A Lesson in POWER: How to ALWAYS Level the Playing Field with the CRA.

Power is a funny thing.

Pretty much everyone wants it at some point in their life.

Most of the people who have it do not know how to use it properly.

To be honest, few will ever get it.

The most important thing to know about power is that it is most successful when used in two ways; either by declaring yourself King and having your cronies keep everyone else at bay by whatever means possible, or secondly by taking the time to get key players on your side and using your network to help you maintain power but all along helping those around you learn and grow, and they help everyone else under them do the same.

Which model do you think is most often associated with government tax collections agencies?

Having spent a lot of time working at the Canada Revenue Agency (CRA) in the collections and enforcement division and being responsible for training collections, enforcement and audit staff there I can honestly say not as many staff there who feel you have to do what they say no matter the consequences as you would think.

It is true that there are employees of the CRA who feel that being in a position of power allows them to do things, say things and act in a manner which is improper or unjustified.  There are also staff there who take their positions of power to a whole new level and they let their egos control their decision-making process which means they wield power in order to realize an outcome in their best interest, not yours.

I have seen how power corrupts and the result is never easy to correct.

The CRA has a lot of power.

Throughout my decade of employment at the Canada Revenue Agency I was surprised with how much power the Agency has and how many taxpayers feared this power.  I could hear collection officers tell taxpayers that they could clean out their bank accounts like “this!” (Insert snapping of fingers sound here), which is true, but also not true.  I learned to be subtle in my use of my apparent super-powers and the way I used my power was to visit my clients and by always making sure that when sitting with a taxpayer / representative that my chair was at its highest so that I would be looking down at them.  It was all I needed when dealing with the career tax evaders because it worked, but it was a tactic not necessary when dealing with 99% of the people I met with.

However, we already know that the CRA has a lot of power and in most cases before they use it, they are going to let you know first by phone, letter or a visit to your home or place of employment.  Once the CRA has decided they need to use their powers they are bound by the guidelines set out in the Income Tax Act and Excise Tax Act and by policies and procedures set out in their tax office.  The extent to which they use their powers is either their decision or it is influenced by their team leader or manager.

Once the CRA starts using their powers, your ability to control the outcome diminishes greatly. What you can control, is how much power you will ALLOW the CRA to use against you.

This is done by being proactive – reading notices, asking questions and keeping all your paperwork in one spot where you can access it once it is asked for.  But if you are past that point, or if it is just not possible, then you can take power back by enlisting the help of people who know the CRA policies, procedures and most importantly, their techniques and tactics.

If the CRA knew they were dealing with someone who knew more about their job, more about their techniques and more about how quickly they need to take an action which they claim is urgent, then the playing field is changed forever.

Having someone there to look after your best interests, who will tell you what the best plan of action for you, and you only, then taking that plan to the CRA and telling them the same is the best way to always level the playing field.  Negotiating is always easier when you know more than your opponent.

So please, if you have a tax problem, old or new, and you have been spinning your wheels with the CRA, the IRS, the MRQ, WSIB or the CRTC, don’t let it continue any longer.  Come visit inTAXicating.ca, or send us an email at info@intaxicating.ca and take advantage of our free consultation to leave how to put these issues behind you once and for all.

Have you ever been put in a position where you accepted something which was not in your best interests because the other side had all the power?

Happy to read your comments below.

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Lien on Me: The CRA and Liens. Questions Answered.

When the Canada Revenue Agency (CRA) registers a lien against your home, they are securing their interest by attaching the repayment of their debt to your property.

CDAHQsignage2

The CRA considers a lien to be enforcement action and this tool is commonly applied where there are properties in the name of a taxpayer who has a tax debt.  Collection officers at the CRA should be registering liens, or securing the Crown’s interest, much more frequently then they currently are, and it should be done whenever there is a tax debt of a considerable amount owing.

Below are some answers to common questions about CRA property liens to help you understand what to do, and where to turn for help.

1.  How to tell if there is a lien registered against your property 

A title search on your property will reveal the existence of a lien.

It is CRA policy that they advise you by letter when a Certificate has been registered in Federal Court which identifies the property in question and the balance owing for which they are preparing to register a lien.  This does not mean that a lien has been registered, but this is essentially a warning of impending action.

If, however, the CRA does not have your correct address you will not receive any notices and thus may only discover there’s a lien when you try to sell or refinance your property.  A title search reveals the existence of liens.

