Taxpayers Ombudsperson to Examine CRA Legal Warning Process

The Taxpayers’ Ombudsperson, Sherra Profit has announced that the Office of the Taxpayers’ Ombudsperson (OTO) will be undertaking an examination into the systemic issue of the Canada Revenue Agency’s (CRA’s) practices regarding providing legal warnings to taxpayers when collecting unpaid taxes.

Obviously, the OTO have received many complaints alleging that staff at the CRA have been taking legal actions – freezing and seizing funds from bank accounts, garnishing wages, taking refunds – without notifying taxpayers first, or without working to make a payment arrangement first.

Oh oh.

Apparently, the purpose of this exercise is to allow for the Ombudsperson to identify the current process the CRA uses in order to take legal actions, specifically to see if the notice being given is “sufficient”.

Additionally, there will also be a review of whether the CRA clearly identifies their entire collection process on their website.

Is it clear enough for the average Taxpayer to understand not to carry a balance with the CRA?

After the examination, the Taxpayers’ Ombudsperson will make her findings public in a report.

For those of you not familiar with the Office of the Taxpayers’ Ombudsperson (OTO), they “work to enhance the Canada Revenue Agency’s (CRA) accountability in its service to, and treatment of, taxpayers through independent and impartial reviews of service-related complaints and systemic issues”.

The website can be found here; https://www.canada.ca/en/taxpayers-ombudsman.html

The OTO wants to initiate systemic examinations when complaints or questions are raised about a service issue that may impact a large number of taxpayers or a segment of the population, in order to keep on top of the pulse of Taxation and the CRA here in Canada.

Recommendations arising from these examinations are aimed at improving the service provided to taxpayers by the CRA.

Quotes
“While the CRA’s collections practices and collections officers’ behaviours are some of the most common complaints received in my office, we have received more specific complaints about the legal warnings aspect.  CRA collections officers generally try to work out an acceptable payment arrangement that will allow taxpayers to avoid undue financial hardship. Taxpayers who contacted my office indicated they were taken by surprise, and said they have faced financial hardship and stress because of the lack of notice prior to CRA taking legal action.”

Sherra Profit
Taxpayers’ Ombudsman

Well…

Let me tell you, Office of the Ombudsperson, that there are 3 important pieces to the puzzle that you do not know about or have overlooked;

  1. The issuance of the Notice of Assessment (NOA) comes with legal warning built right into the notice.  As the CRA’s collectors will tell you over and over again, the CRA is not a bank and thus, by issuing the NOA the CRA is demanding payment in full.  If, for whatever reason, a taxpayer cannot make payment in full, they are expected to contact the CRA and let them know.
  2. Recent attempts by the CRA to lower their workloads resulted in the creation of New Intake inventories where by the collectors were advised and trained to take immediate legal action against a taxpayer once the 90 days grace period granted upon the issuing of a Notice of Assessment has passed.  Day 91 = legal action.
  3. Trust accounts, situations where trust funds are due to the CRA as due right away and no collection restriction applies, ie/ jeopardy.

The answer here might include spelling out information on the CRA website a touch more clearly, and it should include having it in a few more places, maybe flashing and more noticeable because to educate and inform each and every Canadian Taxpayer all the time so everyone knows, just is not feasible.

Personal experience working at the CRA has afforded me a much different view of the CRA’s legal warning procedures and when I compare how I handled files to how others did, I get it… There are issues.

I cannot tell you the number of times I gave verbal legal warning, followed that up with written legal warning, then followed that up with another call and then upon freezing a bank account, got that call of surprise and shock.

However, I do know of a few others who froze bank accounts and instead of sending the legal document to freeze the account to the bank and the Taxpayer on the same day, held on to the Taxpayer’s copy for an extra day or 2 in order to prevent the Taxpayer from getting the notice first and emptying his / her bank account.

It’s not as clear as one might want it to be…

OTO… You’re going to be so disappointed with what you find, but you need to understand before you try to make the CRA A kindler and gentler place that everything is already in place, policy and procedurally, to do just that.

It could just be that people who are not informed do not feel they have a person or place to ask questions without fear of reprisal!

 

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Author: Warren Orlans

Welcome to the blog for Intaxicating Tax Services, www.intaxicating.ca. My name is Warren Orlans and I am the owner of inTAXicating Tax Services. With over 17-years experience in the taxation industry, 11 of them working for the Canada Revenue Agency (CRA), and the rest working in the private sector at large financial institutions responsible for resolving tax issues for corporations and individuals and the Canadian lead for a large US bank on FATCA implementation. My tax career began pretty much out of university at the CRA, in Collections, where I moved up, across, over and up again through their division with stops in Enforcement, Taxpayer Relief (then Fairness), Audit, Directors Liability, Training, Mentoring, GST, GST/HST, Payroll, Corporate Tax, Personal tax, and probably much more. If you have a collections, compliance or audit issue with the CRA, MRQ, IRS or with the CRTC, WSIB or any aspect of those agencies, inTAXicating is the place you need to contact. inTAXicating Tax Services has strategic partnerships which allows my team to include amazing tax lawyers, insolvency practitioners, mortgage brokers, debt counselling experts and much more. When dealing with governments, knowledge is power. We possess strong understanding of government so we know what the next step is before the government does. When you have a collections problem with the CRA, do you hire a graphic artist? No, you get a former collector who trained the staff, and who worked as a resource officer for 5 years. Then you know you are on the right track to resolving your tax problem(s). Others offer suggestions. We offer solutions! info@intaxicating.ca

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