George Nkoke Nnane of Richmond Hill, Ontario, was sentenced in the Superior Court of Justice in Toronto to 4-years in jail for filing fraudulent tax returns, the CRA has reported.
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.
Commonly asked questions:
- 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 refinance 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 refinance 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 out of my name / remove myself from title? 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 clear up some of 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 example will help Taxpayers who have liens registered against them by the CRA.
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?”
Answer: 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.
Lien / Writ / Certificate Help
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.
We can be reached via email at firstname.lastname@example.org, 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.
For those of you who have attempted to connect with me through my website, inTAXicating.ca, you may have noticed that it was down for a period of time… I had changed web-hosts and at some point in time, the new host changed routing and didn’t notify me, so the site and email went down.
Apparently, while all of these website issues were finally resolved, the email issues have been partially resolved. Some of the older emails were retrieved, whereas some may be gone forever.
As I try to get through the backlog of emails, and phone calls, I ask that if you have tried to contact me in the past month to month and a half, and if you have not heard back, or if we started correspondence and that abruptly ceased – and you still need assistance – to please reach out again via email (email@example.com).
Thank you for your patience.
As a back-up, I have also begun using this gmail account: firstname.lastname@example.org.
If you have a tax question, need some assistance with a tax problem or want to hire me to assist with a tax diagnosis or write a Taxpayer Relief letter, please contact me. If you would like to have me speak to a group, or conduct any media interviews, please mention in the subject line that the email is urgent.
Thank you for your understanding and patience.
Are you on the Canada Revenue Agencies radar? How about on the CRA’s Audit Radar? Have you been “flagged”?
Have you ever wondered how the Canada Revenue Agency (CRA) decides who to audit? Are there red flags? Or does the CRA know how you operate your business which makes you more or less likely to be audited?
Here is the answer that you might be looking for;
The CRA knows who Cheats on their Taxes!
Do you fit their profile?
Are you at risk?
First, some background.
While I was still working at the Canada Revenue Agency (CRA), we released the results of a study that was put together to profile what kind of person poses the most risk for the CRA’s collections and audit groups.
The CRA spent a lot of time going through the main accounts; personal tax, payroll, GST/HST, and Corporate Tax, and we looked at who filed on time, who filed late (and how late they filed), and who was regularly compliant, and who needed a follow up verification audit, and what the result of those audits were.
This study focused on Tax Compliance, specifically;
- Percentage of Taxpayers who accurately reported income and expenses (95%)
- Percentage of Taxpayers who file on time (93%)
- Percentage of Taxpayers who made payments on time with their filing (91%).
When it comes to reporting compliance or honestly reporting all your income and/or expenses, this study found that males are more likely to underreport their tax owing than females.
The study also found that underreporting is highest among taxpayers aged 35 to 54 and lowest among taxpayers under 35.
Underreporting of tax was also lowest for taxpayers who are married and highest for those who are separated, with single taxpayers somewhere in between.
Not surprisingly, underreporting of tax is higher among taxpayers whose main source of income is either capital gains or self-employment income versus taxpayers whose main source of income is wages, where most of the tax is withheld at source by the employer.
So who is on the CRA’s radar?
The prime candidates for the CRA to audit, or perform a desk review of expenses, are the separated or divorced males between the ages of 35-54 years old.
Do you fall into that category?
If so, know that the CRA is keeping one eye on you and the other on what you report and when it is reported.
Contact us at inTAXicating, and let us help you ensure that you remain compliant, and ensure that you have the knowledge necessary to organize your records so that you can quickly and easily get through a CRA audit.
Here is an example of a case where the CRA used the criteria identified earlier to quickly descend on a taxpayer who fell behind in his filing and remitting duties.
Case: Tax Cheat? Or Disorganized Business Owner?
I was approached by a business owner who ran very loosely with his books and records. He kept a box of receipts and while most of the business receipts made the box, many got lost along the way. Additionally, this business owner charged business expenses on his personal credit card, and personal expenses on his business card. He travelled quite a lot for work, and he posted a lot of content on social media, but he failed to keep a thorough and accurate log documenting his personal versus business travel.
Additionally, because he was always on the go, had no time to review the details of the tax side of his business. He had money in his business bank account, then he knew he was earning money. At year-end, he would bring his half-completed records and his shoebox to his accountant for the preparation of his returns.
In June he would receive a refund.
A series of events, however, changed his life forever.
- His accountant began to get busy
- As a result, he was late getting payroll figures, and was late making the payroll remittance
- Then the GST/HST numbers were delayed, so that filing was late
- His personal tax filings were delayed
- His business tax filing was delayed.
