This blog is written by a former Canada Revenue Agency (CRA) Employee of the Year who worked in, managed and trained CRA's Collections Department staff for almost 11-years. inTAXicating provides information, support and solutions for everything CRA related, including but not limited to; Collections, Enforcement, Audits, Liens, Back-Filing, Assessments, Director's Liability, s160 Assessments, Taxpayer Relief, Voluntary Disclosure, Bankruptcies, Proposals, Mortgages and diagnosing and solving the most complex of tax problems. Contact us for a free consultation! Should you need to hire us, you will find us to be Experienced, Honest and On Your Side. Email us at firstname.lastname@example.org, and let's begin solving your tax problems together!
If you live in Southern Ontario, you are in the middle of a heat wave. Summer came back bigger, badder, stronger than it had all summer, and with humidex readings in the low 40’s, all the talk is about cooling off and extending the cottage season.
And there is nothing wrong with it.
But as the calendar creeps towards October, we enter the last quarter of the year and this is traditionally the best time of year to finally seek resolution on that nagging Canada Revenue Agency (CRA) tax problem.
The tax problem that causes you so much stress that you cannot open the brown envelopes from the CRA.
The tax problem which resulted in the CRA freezing your bank account or garnishing your wages.
That nagging tax issue which prompted the CRA to register a lien against your property.
The one that prevents you from having a full night’s sleep.
Yes, that one.
Well worry no more because help is here.
No matter how big, or small, complex or simple, we have seen them all, and resolved them all. At the very least, after a meeting with us, you will understand the truth behind your tax problem – whether you have a chance of having it overturned or whether you actually are on the hook for the balance.
After a meeting with us, you can finally start on the pathway to resolving your tax troubles and no longer worry that when you try to use your debit card it might not work because the CRA froze your bank account and withdrew all of the funds.
I came across this article from the Montreal Gazette;
I strongly recommend that you take the time to read it. It is brief, but very informative as it tells the story that I have been trying to tell for the past 20-plus years! There is that there is a significant percentage of, not just Quebecers, but Canadians who leaving money on the table because they don’t understand the tax system, according to a report released by the C.D. Howe Institute last week.
The report — which bases many of its conclusions on a survey of 1,000 Quebecers — suggests that lack of knowledge is one of the reasons many people don’t take advantage of credits and savings vehicles, like RRSPs, which could reduce their tax burden.
“People might be missing out on benefits that they’re entitled to,” said Antoine Genest-Grégoire, a tax policy researcher at the Université de Sherbrooke and one of the authors of the report.
“It can take various forms, people can simply not know about the existence of the credit … sometimes, they know it exists but they don’t know how to use it or they find it too complicated.”
Survey participants were asked a series of questions about how the tax system works and the average score was just 55%.
It wasn’t just tax credits that left participants stumped. Respondents scored poorly on questions about progressivity — the idea that people with higher incomes pay a higher tax rate, a core principle of the Canadian income tax system.
While almost 90% of respondents knew that income tax rates differ based on how much people make, many struggled with the concept of bracketing — when different segments of an individual’s income are taxed at different rates.
“We hear a lot of people thinking that once you reach the top income brackets, you essentially pay close to 50% of your income in taxes,” Genest-Grégoire says, when in reality, it’s only the income above the cut-off for the highest tax bracket that’s taxed at the highest tax rate.
Only 26% of survey respondents were able to answer a question about that correctly.
While survey respondents generally had a good sense of whether they pay sales tax on everyday purchases, like groceries, prepared food and clothing, there were some exceptions.
For example, Quebec provincial sales tax doesn’t apply to books, a decision made to encourage literacy and support book publishers in the province. Only 21% of survey respondents knew that.
The result, Genest-Grégoire said, is that the public policy objectives of the tax exemption are unlikely to be realized.
The lack of tax literacy doesn’t just affect individuals pocketbooks, Genest-Grégoire said.
“People who don’t understand taxes tend to have lower trust in the tax system. The Canadian tax system, even though you’re obligated by law to produce a tax return, works on trust. The government doesn’t audit everyone,” he said. This lack of trust “makes tax avoidance, tax evasion more probable.”
Genest-Grégoire said the provincial and federal revenue agencies have taken steps to put more information online, but the system itself remains complex. One solution would be to make benefits that are currently provided through the tax system more accessible and for government to automatically enrol people, as is already the case with many benefits for children.
Warren Orlans, a former CRA Collections Employee turned Taxpayer Advocate has been saying for over a decade that the CRA needs to continue putting out information on the Internet, however it needs to be available in many different formats in order to be most effectively accessed by Canadians everywhere. “Not everyone learns the same way, so having a concept explained in text, showing steps, and possibly with an example and even with little videos would expose the greatest number of Canadians to the message at once.”