2.  When the CRA registers a Certificate do they always then register a lien?

Not necessarily.  The CRA could be using the Certificate in several ways, including; to secure their interest in the property to make sure that before the tax debtors interest in the property is liquidated, the tax debt is paid in full, or in order to get the attention of the property owner so they will begin negotiations with the CRA, or they may have the intention of proceeding with the seizure and sale of the property in order to pay off all or part of a tax liability.

3.  Will the CRA take my house and leave me homeless?

It is CRA policy to not seize and sell a property when it would result in the property owner having nowhere to live.  If this property is an income property or cottage or secondary place to live, then the CRA will likely proceed to realize on the property and pay off their debts.

4.  Have I lost title to my home?

No. A lien is a registration on the title of that property which prevents you from selling or refinancing that property until either the tax debt owing is paid in full, or there is a written arrangement to have the proceeds from a sale or refinancing directed to the CRA for full payment of the debt.

5.  What is a Writ of Fi Fa / Writ of Seizure and Sale?

If a Certificate has been registered in the Federal Court and the tax balance still exists, the Canada Revenue Agency (CRA) will register a Writ of Fi Fa (abbreviation of “fieri facias” which is Latin and means “that you cause to be made”).  It is a writ of execution obtained in legal action which is addressed to the sheriff and commands him to, in this case, seize and sell, the property of the person against whom the judgement has been obtained.

This is a very serious enforcement action and after your property is sold, you are entitled to any proceeds left over after the tax arrears have been paid in full.

6.  What are my options now that a Certificate has been registered and a lien applied to the property?

Even though the CRA has an interest in the property, you can still access the equity and use that equity to make arrangements with the CRA – or the Department of Justice – to refinance the property or even sell it with the understanding that this can only be done in conjunction with the CRA receiving full payment of their tax debt.

7.  What is the CRA’s priority regarding my property should I decide to sell it?

Assuming your mortgage is a traditional mortgage through a recognized financial institution, the proceeds from a sale should fall in this order (depending on the type of tax(es) owing);

1. Financial institution holding the mortgage

2. Secured lenders

3. Canada Revenue Agency

4. Other creditors who have registrations against the property

5. Property owner.

So if you have other debts including a tax liability (and the two tend to go hand-in-hand), then it is possible in this scenario to have nothing left over by the time the property is sold and all debtors are paid off.

8.  What if I owe CRA more than there they get from the sale of my property?

If, after the sale of your property there are still taxes owing to the CRA, them your tax balance is reduced by the amount the CRA is paid and the remainder is still owing to the CRA.

9.  What if I am not the only one on title – ie/ jointly with a spouse?  

In the case where there are more than one person on title in addition to you, it’s important to keep in mind that the CRA can only realize proceeds from your share of the equity in the property.  So if you sell, re-finance or are forced to sell, only your share of the equity can be paid out the CRA. The CRA cannot seize your spouses’, or anyone else’s equity.

Keep in mind that in order to get the Certificate, the CRA has to reconcile the account, determine the share owned by the tax debtor and then use that figure when sending the Sheriff out to seize and sell the property.

10.  The CRA has registered a lien against my property.  Can I sell my interest to someone else and get removed off title?

If a tax debtor initiates a transaction which puts an asset out of reach of the Canada Revenue Agency not at Fair Market Value, the CRA has the ability to initiate a section 160 Non-Arms Length assessment and assess the person(s) who received the asset for your liability (minus consideration received).  

11.  Will bankruptcy free me of a lien?

Filing for bankruptcy, or filing a consumer proposal, does not discharge a lien against your property. If you go bankrupt on your CRA debt, the lien remains and – even worse – accrues interest over time. Even after your discharge from bankruptcy, the lien remains in force, until you eventually sell your home and the CRA’s priority is now second in line after the bank.

If after all that the tax debt is still remaining, then and only then because of the bankruptcy, will the tax debt no longer be owing.

Who Can Help?

The bottom line here is that tax liens can cause serious problems and it’s best to seek our help to resolve your tax issues before it gets that far.  Even if a lien is in place in order to secure the Crown’s interest, it’s best not to ignore the CRA.

We have handled hundreds of liens, and will find the best solution for you.  It might be refinancing your mortgage, paying out the lien, or temporarily lifting the lien in order to improve your arrangement with the CRA.  Whatever the problem, no matter how complex, we have helped and can help.

Initial consultations are always free.

inTAXicating Tax Services.

Visit our website or send us an email at info@intaxicating.ca.

Toronto-based.  Canada-wide.