- His business made money.
- While all of this was going on – he continued to send his info to the CA, and pay the CA’s invoices. He would get the odd notice from the CRA and send it to his accountant to “take care of”.
This is very typical and a common occurence.
What he didn’t know was that everything was not okay.
One day a CRA field officer showed up to discuss his non-compliance and to arrange a payroll audit because the company was 6-months behind on remittances. There was also a balance owing to the CRA of over $35,000.
Shocked, he contacted his CA who said that she would look into it, that it was going to take some time and she felt the CRA was completely wrong.
Convinced that the accountant was right, the business owner went back to work, and the accountant was going to find the error and fix the problem.
Only problem that he didn’t know was that there was no “error”. The balance owing to the CRA was legitimate. By filing late over that 6-month period, the accountant had amassed a significant balance due to late filing penalties and the balance was jumping by leaps and bounds as a result of the 10% interest the CRA charges on outstanding balances (compounding daily).
Then one day he received a call from one of his main suppliers who was concenred because not only did he cheque bounce, but there was a CRA officer there earlier in the day asking questions.
He contacted his accountant.
She appeared stunned and said that she would call the CRA and fix it.
She was just buying time.
A week later, the garnishment was still on the account, interest was accruing, and the accountant was telling stories of the CRA being unfair, and mean, and not listening or returning calls.
Frustrated and panicked that he might have to close his business without a bank account, he contacted his CA and asked for his books and records.
She refused. Realizing that this was the end of the relationship with her client, she told him that she had done a lot of work with the CRA and she demanded payment before she would give up his information.
He refused to pay – how could he? He had no access to his bank account and the CRA had taken all of his funds.
In fact, it took him 8-months and a small claims court date for this process to resolve itself. She took him to court for unpaid work, and thankfully, the judge was wise to this CA and her practices and awarded the client his books and records in return for payment of the work actually completed, not the entire invoice.
The damage was done. The business was also close to being done.
The CRA doesn’t care about the reasons why someone becomes non-compliant – they look at the business, the owner, and then set their course to fix it.
The fact that this business owner fit the category did not help him at all, as the CRA quickly and aggressively went after every asset that he had, raised assessments for the missing payroll and GST/HST figures, and sent Requirements to Pay to his business bank account, contacted his receivables (clients) and quickly moved to raise director’s liability so they could go after his personal assets.
Running a business is difficult.
Running a business without a business bank account is also difficult.
Running a business without a bank account, after the CRA notified your clients that you owe considerable amounts of tax money is next to impossible.
What killed this business was a combination of bad accounting, bad advice, lies, deception and some really bad luck.
The reality is that many, many businesses and individuals have this experience on a daily basis. It is next to impossible for the CRA to determine if the information being told to them is legitimate or a made up story – but when the owner of the business is a perfect fit for commiting tax fraud – the CRA takes notice.
Could this have been fixed? Of course.
If you owe money to the CRA, or if you have fallen behind on compliance, or if you suspect that your tax advisor is giving you bad advice, contact us now. At inTAXicating, we’ll look at the facts, and help you run your business while we work on solving the problem.
Visit our website @ www.intaxicating.ca.
Send us an email to: Info@intaxicating.ca
A former Canada Revenue Agency (CRA) auditor and his wife were found not guilty of fraud when a judge rules that the CRA failed to prove that the fraud was intentional.
This is significant, folks!
The original article can be found here;
What I truly hope is that this ruling provides the CRA with a much clearer understanding that there are actually some Taxpayers and businesses (and even former employees) who might not fully understand the CRA’s rules and regulations and their application, and that there exists a chance that people make mistakes.
I’m not saying in this case that there was a mistake – and I don;t believe that the judge was saying that either, but what was very clear from this ruling is that the for the CRA to win a case they need proof and facts.
The CRA obviously will be appealing this decision.
My experience in the CRA has afforded me this insight which I happily pass along to each of you who read this… It’s okay to make mistakes. We all do. The CRA does not expect each and every Canadian Taxpayer to be tax experts, but where the CRA has zero tolerance is where Taxpayers try to circumvent the rules and do so knowingly. At that point, you can’t claim you didn’t know the rules. You’ll be no mercy from the Crown at that point in time.
As well, there are many, many, many opportunities to resolve the tax issues before having to bear the expenses of going to tax court! This ruling was the first of it’s kind, and considering how many people want to sue the CRA or take the CRA to court, it makes you wonder who is advising them, and who is paying their bills!