“Every day, I deal with Canadian taxpayers and corporations of all sizes as they try to understand and interpret the CRA. My 11-year’s experience at the CRA and 10-years outside the CRA have afforded me the ability to diagnose and resolve even the most complex of tax matters”, Orlans said.
If you need help understanding the CRA, or interpreting their letters or actions, contact the best, at inTAXicating. Email: info@inTAXicating.ca. Or call us at 416.833.1581.
Happy Canada Day, Canada. You don’t look a day over 150-years-old!
There are so many things to be thankful of this Canada Day, beginning with Tim Horton’s and hockey and ending with socialized medicine and peace. But in between there is a whole lot of taxation. Taxes you pay which go to build new arenas, which pay for medicine, which support the troops who keep us safe, and fund programs which integrates youth of all backgrounds, races, religions and income levels together in order to keep violence as low as possible.
These are the taxes we cannot avoid paying – unless we stop spending – and they are the consumption taxes (GST/HST), gas tax, liquor tax, and many more, and there are taxes on wealth, like personal income tax, as well as Corporate taxes. There are also payroll taxes and any other fee, levy or revenue tool (all taxes but given a different name).
For the most part, these taxes are unavoidable, and as Canadians we pay them knowing that money goes back into the economy and helps people.
What I do not understand, however, is why people pay more taxes than they are required to pay, or can afford to pay, and these taxes are viewed by people in the Canada Revenue Agency (CRA) as a “stupid” or “lazy” tax and what they are referring to are penalties and interest.
It is my belief that no one should pay any penalties or interest. Ever. Why give the CRA more money than they are seeking through the Income Tax Act or the Excise Tax Act.
If you work with an accountant or tax preparer, there should be no reason for late filings or late remittances, or for missing out on key deductions because that representative should know you, and the industry you work in, and be able to keep you current and free of penalties and interest.
But there are many legitimate reasons why people file late, and incur penalties and watch interest accrue on their tax accounts, and these people are then hammered by the CRA and need help, which is why I created inTAXicating. My goal here is to help you get out of the troubles that you have gotten into and by help, I mean rehabilitate you and get you current on your filings, help you reduce your balance owing, apply for taxpayer relief (fairness) if it applies to you, and get you on a remitting and reporting schedule which ensures you are never late again.
Too many firms out there have watered down the “Tax Solution” process to the point where you pay them a ton of money, they “fix” your issue and then another one pops up, all because they are experts in taking money and not experts in resolving CRA debt issues.
The best part about working with inTAXicating is having the expertise where you need it. If your problem is with collections or enforcement then you need the person who worked in that area, and trained and managed the collectors and who can tell you the CRA’s next move before they can.
Being audited? Recently assessed? Don’t understand a letter? Balance looks too high?
There is no tax situation too scary, or too difficult to figure out. Business taxes, personal taxes, GST/HST, payroll, T2’s, provincial, federal, liens, RTP’s, appeals, VDP… We’ve seen it all, handled it all, and have been successful with it all.
Just because it’s July 1st and summertime doesn’t mean the CRA stops working too. In fact, it’s the opposite. With more time on their hands, the CRA’s collections staff have the time to thoroughly research tax files which have balances on them to see what they can do to ge the account paid in full.
My experience working in the CRA for almost 11-years, tells me that the majority of in depth investigations occurs during the summer months.
Make summertime the best time to resolve that nagging tax problem.
If you have a tax problem, we have a tax solution.
Here are the answers to the most frequently asked CRA Tax collections questions from the past weekend:
Can you bribe a CRA officer in Canada?
First off, bribing a CRA officer is a criminal offense and you could quickly wind up with the RCMP at your door, or under investigation, but more realistically, the staff at the CRA tend to be lifelong civil servants and one of the great benefits of working in the civil service is the great pension. Few civil servants are willing to even entertain the thought of giving up their pensions, let alone going to jail for someone when they have hundreds of other people to collect from.
2. Is there GST/HST on a lien?
Answer: Let’s presume that the question is asking if there is additional GST / HST on a lien, and the lien has been registered by the Canada Revenue Agency (CRA). In that scenario, the answer is no.
The CRA would register a lien for unpaid or unfiled (and assessed) GST / HST, and the amount used for the lien is the amount owing on the day it has been registered in Federal Court. This fact is important because from that day forth, interest continues to accrue and accumulate on the tax account with the CRA, but the lien only reflects the amount owing at a point in time.