 

Canada Revenue Agency Offering to Close Dormant GST Accounts

[109/365] Taxation.
Taxation. (Photo credit: kardboard604)

I came across an interesting article on the H&R Block blog site regarding the Canada Revenue Agency (CRA) and their upcoming strategy regarding dormant GST accounts.  The original article can be found right here.  Having spent almost 11-years working for the CRA – almost 2 of those years dedicated to GST, I am very familiar with the problem the CRA faces by having many GST accounts open and unaccounted for.  When the CRA is unsure as to whether the account is open, active and not filing, or open, inactive and never used can often be difficult to determine is the phone number and address on file at the time of registration are no longer applicable.

As many of you are already aware, not filing GST returns is a criminal offence under the Excise Tax Act for which the CRA can, and will prosecute taxpayers.  When the CRA moves to action on these accounts their intention is in their approach so if they suspect the file was opened in error, or can be sure it is not required then they will call, or have a field officer drop by the residence or business to ask about the account.  If, however, they have reason to believe that the account is open and just not-filing, maybe as a result of a telephone conversation, then they approach this completely differently.

In this case, the CRA will begin to collect information for their permanent diary and see how the story differs from the information provided by the taxpayer.  Once they notice a difference, they move in with a Demand to File, which is an indication that they intend to prosecute.

The CRA understand that taxpayers register GST accounts then move and fail to update their address with the CRA (HUGE mistake!) at which point the CRA needs to determine if the account is inactive or a non-filer.  If this is you, or someone you know, it’s best to take care of this right now.

A common example would be this; a taxpayer opened a business which operated as a sole proprietorship (SoleProp) for 18-months until it incorporated.  The new corporation (NewCorp) registered a GST account and began to make its quarterly installments, while the SoleProp no longer had any income attached to it, but instead of closing it, the owner filed nil returns for the next 3-years.

This is an example of an account the CRA would happily close over the phone because the trail is clear and both are current.

Normally, you need to complete a RC145 Form (used to be a GST11)– Request to Close Business Number Program Accounts in order to close your GST account, however under this program, the CRA will close the account if you give them permission over the phone.

Whether the account is closed or not, you still have to file all your outstanding GST/HST returns and pay any amounts owing up until the day your business ends because closing your account does not exempt you from paying any GST owed back to the CRA.  In addition, if you have business assets and shut down the operation, the assets are deemed disposed of at Fair Market Value (FMV) on the day you stopped operating so you will need to calculate the GST on the value of your assets, too.  You will also want to make sure that you capture any bad debts on that final GST return if you have not previously.

If you sell to a purchaser who is a GST registrant and who continues to operate the business, you can jointly file a Form GST44, Election Concerning the Acquisition of a Business or Part of a Business, so the purchaser does not have to collect and you do not have to pay GST.

The important thing to remember about the GST is that once you open an account it remains open until you take action to close it.  If you have a dormant GST account and the CRA is calling you, it will save you time to answer the phone and provide permission to close it.  If you fail to close it and the CRA is unable to get in touch with you, they can enforce collection actions against you and raise director’s liability to hold you personally liable to corporate debts, as well as the previously mentioned criminal prosecution.  Stopping this kind of action can be difficult once the CRA has determined that you are hiding something from them.

Do not wait for the CRA to come collecting their returns or their GST, but if you are already embroiled into a battle with the CRA over notional assessments or GST amounts owing, or worse if you have received a Demand to File notice from the CRA that they are intending to assess you as a director of the corporation and are seeking a due diligence defence, you need professional help right away.

I can help!

Just visit http://www.intaxicating.ca and see how Intaxicating Tax Services can assist you in all your CRA matters.  Passionate about Tax.  Passionate about helping people.

info@intaxicating.ca

Beware of Fraudulent Communications! The CRA Does NOT Randomly Request Personal Information.

Canada Revenue Agency
Canada Revenue Agency (Photo credit: John Bristowe)

The CRA issued a warning, as the periodically have to do, to make sure that citizens are aware of some scams being committed via email, phone and mail whereby someone is pretending to be the CRA and they are asking for personal information such as a credit card number, social insurance number (SIN), bank information or passport information.

As in EVERY other situation, if someone, anyone asks you for this information, you should NOT be providing it.

If the CRA wants to contact you for information they already know all this information and will not be asking you for it.  Even worse is the fact that the fraudsters are arguing that this personal information is needed so that the taxpayer can receive a refund or benefit payment.

Again, the CRA knows this information and if you are eligible for a program or benefit, they will either enroll you in it automatically or they will send you a letter asking you to call the CRA general enquiries line.

