Blog of www.intaxicating.ca. Canadian Tax Consultant and former Canada Revenue Agency (CRA) Employee of the Year who worked in the CRA for almost 11-years in their Collections Department. We can help with Collections, Enforcement, Audits, Liens, Back-Filing, Assessments, Director's Liability, s160 assessments, Taxpayer Relief and so much more (RST, IRS, MRQ) We are Experienced, Honest and On Your Side.
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.
I had a nice long conversation with a client the other day regarding the potential that either the Canada Revenue Agency (CRA) or the Provincial government (in Ontario) were going to pursue a Director’s Liability assessment against him for the debts of his now-deceased corporation. Part of the discussion surrounded how the Canada Revenue Agency and the former Ontario Retail Sales Tax (RST) group handled assessments, and the criteria they used when reviewing whether or not to pierce the corporate shield, plus the importance of a due diligence defense.
During my employment at the Canada Revenue Agency (CRA), I felt I needed to gain a more thorough understanding of Director’s Liability and figure out why there were so few assessments raised in our office compared to other offices. I personally had not raised any Director’s Liability assessments mainly because I was effective on the phone and combined with meetings, was able to resolve many debts prior to the assessment stage. Still, Senior Management encourage the Collections staff to utilize this collection tool more, so as the Resource and Complex Case Officer, I asked for, and was given, the Director’s Liability inventory to control.
By controlling the Director’s Liability inventory, that meant I needed to know the ins and outs of Director’s Liability – section 227.1 of the Income Tax Act and section 323 of the Excise Tax Act, because if anyone in our office wanted to raise an assessment, I would have to review their account, ensure all of the much-needed grunt work had been completed, then ensure they had spoken to the Director(s), given them sufficient notice, provided them time for a Due Diligence Defense, at which point I could sign off and begin to track the file.
After organizing that inventory and rolling out the new procedures, I began to scour the accounts in our office for potential Director’s Liability assessments, then, in addition to my other inventories, provide recommendations and suggestions to the staff on how to proceed if I felt there was a possibility for an assessment. Management decided instead of burdening the staff, I should just take those accounts I felt were ready for Director’s Liability assessments and work them, plus all of the other accounts I was tracking where assessments were raised too.
It was a fair amount of work, but more importantly, it was very enlightening, to review the government’s policies on Director’s Liabilities plus review the procedures in place, compare that to how other office’s handled their files and really tighten up the process. If an account was a sure-fire Director’s Liability assessment, it was raised, and if there was no chance, or not the right time, the file was returned to active collections.
I found the first common misconception around Director’s Liability was that the issuance of the Director’s Liability Pre-Assessment Proposal Letter (which notifies director’s that we are reviewing them for Director’s Liability) was being used as just another letter by the Collections staff to remind directors of their obligations, when in fact the CRA intended on using this letter to notify Directors’ that an assessment was beginning. Internally, the Canada Revenue Agency was actually starting to investigate the personal ability to pay of the director(s) at the time this letter was issued.
Going forward, that letter was not to be used lightly, and it was not to be sent to the Director(s) numerous times. A Director would then have the assessment raised against them and wonder why it was raised this time, and not earlier when one of those letters went out, so in order to prevent a possible loss in Tax Court, the decision was made to send it once, and then follow-up with the Due Diligence defense letter before raising the assessment.
Ignoring the Due Diligence defense letter (which happens often) meant the one opportunity a Director had to start their case on the record was lost, and with the CRA building their case in the permanent diary, the Director(s) stood little chance of preventing the Canada Revenue Agency from raising the Director’s Liability.
Once that waiting period passes, the file usually gets very quiet…
From the Director’s point of view, either the assessment is raised and they receive a letter from the CRA stating that, or the assessment is raised and the letter gets lost in the mail (tossed out), or the assessment is raised and before the Director is notified, their personal assets come under fire. There is of course, the possibility that nothing happens and the Director(s) are left in limbo, but without having a dialogue with the CRA, or experience around the policies and procedures, there is no way that the Director(s) will know when and if the CRA is coming – if at all.
Once raised, the Director(s) have quite limited options.
A recent court case, which I will highlight below demonstrates a situation where an assessment was raised, and in Tax Court, the decision was turned over and the assessment cancelled. I guarantee it won’t happen again, as the CRA will ensure their processes are tightened even more to close this loophole.
The case was Bekesinski V The Queen.
The link to the case on the website for the Tax Court of Canada, is here.
In this case, Bekesinski was the Director of a corporation who was personally assessed by the Minister of National Revenue (CRA) in the amount $477,546.08 for the corporation’s unremitted income tax (T2) and employer contributions of CPP and EI for payroll (source deductions) plus penalties and interest for the 2001, 2002 and 2003 fiscal years.
Under Director’s Liability, the CRA can assess directors for payroll and for GST/HST, but not Corporate Tax liabilities.
