or eliminate part of the penalties.

CRA will consider a taxpayer relief application where some extraordinary circumstance led to the tax debt or inability to pay the tax debt. Some examples of grounds for taxpayer relief consideration include:

•    Medical problem – you or an immediate family member
•    Death – immediate family member
•    Extreme financial hardship
•    Error on the part of CRA

While the above are some common examples – CRA will consider any taxpayer relief application that reaches the threshold of an extraordinary circumstance.

Historically you could not apply for taxpayer relief on tax years older than 10 years. So, for example, in theory, if the year is 2014, you could apply for taxpayer relief for tax years backward to 2004.

This was until the Bozzer Case was decided. In December of 2006, Mr. Bozzer applied for taxpayer relief asking that CRA consider cancelling the interest that had accumulated on his tax debt. CRA rejected this application stating that the tax years in question were 1989 and 1990, that is, tax years older than the 10 year limitation.

Mr. Bozzer subsequently applied for a second review of the decision which was also rejected and a judicial review of the matter which was dismissed.

Mr. Bozzer went all the way to the Federal Court of Appeal where he argued that the 10 year time
limitation could extend 10 years backward from the date of the application for taxpayer relief but for the interest relief to be applied only the interest that had occurred in the past 10 years.

Tax years – 1989 and 1990

According to a recent CCH article the Federal Court agreed with Bozzer and the decision means that regardless of how old the tax year is, CRA can consider a taxpayer relief application for the preceding 10 tax years, as opposed to saying that an application is automatically rejected if the tax year in question is older than 10 years from the date of the application. You can read the full CCH article here http://www.cch.ca/newsletters/TaxAccounting/October2011/index.htm.

As it relates to taxpayer relief applications – time is of the essence. The longer you wait to make your application the more you stand to lose, including also asking for relief of penalties. The sooner you file your relief application the better.

For more information on filing a taxpayer relief application, even if the tax years in question are more than 10 years ago, please call Tax Solutions Canada today at 1-888-868-1400.