To understand where you stand and what your options are, you can start by contacting inTAXicating Tax Services, at http://www.intaxicating.ca, and start dealing with you tax issues with the facts.
This is one of the most commonly asked questions of me: How do I know if what I read on the Internet regarding debt to the Canada Revenue Agency (CRA) is true or not?
The answer is quite clear, however, complicated at the same time.
If you owe money to the CRA and you are looking for options, suggestions, or tips on the Internet, you have to pay special attention to the “Solution” options which are advertised as if they are providing legitimate advice.
The most important thing to do is to take note of the terminology used in these ads – over and over again – because the intention of these ads and blog posts are not to help you but to achieve a high SEO (search engine optimization) ranking. These posts are written to capitalize on the number of eyes who will read that post because of the way it was written, not because it was intended to provide help to you.
Here is an example of a fear mongering ad, disguised as an article on taxes, meant to “help” you. I am paraphrasing the content, but the example should provide a clear clue as to the true intention of the poster.
Title: Understanding Canada Revenue Agency (CRA) Tax Assessment & Arbitrary Assessments
The sample post: CRA tax assessment is when the Canada Revenue Agency conducts a review of your income taxes. The most common form of CRA tax assessment is the Notice of Assessment that is sent once the CRA has conducted a preliminary review of your tax return. There is another CRA assessment known as “arbitrary assessments.” These assessments are also known as “notational assessments.” What this means is that, if you have not filed your taxes on time, the CRA could decide to complete and file your return for you.
Many people believe that, if you do not file your taxes, that the CRA will wait until you do file your taxes and then the CRA will penalize you by changing you penalties, fines, and interest.
This is not always true.
The CRA is able to choose to complete an arbitrary assessment in which the Canada Revenue Agency will estimate your income and the tax debt that you owe and then the CRA will charge interest on this debt as required.
The amount of tax debt that comes from a CRA arbitrary assessment will not be as favourable to you as it would be if you completed your return yourself.
The CRA will use previous income tax statements to complete your return and will not take steps to include expenses or deductions or attempt to give you any tax breaks.
In many cases, the amount owing listed by the CRA will be very high and additional charges, penalties and interest will be charged since the assessment was late.
You will then be subject to CRA collection efforts such as a wage garnishment of up to 100% of your income, or the CRA will empty your bank account and then freeze it so you cannot use it. They could also put a lien on your house and if you don’t pay them, sell it and keep the proceeds.
What do you do if you Receive a Notational Assessment?
If you receive an arbitrary CRA tax assessment, your options are;
- Pay the amount listed
- File an appeal of the assessment.
- You can also choose to file a return yourself at this point in an attempt to reduce your tax bill, but, this will trigger a CRA audit to ensure that your tax return is filed correctly.
In addition, if the CRA does not have the information it needs in order to complete an arbitrary assessment, it can take you to court where the court can order that you complete the return and pay a court fine.
If you ignore this court order, you could be subject to contempt of court charges and go to jail.
As you can see, your best option is to contact us, and we will help solve this problem. We have an army of former CRA staff at our disposal who deal with hundreds of these daily.
Let us help keep you out of jail and away from the prying eyes of the CRA.
After reading this, if you were not afraid of the CRA, you must be by now. This blog post started out trying to get people looking for CRA tax solutions and slowly wound its way through a series of lies and mis-truths and took the reader straight to audit and jail. It just stopped short of proclaiming that King Tax Man was going to descend from the clouds and throw tennis sized hail-balls at you.
This type of article is not good. It’s not accurate, heck, some of it is not even true. But how would you know?
What are the red flags that you should notice?
Let’s break down this article and address some of the “facts”.
First paragraph – mentions of CRA, or Canada Revenue Agency – 5 times. This is their SEO target, clearly.
I was also alarmed that the writer was unable (or unwilling) to state what a Notice of Assessment (NOA) is, and how the CRA actually issues them. To set the record straight, a Notice of Assessment is the computer generated form which is issued once a change occurs on someone’s tax account. This NOA carries with it a legal warning from which the CRA are able to take collections actions.
An additional lie occurred when the author stated that your tax return is looked over once it is filed. In truth, no one has reviewed your tax return. The data entry group take the paper-filed returns and just enter the information in the system. Electronically filed tax returns are run through a program aimed at identifying any obvious errors or inaccurate deductions taken.
There is the idd case where the CRA will flag and wait for your tax return, however try not filing for 20-years and being under audit regularly, and then you can get to that level.
