A vast majority of Canadians pay their fair share of taxes, but those who don’t put an increased burden on the rest of us. That is why the Canada Revenue Agency (CRA) has implemented initiatives to help Canadians participate in the efforts to help fight offshore tax avoidance and evasion. The Offshore Tax Informant Program…
The following are tips to keep the CRA’s collections department happy.
This list in not fully inclusive of everything that you can do because you cannot send them gifts, they have to reject or toss them, and if you do their work for them – they might like that for a bit – until there are no more accounts, and then they will have no more work to do, and then no job.
So here are a few tips to keep CRA happy…
- Communicate, communicate, communicate. If they have to contact you, they’re already angry.
- Don’t be a jerk on the phone to them. Everything you say goes into a permanent diary and that diary is summarized semi-annually. You don’t want anyone who accesses your account to think you’re a jerk
- Don’t accuse them of being out to get you… They likely have 400-500 accounts and their goal is to collect some, write some off and let the others pay or go bankrupt. Just show them some progress on any of those fronts and you’ll be in much better standing.
- Ask for the best and lowest settlement offer. The CRA does NOT do that unless it is through insolvency or a formal proposal in bankruptcy. The IRS settles debts, but this is not the IRS… The CRA is WAY better!
- If you enter into a payment arrangement, ensure there are sufficient funds in the account to pay the cheques. If a cheque is returned NSF (not sufficient funds), then the CRA collections officer will take immediate collection actions and getting those Requirements to Pay removed can be next to impossible.
- Keep current!!! Whether during the period of a payment arrangement, or just through discussions with the CRA make sure you are up-to-date on all filings and payments (including GST/HST, income tax, payroll taxes, etc). If you fail to remain current, the CRA can – and likely will – end the payment arrangement and pressure you for more.
- Understand that the CRA is not your bank, and treat them that way. At a bank, you are earning credit, but at the CRA, in collections, you are paying 10% interest compounding daily… It’s not in your best interest to take your time re-paying them.
- If you have nothing to hide (and even if you do have something to hide), be honest with the CRA collections officer. Things you say may cause the CRA collections officer to become concerned.
- Provide the information that is requested by the CRA collections officer. If the CRA collections officer trusts you, he/she will be more likely to exercise discretion before pressing confirm on that Requirement To Pay.
Move east, Surrey, B.C., tax workers are being told, including to Greater Sudbury as the CRA shifts further away from face-to-face interactions and more towards the IRS style of tax hubs.
The Canada Revenue Agency (CRA) has announced on their website that there are changes coming to the RC59 Business Consent form. This form is completed by a taxpayer who has business accounts or by businesses who wish to have a representative contact the CRA on their behalf.
Without having this form signed and dated, the CRA will not speak to the representative.
These changes are expected to be law in May of 2017.
These laws apply to representatives who use the RC59, Business Consent, to get online access to their business clients’ information in Represent a Client.
- After May 15, to request online access to tax information for a business, you will need to complete the authorization request in Represent a Client. Form RC59 will no longer be used to authorize online access.
To complete an authorization request:
- Log into Represent a Client.
- From the Welcome page, select “Review and update.”
- Select “Authorization request” at the bottom of the “Manage clients” tab and follow the instructions.
- Print the signature page for your client to sign.
Scan and send the signed copy of the signature page to the CRA using Submit documents.
- When you use Represent a Client, you’ll have access to your business clients’ information in five days or less instead of the 15 days it takes today with form RC59.
You can also see which business clients have authorized you and if the authorizations expire by selecting “Businesses that have authorized this business (or RepID)” under the “Manage clients” tab.
- What if I don’t use Represent a Client?
If you still prefer your current process, you can still use form RC59 to request access to your business clients’ information by telephone or mail.
In some not-news of the day, the Federal Auditor General has found that the federal government takes months — sometimes years — to make decisions, costing Canadians time and money when it comes to resolving tax disputes.
Audits of the Canada Revenue Agency unveiled exceedingly long delays which fall short of public expectations in an era of advanced technology and instant communications. He noted that departments, like the CRA, assess the time it takes to make decisions against their own internal benchmarks, giving little heed to what the taxpayers they serve might consider a timely decision.
The Canada Revenue Agency often leaves taxpayers waiting for months after they file formal objections to their tax assessments. Appeals officers seeking help from other parts of the agency often wait a year or more.
Over the last 10 fiscal years, the inventory of outstanding cases at the CRA grew by 171%, while the number of employees dedicated to resolving them grew by only 14%, the audit found. The backlog of unresolved cases as of March 31 represented more than $18 billion in federal taxes, the audit said.
But the solution here is not necessarily to grow the public service, but rather a review of the internal policies and how the union impacts the employees ability to do their jobs might need to be reviewed and revamped.
I remember when I started working in the CRA and was “advised” that I should be working 7 accounts per day. I can tell you this, when you begin your day at 7:15, and are completed your work by 8:30 there is only so much coffee you can drink per day. I wound up holding several inventories of accounts, and assisting my teammates in order to keep busy.
Eventually, as rules loosened, I was in charger of a collections / compliance team and we were working upwards of 90 accounts per day each which made such a significant dent in the total amounts coming into collections that they disbanded the team.
