Canada Revenue Agency (CRA) Lien Questions Answered

There are many questions around writs and liens – each situation can be very different – but there are some commonly asked questions which pop-up when someone realizes that the Canada Revenue Agency (CRA) has registered a lien against their property.

We’re going to try to address and answer the most commonly asked questions right now.

  1. When does a lien have to be dealt with. A:When the property needs to be sold or refinanced. Unfortunately, many Canadians realize that the CRA has actually registered a lien when the property owner is attempting to sell or re-finance their property, which is also the worst time to attempt to get the CRA to work with you.

2. Can I negotiate with the CRA? A: No, the CRA will not / does not negotiate tax debts. You can negotiate a payment arrangement under certain circumstances, and you can “negotiate” penalties and interest by applying to the CRA’s Taxpayer Relief program, but no other negotiations exist outside of bankruptcy.

3. Will the CRA remove a lien if I file for bankruptcy? A: No, liens survive bankruptcy.

4. Once I pay the lien amount, my debts to the CRA are done, finished, over? A: No, actually, the lien amount represents an amount owing in your account at the time the lien was registered. There is still interest accumulating on the debt (possibly other assessments too). Once the lien is resolved, there is the additional amount(s) which must be cleared up.

5. How can I get a lien removed? A: Great question! You can, provided you are doing so for a reason. If you need the lien removed in order to re-finance because that re-financing will result in the CRA getting paid, then you might be able to have the CRA temporarily lift the lien to allow for that transaction to proceed.

6. Can I transfer the property? A: NO, NO, NO!!! This is very dangerous because if you transfer an asset from your name into another person’s name when you have a debt to the CRA, or may have a debt to the CRA, and that transfer is for less than the fair market value, then the person who received that asset can be held liable for your tax debts.

7. Is the CRA going to act on the lien and kick me out of my house? A: No. If there was a lien on a secondary property such as a cottage for example, then the CRA might be prompted to take action and force a sale, but for a principal residence, no they are not.

8. If I leave it long enough, will it go away? A: Unfortunately no, unless you knew something about the way the CRA operates and there were specific criteria which applied to you and your financial situation…

To help support the confusion around this topic, here is an email we received recently regarding a CRA lien. This email contains some common questions, along with some common misinformation.

Hopefully this will help Taxpayers who have liens registered against them by the CRA.

Lien email.

Question: “When the CRA puts a lien on a property, we are advised to contact a lawyer. Why is that? Can we not get written confirmation from the CRA ourselves, that after the lien amount is paid, the lien will be removed within a set period of time?  If they agree to do it, do they just delay anyway or check whether they want anything else from you first?  Is this all true?”

There is a lot here, but let’s break it down into manageable pieces.

When the CRA registers a lien against a property – which is a regular CRA collections technique in order for the CRA to secure their debt – they know what the outcome will be.  As a result, while it might be a huge inconvenience, it’s usually not a concern unless the property is going to be sold, or if it needs to be re-financed.  In that case, the lien needs to be addressed.  Otherwise, the amount the CRA registers the lien for is the amount owing on the day the lien was registered and interest and possibly debt continues to accrue on the account.

The CRA cannot and will not provide confirmation that once a lien is paid that the lien will be removed because there might be additional debts which the CRA is going to need to register a lien for.  They prefer not to put things in writing which could come back to cause them problems collecting tax debts.

If, however, there is a just a tax debt, and the collector registers a lien and that lien is satisfied (paid) – that means the balance was paid in full through re-financing or selling the property.

The major problem that occurs here is that once a tax account is paid, that account is automatically removed from the inventory of accounts that the collector has – often without them knowing. This means they do not have the opportunity to remove the lien from the property and need to be reminded there is a lien in place so they can finish it up, remove the lien and close the account.

Otherwise, it can be very difficult to get a lien removed after the fact because there is no one assigned to it, and no one wants to take responsibility for working an account which is not assigned to them.

So if there is a lien registered and you pay it, make sure to follow up in a timely manner to ensure it’s been taken off.

 

If you, or someone you know has a lien registered on a property that they own and are looking for suggestions, recommendations or solutions to resolve this, then look no further than inTAXicating Tax Services. You can send an email to us at info@intaxicating.ca to get the ball rolling.

Our services will cost you much less than you expected, and your results will be far greater than you could have imagined.

Author: Warren Orlans

Welcome to inTAXicating. My name is Warren Orlans and this is my blog. I have been writing this blog since 2008 to provide clarity around taxation issues which I feel should have been explained somewhere - preferably by the CRA. I have over 20-year's experience in the taxation industry, 11 of them working for the Canada Revenue Agency (CRA), and 5-years working in the private sector Managing the tax departments for large financial institutions. It was at that point when I realized that people were coming to my blog seeking advice, and asking me to assist them with their tax issues, so I opened up my own business and started helping people deal with issues relating to the CRA. 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, inTAXicating is the place you need to contact. inTAXicating works in strategic partnership with amazing tax lawyers, insolvency practitioners, mortgage brokers, debt counselling experts and much more. If you have a tax question, feel free to ask in the comments, or email me at either info@intaxicating.ca, or intaxicatingtaxservices@gmail.com.

Would Love to Hear Your Thoughts

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s