Is the Canada Revenue Agency (CRA) looking after your best interests?

The Canada Revenue Agency (CRA) does an adequate job at what they are mandated to do, and that is to collect tax revenue and tax information from taxpayers while using their debt management (collections) division to collect from the unwilling or pre-occupied.

From the inside the CRA trains the collectors to understand that those who do not file or pay are “debtors” and that actions should be taken to bring these debtors into compliance right away.

They are also trained that if you can collect from – or force into bankruptcy – these individuals and corporations, that you are doing them a service but forcing them to make decisions that they are unwilling or unable to make on their own.  You’re doing them a favour by putting them out of business.  You stop the “bleeding”.

Those of us who have worked in the “real world” understand that behind the account numbers and names there are real people who are trying to run real businesses and who find taxation either complicated or overbearing and cannot comply with the rules and regulations.

Since failure to comply with some tax laws can result in criminal actions, I believe that the tax rules are complicated and with little forgiveness on the party of the government, one small mistake can shut a business down, or result in significant monetary penalties.

The most frustrating part, I find, is trying to explain to the CRA that their actions – while justified internally – have serious implications on more than a business or a person.

Take for example one of my clients;

I spent the last week in serious discussions with just about everyone at the Winnipeg Tax Services Office, trying to convince then that if they keep a garnishment on a corporate bank account that they will shut down this corporation.

The corporation’s issue, which the collector, team leader, technical advisor, section manager and director felt justified these actions?

They were in collections for 2-years. They had a trust exam and fell behind.

GASP.

I mentioned the accounts I am resolving for them right now involving people and corporations in collections for 15-20 years. 2-years is a drop in the bucket.

I also let them know of the tragic circumstances surrounding this corporation involving a death, an illness and a mass exodus of employees which left one director now trying to keep his corporation alive. That was until the CRA placed the garnishment and wanted to shut down the corporation.

So the collector – new – and the technical advisor – new – find words to justify their actions and the director did not return my calls or letters (yet, apparently) did not feel compelled enough to get back to me and intervene.

The CRA’s solution instead of putting 3 employees out of jobs, and a family man without income to support his young family was to drag out the process and ask for a payment arrangement on a corporation with no income… From their actions.

So whose interests are the CRA looking after?

Theirs?

No.

By not allowing the corporation to operate and earn income they are going to lose out on revenue to pay their liability.

Or when the CRA finally “allows” the business to continue operations and removes the Requirement to Pay from the business bank account, the CRA fails to take into consideration that the business will now need to back back rent, phone bills, internet bills, and likely replenish inventory before they have any funds abailable to pat themselves or the CRA anything.

Is the CRA then looking after the best intentions of the corporations?

Heck no!

By not being able to operate and by stringing along the director, this corporation is bleeding a slow death. Customers are losing faith, employees are quitting or being laid off, and with no money, the corporation cannot afford to fight any more.

It becomes very clear at this point that the CRA is looking after no one’s interests.

The CRA takes actions which are told to them from people who have no concept of reality.  Their actions are destructive and cause more damage than good, most of the time.  They don’t understand that sometimes, no action is the very best action.

Frustrating?

Absolutely it is.

In our specific case, after one whole week of trying to talk sense into the CRA, the collector agreed to lift the garnishment today.  Instead of receiving a payment, however, the CRA will get a plan on how this corporation plans to recover from a poorly executed collection action which got the CRA one payment and now nothing for at least a month.

At the end of the day, because of our involvement, everybody is going to win, but my job would be so much easier if the CRA understood that they need to listen to the experts and let the account resolve itself.

We all would be so much further ahead – the corporations director might have actually slept in the past month – if the CRA had slowly taken actions to remedy the situation rather than freezing the business bank account and not telling the business owner why they were trying to shut him down.

I’m looking out for the corporation’s best interests.  I’m also looking after the best interest of the CRA because we all need them on our side, and not against us.

Someone has to!

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