Our office had to take on work from other tax offices in order to have enough work for each employee and as stay left, took on other positions outside of collections or took leaves they were not replaced. Our tax office at 50% less staff was resolving 400% more accounts…
But like everything else in life, there was a downturn, contracts up for renegotiation, people moved on (like myself) and now the Auditor General reports there are too many accounts which cannot be handled at current staffing levels.
Did you know?
You can see your installment amount in the CRA’s My Account and make your installment payments online.
Even better, you can see your installment amount online!
To see your installment amount online, you need to login to My Account, select “View mail,” and click “Instalment.” If you don’t have My Account, you can register now, I’ve hyperlinked it for you, but understand that the registration process can take weeks.
Also, I do not recommend providing the CRA with Direct Deposit information if you have a tax liability or intend on having one any time soon as they will use that bank source to clean out your bank account… I’m just saying… If I still worked there, I would too.
Back to installments…
Don’t forget: If you signed up for online mail, you may receive an email notification for your instalment reminder from the CRA!
If you fail to make your installment payments you will be penalized by the CRA, as laid out here; http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/ntrst-eng.html.
You will be charged interest if all of the following conditions apply:
- The CRA sends you an instalment reminder in 2016 that shows an amount to pay
- you must pay by instalment in 2016
- you did not make instalment payments, or you made payments that were late or you paid less than what you had to pay
The CRA charges instalment interest on all late or insufficient instalment payments.
Instalment interest is compounded daily at the prescribed interest rate.
How the CRA determines the interest?
- The CRA calculates interest on each instalment payment that you should have paid from the day it was due to your balance due date based on the payment option that results in the least amount of interest.
- The CRA calculates the interest on each instalment you paid for the year starting from the later of the date the payment was made or January 1 up to the balance due date.
Then, they determine the interest you owe by charging the difference between a. and b., if the difference is more than $25.
You may have to pay a penalty if your instalment payments are late or less than the required amount.
The CRA apply this penalty only if your instalment interest charges for 2016 are more than $1,000.
To calculate the penalty, the CRA will determine which of the following amounts is higher:
- $1,000, or
- 25% of the instalment interest that you would have had to pay if you had not made instalment payments for 2016
Then, they subtract the higher amount from your actual instalment interest charges for 2016. Finally, they divide the difference by two and the result is your penalty. Clear as mud, eh?
For 2016, John made instalment payments that were less than he should have paid. As a result, he has $2,500 of actual instalment interest charges for 2016. If John had not made any instalment payments in 2016, his instalment interest charges would have been $3,200. Since 25% of $3,200 is $800, we subtract $1,000 (the higher amount) from $2,500. The difference is $1,500. Then, we divide $1,500 by two. John’s penalty is $750.
Now the good part!
How can you reduce your instalment interest and penalties?
You can reduce or eliminate the interest charges and penalties by overpaying your next instalment payment or by paying it early. By paying early or overpaying, you will earn instalment credit interest. This credit interest is not refundable and can only be used against any interest charges on late payments for the same tax year.
How to Pay:
Choose the electronic payment method that’s right for you:
Online banking – Through your financial institution’s online banking, add the Canada Revenue Agency (CRA) as a payee and look for the “tax instalments” payment option.
Debit card – The CRA’s My Payment service lets you pay with your Visa® Debit or Interac® online debit card through participating financial institutions.
Pre-authorized debit – You can set up a tax payment in advance. You choose the bank account, the amount, and the date or dates of the transaction.
Credit card – You can use a third-party service provider that offers additional payment methods, including credit cards.
Carefully enter your social insurance number as your account number so the CRA can apply your payment to the intended account.
Stay connected with the CRA:
On Twitter – @CanRevAgency.
Subscribe to a CRA electronic mailing list.
Add their RSS feeds to your feed reader.
You can also watch their tax-related videos on YouTube.
I get lots of questions related to Credit Bureaus and items which show up well after they have been paid or which do not belong on there at all.
Having worked for Equifax many, many years ago right after I started working for the CRA and they release all the temporary staff for an 11-month period due to budget cuts, I can proudly say that Equifax makes it very easy to communicate with them regarding any such issues.
It’s all laid out on their website, but I provided a summary here:
Complete and submit a Consumer Credit Report Update Form to Equifax.
It is necessary to specify what information is incorrect or what information does not belong to you.
Equifax will verify that information afterwards as part of their investigation.
You will need to include photocopies of all necessary documents and identification to update your personal Credit Report (Ex: receipts, legal documents, 2 photocopies of pieces of valid identification, including proof of current address)
Fax the request to them at:
Fax: (514) 355-8502
Your request will be processed within 10 to 15 business days. After this period has elapsed, a confirmation letter will be sent to your mailing address.
Equifax Canada Co.
Consumer Relations Department
P.O. Box 190, Station Jean-Talon,
Montreal, Quebec H1S 2Z2
Your request will be processed within 15 to 20 business days . After this period has elapsed, a confirmation letter will be sent to your mailing address.
Equifax will verify the necessary information and mail you a confirmation.
Could it be any easier than that?!?