Another common scam refers the person to a Web site resembling the CRA’s Web site where the person is asked to verify their identity by entering  personal information.

Again, this is not true.  The CRA website is http://www.cra.gc.ca where the “gc” stands for “government Canada” and the “ca” represents that the website is Canadian.  If the fraudster persists, please hang up and call the general enquiries line to confirm or call the RCMP (details below).

So just to confirm, and this is from the CRA website;

The CRA does not do the following:

  • The CRA will not request personal information of any kind from a taxpayer by email.
  • The CRA will not divulge taxpayer information to another person unless formal authorization is provided by the taxpayer.
  • The CRA will not leave any personal information on an answering machine.

When in doubt, ask yourself the following:

  • Am I expecting additional money from the CRA?
  • Does this sound too good to be true?
  • Is the requester asking for information I would not include with my tax return?
  • Is the requester asking for information I know the CRA already has on file for me?
  • How did the requester get my email address?
  • Am I confident I know who is asking for the information?

The CRA will continue to post notifications of fraudulent communications as they become aware of them and encourages you to check their Web site should you have concerns.

Examples You will find examples of a fraudulent letter, emails, and online refund forms from the CRA’s website in the links provided.  Notice how shoddy and unprofessional the request are.  As per telephone calls, the CRA will occasionally leave messages for taxpayers on their answering machines, including a callback number, and a request for the taxpayer to have their SIN handy when they call, however, it is important to note that not all telephone messages claiming to be from the CRA are genuine.  If you have any doubt and wish to verify the authenticity of a CRA telephone number, agent name, or location. you should contact the CRA directly by using the numbers on our Telephone numbers page.  For business-related calls, contact 1-800-959-5525 and for individual concerns, contact 1-800-959-8281.

If you have responded to a fraudulent communication and have become a victim of fraud, please contact the Royal Canadian Mounted Police’s Canadian Anti-Fraud Centre by email at info@antifraudcentre.ca or call 1-888-495-8501.

Be careful when giving out personal information to anyone regardless of where they claim to work.  The CRA won’t get offended.  They’ll try again a different way if necessary.

The Canada Revenue Agency Informant Leads aka “Snitch” Line

You have come to this blog for more information on the Canada Revenue Agency’s (CRA) Informant Leads or Snitch Line.  Yes, the line does exist and if you are looking for the number in order to use it, that number is 1.866.809.6841.

You may have heard me speak on CFAX1070 about the CRA Snitch line, or possibly you heard my interview on CBC.ca regarding the existence and use of this line.  If you have not, then let me take a moment to clear the air on this line.  The Informant Leads line does exist.  In fact, it has become such a popular tool for finding new collection sources that it’s increased volume of calls can be directly attributed to a reduction in the need for collections staff / auditors and investigators who were responsible for digging up new leads.

It is absolutely not possible for someone to call the line, make up a story and have someone investigated.  Anyone who states that does not know the purpose of this line and obviously has no experience working in the CRA.  To say that is irresponsible and fear mongering.   The CRA will act on leads but there must be some proof provided.  Simply asking for your neighbour to be audited because they drive a nicer car than you is not going to begin years or investigations-hell for them.  If, however, you purchase an item from a retail establishment, and are charged taxes, but you notice that the teller never ran the purchase through the till, then you can be assured that they are pocketing the taxes instead of remitting it to the CRA.  Or, if you notice on the receipt that they have charged you the wrong rate of tax, then you need to notify the CRA.

In one case, while I was working at the CRA, I purchased a large ticket item from a local store only to find out later that the taxes on the bill totaled 28%.  I went back to the store to ask for it to be corrected, only to have them advise me that it was a “US cash register” and that the rate was incorrect.  I took the receipt into the office hoping to launch an internal investigation but was told it would be 6-weeks before they were able to look at it.

So I walked over to a phone beside my desk, called the snitch line, explained the issue and after providing the receipt as proof, found that an investigation was launched the next day and heard through the grapevine that over $200,000.00 was recovered from the company.

That is where the snitch line can be put to good use.

If, however, you hear your neighbour bragging about how much money he makes under the table and he lives way better than you do?  You can call the snitch line.   Or if your ex-spouse is unwilling to file their outstanding tax returns because it would mean they would have to increase child support payments, then you can call the snitch line.  The CRA will take the information, begin with an internal investigation to see if there is merit, then possibly drop by the home or business to get a feel for whether an audit is required or if a net worth assessment is needed.

At the end of the day, the intention of the snitch line is to provide a direct link to the CRA’s Audit department and it assists the CRA as they use these “tips” to recover funds from professional tax avoiders.