Canada’s tax system is a self-reporting system so the information is accepted as filed, and the Audit, or Verification department are responsible for checking the information to make sure it is correct after the fact.
Another HUGE issue, is that there is a significant difference between an arbitrary assessment and a notional assessment.
Arbitrary assessments are issued for personal (T1) taxes and occur when the CRA’s non-filer group, or a CRA collector takes information on your personal tax account for that current year, plus previous years and prepare the unfiled tax return for you, less deductions.
In many cases, they are pretty accurate.
A notional assessment is specific to GST/HST and in these cases the non-filer unit or the collections unit will assess an amount owing for each period outstanding based on a suggested amount the system provides. That suggested amount is a combination of the previous filings, and the industry or SIC code that is associated to your file.
In both cases, returns can be filed and the assessments removed, however, Notices of Objection should be attached just to provide recourse should the filings not be accepted.
Filing the missing returns does not trigger an audit.
The whole piece about the CRA taking you to court, etc., makes absolutely no sense as it’s not even true. Arbs and Notionals are based on information in the CRA’s systems. If the CRA doesn’t have information, they can still raise an assessment.
I suspect the writer was just trying to close out the reasons for using them by tieing in the jail / court fine, for not complying. It’s not true at all, but it makes for a compelling story!
If the intention of the article was to really assist Taxpayers and let each and every Canadian decide if they want to pay for assistance / expertise, then all they had to do was discuss prosecution which is what the CRA can and will do if repeated attempts to file have been issued from the CRA (Demand to File) and have not produced the returns.
Maybe they didn’t know that existed…
Maybe they were not aware that failing to file is a criminal offense, if the CRA asks for the returns and they are not provided.
Certainly, they did not want you to know that failing to pay is not.
If someone looked at the above post, they would panic, contact this firm, and likely be convinced to pay a lot of money for something they could likely do themselves because they don’t want to make it worse, or go to jail.
It’s hard to get the truth out there when there are people and firms distorting the facts in order to make a profit off of taxpayers lack of understanding of how the CRA works.
Additionally, if they intentionally muddled the facts in this post to scare you into using their services, what other information have they creatively adjusted?
Or, if they believe this to be the truth, then they just don’t have the experience or expertise to know better, and do you really want to use them to represent you in dealings with the CRA?
I questioned the author in an online social media forum. I said, “I’ve always understood that an arbitrary assessment was specific to T1 returns and that they were actually quite accurate because most of the information used is already posted to your T1 account, whereas a notional assessment was specific to GST/HST and those figures were based on the industry or SIC code. Can you confirm this is your understanding as well?”
He never responded…
When you have CRA tax collections problems then you need the expertise of the firm with an actual former CRA tax collector. inTAXicating Tax Services.
Visit us at http://www.inTAXicating.ca
Do you owe money to the CRA? Are you in Collections? Do you have CRA debt? Are you looking to make an installment payment, or a payroll remittance? How about a GST/HST payment or remittance?
If any of these apply to you, then you need to know how to make a payment to the to the Canada Revenue Agency (CRA).
If you have to make a payment to the Canada Revenue Agency (CRA) for either tax arrears or with a filed return, or as a remittance / installment, you have no excuses! You can use any of the following options:
- Your financial institution’s telephone or online banking service
- The CRA’s pre-authorized debit service offered through My Account, which lets you:
- set up a payment from your bank account to the CRA on a pre-set date
- pay an overdue amount or make instalment payments
- The CRA’s My Payment service, which lets you make payments online. You can use this service if you have Visa®Debit, Debit MasterCard® or Interac®
- Online at a participating financial institution
- Through a third-party service provider which offers payment by credit card or PayPal.
- In person at any Canada Post outlet using cash or debit card.
What if you cannot pay in full, or if the CRA is all over you and you want to make a payment but don’t want them immediately sending a Requirement to Pay to your bank account and freezing it?
If you owe money to the CRA but are unable to pay the full amount now, or if you need the CRA to work with you and set up a payment arrangement – to make smaller payments over time until you have paid your full debt (including penalties and interest), you should contact inTAXicating Tax Services through our website www.intaxicating.ca to schedule a meeting.
Aside from helping you make that payment, and avoid the garnishment, we can also assist with a wide variety of tax matters.
We can also assist with the potential cancelling, waiving or reducing the amount of penalties and / or interest you owe through the CRA’s Taxpayer Relief Program. Results are never guaranteed, however, you stand a 0% chance of having the penalties and / or interest reduced or waived entirely if you do not apply.