Often, a lien will get paid out and then the CRA’s computer system kicks out an update Notice of Assessment with an additional balance owing and taxpayers are puzzled having just paid off a lien.
They did pay the lien.
Now they pay the rest of the balance owing.
3. Where can I get the truth about Voluntary Disclosure?
“If you use a motor vehicle for both employment and personal use, you can deduct only the percentage of expenses related to earning income. To support the amount you can deduct, keep a record of both the total kilometres you drove and the kilometres you drove to earn employment income. We consider driving back and forth between home and work as personal use.”
Since today is Thursday, I thought a Thursday Thirteen themed post might be a good change of pace!
Here are 13 things that should NEVER be said to someone with a tax problem, from someone who claims to want to help (or just your money).
Each quote below was an actual quote uttered by a tax solution representative or accountant to a prospective client in my presence.
Sit tight, and get ready to shake your head in disbelief…
13. “GST, HST, PST… They’re all the same.”
12. “CRA Collectors don’t care about you. They treat their clients like a ‘whack-a-mole’ game. You pop your head up and they smack you on the head with a hammer. We provide you with a helmet or advise you to stay underground until the game is over.”
11. “You’re an alcoholic? GREAT! Substance abuse qualifies for relief!!”
10. “I can tell you for a fact that the Auditor General requires the CRA to close files, NOT collect money. The benchmark is 7-years. We can close your file in 7-years!”
9. “You’re just a little guy! Nobody cares about you.”
8. “If you tell the CRA anything you are shooting yourself in the feet. That’s dumb and it hurts.”
7. “I know the CRA have won in Tax Court, but they are wrong, and this time we have everything we need to prove them wrong!”
6. “Just ignore them and it will all go away.”
5. “You don’t need to speak to a Tax lawyer, or an accountant. They’re useless. You should never talk to the tax preparer. Just pay us $5,000 and we can make it all go away.”
4. “The Taxman…”
3. “I don’t care what the CRA wants, and how soon they want it. They’re getting what I want to give them, when I’m ready to give it to them, AND they’re going to see that I’m right and they are wrong.”
2. “We need to reduce the amount that you owe, so I’m going to create a T2200 for you, and claim a lot of expenses that your employer has not deducted like mileage, phone, and parking. They’ll never know its not true and on the off-chance that they ask, I have hundreds of parking receipts in my car I can give them. It’s perfectly fine…”
“Don’t even bother opening that envelope… Just throw it out.”
Just missing this list, but barely, is the commonly uttered line; “Quick, transfer the house out of your name before the CRA registers a lien against it!”
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
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;
Lien on a property
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;
Are you committed to finding me a tax-solution first.
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 email@example.com and let’s talk! We’re here for you.
The following are tips to keep the CRA’s collections department happy.
This list in not fully inclusive of everything that you can do because you cannot send them gifts, they have to reject or toss them, and if you do their work for them – they might like that for a bit – until there are no more accounts, and then they will have no more work to do, and then no job.
So here are a few tips to keep CRA happy…
Communicate, communicate, communicate. If they have to contact you, they’re already angry.
Don’t be a jerk on the phone to them. Everything you say goes into a permanent diary and that diary is summarized semi-annually. You don’t want anyone who accesses your account to think you’re a jerk
Don’t accuse them of being out to get you… They likely have 400-500 accounts and their goal is to collect some, write some off and let the others pay or go bankrupt. Just show them some progress on any of those fronts and you’ll be in much better standing.
Ask for the best and lowest settlement offer. The CRA does NOT do that unless it is through insolvency or a formal proposal in bankruptcy. The IRS settles debts, but this is not the IRS… The CRA is WAY better!
If you enter into a payment arrangement, ensure there are sufficient funds in the account to pay the cheques. If a cheque is returned NSF (not sufficient funds), then the CRA collections officer will take immediate collection actions and getting those Requirements to Pay removed can be next to impossible.
Keep current!!! Whether during the period of a payment arrangement, or just through discussions with the CRA make sure you are up-to-date on all filings and payments (including GST/HST, income tax, payroll taxes, etc). If you fail to remain current, the CRA can – and likely will – end the payment arrangement and pressure you for more.
Understand that the CRA is not your bank, and treat them that way. At a bank, you are earning credit, but at the CRA, in collections, you are paying 10% interest compounding daily… It’s not in your best interest to take your time re-paying them.
If you have nothing to hide (and even if you do have something to hide), be honest with the CRA collections officer. Things you say may cause the CRA collections officer to become concerned.
Provide the information that is requested by the CRA collections officer. If the CRA collections officer trusts you, he/she will be more likely to exercise discretion before pressing confirm on that Requirement To Pay.