Insolvent or in Tax Trouble? Don’t Let the CRA Decide.

Insolvent or Tax Troubles?  Don’t Let the CRA Decide!

In my experiences which includes almost 11-years working in the Canada Revenue Agency (CRA), you should never allow the CRA to decide whether you can fix your tax problems or whether you should go bankrupt.

From the stand-point of a CRA Collections officer, going bankrupt is great because it removes the account from their inventory of accounts to collect / resolve.

Your file disappears from their inventory and re-appears in the CRA’s Insolvency Unit inventory.

From the perspective of the Collections Department, it’s case closed!

 

There are 3 ways a CRA Collections Office resolves one of their accounts;

1) Collect it / fix the compliance issue(s)

2) Write it off because they cannot collect it

3) Move the account to the Insolvency unit

 

Go Bankrupt!

The CRA’s Collections Officers are not allowed to tell you to go bankrupt. In fact, they are taught in their training that they are not allowed to do that, and that sentiment is reinforced at all future training they attend.  As someone who trained CRA Collections staff for 5-years, I can confirm this fact.

Collections staff are not allowed to even suggest that you go bankrupt.  They might confirm it, but that’s all they can do.

What CRA Collections can do, however, when they feel you are insolvent, is to force you into bankruptcy via their collection actions, which include but are not limited to;

  1. Bank garnishment
  2. Wage garnishment
  3. Lien on a property
  4. Enhanced garnishment to accounts receivables (in the case of a business)

All the while, why applying these garnishments, the CRA refuses to release the hold on the accounts.

They freeze every source of income that you might have and you are faced with the decision to come up with the funds to pay them, or file for a proposal or an assignment in bankruptcy.

In some cases, a bankruptcy is unavoidable and the right solution, but not in every case, which is why I strongly recommend speaking to someone who is looking after your interests first and foremost.

There are tax-related companies who are fronts for insolvency firms, so they might appear  to want to help you, but they want you to file for bankruptcy, and there are other tax-service firms which gather your information and they unable or unwilling to help you, pass you along to a trustee.

You don’t want or need either of those.

You need a tax firm which has the experience in CRA’s collections, and who have the relationships with not only Insolvency firms, but mortgage brokers, reputable accountants and investment professionals so that you’re options are laid out for you to decide the best option.

Not the CRA.

In order to resolve your tax issues you need to disclose the details so your options can be determined, and you need your tax help to do the same.

Ask your tax-help the following questions;

  1. Are you committed to finding me a tax-solution first.
  2. If that solution is not going to be accepted by the CRA, what other options do you feel would work.

Don’t be weary if a firm wants to charge you a small fee to diagnose and plan out your solution.

You should be weary if they want to charge you a significant amount of money to diagnose it  and not give you a plan.  If they want to keep the plan a secret, and not educate you along the way, it’s because there is no plan.

Likely their solution it to drag you along the process knowing that the CRA will come along and lower the boom and then suggest to you that your only option is to conveniently have them file bankruptcy for you.

Don’t ask the CRA if you should go bankrupt.  You might not like the answer.

If you owe money to the CRA and you’re not sure if the debt is a tax matter which can be resolved, or if bankruptcy or a proposal are better options, just ask!  Send an email to info@intaxicating.ca and let’s talk!  We’re here for you.

Corporate Casualties in 2010

With thanks to Yahoo Finance and our friends at http://www.urbandaddy,wordpress.com, for the inspiration, here are the biggest corporate casualties of 2010.

When you look at the list, some will come as no surprise to you and the rest may be interesting. Odds are those you have not heard of, are bankrupt for a reason. However, a bunch of them are automobile lines as a result of this thing called a recession:

Here is the list that meant something to me. If I missed some, please let me know.

A&P. This grocery chain declared bankruptcy in December.

American Media. The publisher of such gossip rags as the Star and National Enquirer, saw a huge hit resulting from the prevelance and quickeness of information in the Internet (Hello, TMZ.com). By November 2010, American Media had a debt load seven times the value of the company, which drove it into bankruptcy.

Blockbuster. This movie-rental chain failed to notice the future happening all around it. While Blockbuster was doubling down on retail stores and dunning its customers with loathsome late fees, Netflix wooed millions of movie fans by mailing them DVDs and offering streaming video over the Web, and Redbox set up convenient kiosks offering overnight movies for a buck. No wonder Blockbuster declared bankruptcy in September.

Hummer. Cool in the early 2000s, 2008 saw the beggining of the end for this brand when oil-prices began to spike. Hummers were looked upon as evil, and the end came after parent firm General Motors declared bankruptcy in 2009.

Metro-Goldwyn-Mayer (MGM). This studio’s archives include classics like The Wizard of Oz, Dr. Zhivago, and Rocky, but a dearth of recent hits–plus debt piled on when a group of private investors bought the studio in 2005–led to a much-anticipated bankruptcy filing in November. MGM should be back on its feet by early 2011.

Mercury. Parent company Ford Motor has turned itself around and become nicely profitable, but it’s not bringing the middling Mercury brand along with it. The aging Mercury got sandwiched between the mainstream Ford lineup and the Lincoln luxury division, with Ford deciding two nameplates was enough. Since most Mercury models were glorified Fords anyway, few car buffs will miss it, but my wife misses her Cougar.

Movie Gallery, which ran Hollywood Video and was once the 2nd largest video-rental chain in the US, first filed for Chapter 11 protection in 2008, then filed again in February 2010 when its restructuring plan failed to gain traction, resulting in all 2400 US outlets being closed and 19,000 workers being laid off.

Newsweek. The Washington Post, which had long owned Newsweek–and lost millions on it in recent years–sold the title to 91-year-old billionaire Sidney Harman. for $1.00 in August.

Oriental Trading Company, declared bankruptcy in August, after writing off more than $400 million in debt.

Pontiac. It was once one of GM’s marquis divisions, with must-have muscle cars like the GTO and the Trans Am. But GM could never revive Pontiac’s faded glory, and when the automaker was forced to shrink following its 2009 bankruptcy, Pontiac got the boot.

Saturn, a newer GM division, and my first car, closed as well.

Yellow Pages. Is anyone surprised by this? I have 2 of them holding up my monitor, and I use http://www.Canada411.ca to look up phone numbers.