Key words the CRA likes to hear includes;

Their names, their address, an amount of unreported income greater than, say $50K, maybe a second set of books, or 2nd property in the name of their cat…

It never hurts to call.

It always hurts to not call.

This line is anonymous and believe it or not, the majority of “tips” come from exes who are left holding the bag while their ex-spouses are living it up.

I figured I would post this since it is the most frequently asked question I get.  Yes a line exists and yes it gets acted on… and fast if the dollar amount to be recovered is high.

I have actual experience seeing this line work and I know for certain of instances where people have called this line in effort to discredit or attack someone and at the end of the day, the CRA  has investigated that person or party and punished them for making a false claim.  Those in glass houses should never throw stones.

Snitch Logo

Coping with Stress in Your Life

Everyone has stress.

I have a few tried and true suggestions aimed at reducing stress and making you more productive at work and at play.  Here they are;

1. Re-prioritize.  If you cannot seem to get everything done and you are constantly beating yourself up about this, then you should face the reality that you cannot do everything.  Don’t just re-prioritize your “to-do” lists (office and home). Re-prioritize your life list.  Make a date with yourself for an hour or two and go somewhere quiet, where you can be alone.

A few tips on re-prioritizing and making lists to live by include;

List what is important to you.
Put these items in order of importance.
Look carefully at your top three. Are these the items that support you financially and emotionally? You have been sabotaging yourself and to successfully stop the self-sabotage, you will have to change the way you have ordered your life up to now. Whenever you need to make a decision concerning the expenditure of your time, look at your life list. Will the activity support those items? If not, do not spend your time on those items. Which leads to the next step…

2.  Get Help. Stop trying to do everything yourself. Start with the most inexpensive thing, which for most people is help around the house.  Get someone to clean, or run errands. If you work in the home, this is really important because you will constantly notice what needs to done and it can distract you.  For your business, hire part-time help to help you with paperwork or tasks that require much of your time. You can hire Virtual Assistants if you are not ready for employees in your office. They can be hired by the hour and can do some of the tasks that you should not be spending your time doing. Virtual Assistants are independent contractors and are skilled in office, bookkeeping and computer work. They work out of their own offices on the computer and phone. Delegate, hire, barter. Do what you need to so that you stop trying to do everything yourself.

3. Be Active.  You cannot sit all day and keep working. It is not good for your body, it is not good for your mind and it is not good for your business. Get some exercise and the easiest way to start is to walk. I urge you to schedule time in your day, each day, for a walk. Often, during our work day we keep going, because we don’t want to lose momentum and we want to get stuff done.

But if you don’t take the time to walk and move your legs, you will not only lose your momentum, you will have used up all your energy and ideas. When you walk, your mind takes in new sights and sounds. It is helpful to let your mind relax into a flow, with no set direction or course. Your subconscious will continue to work on whatever project you are currently involved in, and you will be inspired with new ideas, solutions, and courses of action.
4.  Drink lots of water.  Take the time to drink 6-8 glasses of water per day.  This is quite simple but so important. Keep hydrated to flush out toxins, have healthier looking skin and boost your metabolic rate. Often we mistake thirst for hunger, so drinking enough water can help you control the amount you eat.

Keeping your body hydrated will help every part of your body and mind. You will have fewer headaches, and you will think more clearly. You want the clearest thinking for your business, don’t you?

5. Get more sleep. Adults should have 7-9 hours of sleep a night and if you are not getting enough sleep, everything will suffer. Your business, your personal life, and your health. You do not think creatively when you are tired, and you may make bad decisions. When you don’t get enough sleep, hormones in your body get out of whack. You will actually crave carbohydrates and eat more when you are tired. The foods you crave are usually ones that zap your B vitamins—the ones you need for energy!

The easiest way to start, is to move your bedtime up by 15 minutes. You can create the time to go to bed earlier by turning off the television. PVR your favorite shows. Watch them at a later time. Turn off the computer. Turn off the Blackberry and leave the phone alone. If you have trouble settling down, a hot shower or bath can relax you. A glass of milk or a small bowl of cereal can help.

Create a relaxing atmosphere in your sleep area with soft bedding and quiet. Read a novel or a magazine for a few minutes before you turn the lights out. (Or try tax legislation!)

Remember, as far as work, there will always be more. Leave it.

Go to sleep.

One important note: It is your choice whether you stay in a stressed out, unhealthy state. What do you want? A healthy business and body, or an unhealthy business and body? Think about it.