The Tax Court of Canada held that since the taxpayer had resigned as a director of the corporation more than two years after the CRA’s assessment, the CRA was statue barred from raising the Director’s Liability assessment.
This was something the CRA should have known before raising the assessment and something that the director (or his representatives) should have mentioned at any point during the pre-assessment proposal period, especially at the due diligence defense stage, but was never mentioned.
Brief Overview of the Facts
In 1992 the taxpayer purchased D.W. Stewart Cartage Ltd., a general cartage, trucking and warehousing company where he served as a Director of the corporation.
When the corporation fell behind on filing obligations and as the balance owing to the CRA began to grow, the Director began to receive numerous letters from the CRA warning him that he could be held personally liable for the corporation’s tax debts as a Director of the corporation. He did not notify the CRA at any time that he had resigned as a Director of the corporation.
On October 15, 2010 the CRA raised Director’s Liability and issued a Notice of Assessment (NOA) to the taxpayer for unremitted income tax, employer contributions plus penalties and interest in the amount of $477,546.08.
The Director then argued that he should not have been assessed as a Director because he resigned as Director of the corporation on July 20, 2006 by way of a Notice of Resignation which would have made the raising of the assessment statute barred.
The CRA argued that the taxpayer was in fact a director and that the taxpayer had backdated the resignation to qualify for the exception, which happens more than you could imagine, and to counter this trick, the CRA often requests an “ink date test” to determine the authenticity of the Notice of Resignation.
Unfortunately for the CRA, the results from the ink date test was excluded by the Tax Court because the CRA did not advise the Court that they felt the Notice of Resignation was back-dated. Even the judge felt the Notice of Resignation was backdated, however since the CRA failed to mention it, it was not open for review in the Court.
In summation, Bekesinski avoided Director’s Liability for the corporate tax debts due to a litigation misstep on the part of the CRA, a mistake they are unlikely to be repeat.
It is highly advisable for corporate directors to carefully document their resignations so as to avoid potential future Director’s Liability assessments, because I guarantee, the CRA will challenges to the authenticity of backdated resignations on each and every case going forward.
I have always wanted to write a book to help Canadians deal with tax problems, or tax debts with the Canada Revenue Agency (CRA).
There is no better time than the present, so here is a preview;
If you have a tax debt, tax problem, are behind on filing, made errors on your return, missed deductions or slips or if you owe money and cannot pay. You need a straight shooter who can tell you what to do and do so without costing you an arm and a leg.
Welcome to my company.
It is my goal to help each and every Canadian who has a tax problem through either a free 15-minute consultation, a one-hour meeting or through engaging my services.
I’m going to tell you what you need to know and not what you need to hear. If you are exposed to the CRA, I will tell you. If you are not legally required to pay a debt, I will tell you that too.
What I won’t do is mislead you into thinking that the CRA spends all day searching your keywords looking for you, unless you have done something criminally wrong, then I am recommending you speak with one of Canada’s top tax lawyers who will treat you in the same no-nonsense manner.
I also won’t lead you to believe that I have an army of former CRA staff at my disposal or that the CRA likes being referred to as the “taxman”. They do not. My network of CRA tax experts is vast and reside all over Canada. I have friends still working in the CRA and many who have left. I firmly believe that knowing what questions to ask is much more valuable than the answers given. I know what questions to ask, and I will ask them for you.
I do, however, have 10-years of experience at the Canada Revenue Agency – as a collector – and as a resource officer, field officer, team leader, and I have significant experience in fairness / taxpayer relief, managing the Director’s Liability and s.160 inventory, and for 5-years, I trained the collections staff at Canada’s largest Tax Services Office how to do their jobs. I cannot and will not list all the areas of the CRA that I worked in, because I wanted to learn, experience and help taxpayers while working there and I still want to do the same now that I am on the other side of the negotiating table.
Common sense tells me that if you have a tax, collections, or enforcement problem, you do not need a trustee, or a tax lawyer, or an accountant, but you need a former CRA collections expert to steer you clear of trouble.
Don’t let the CRA or other “tax” firms decide that you need to go bankrupt. You decide!
If you need forms filed with the CRA, or tax returns prepared for individuals or businesses, I work with the best accountants and accounting firms who share my philosophy of putting you first. Together we make sure your past filings are accurate and that you have claimed the correct amounts legally allowed. We don’t add things or make up deductions because that is what gets you in trouble.
My firm is Toronto-based, however accessible throughout Canada and around the world – as my clients have found out.
I’m not going to pull out a horse and pony show and try to entice you with fancy expensive ads which I will need to charge you extra to pay for – but I’m going to listen, process, and advise you what to do based on my experiences and based on 17-years of handling matters with the CRA, IRS, Revenu Quebec and with WSIB and the CRTC. I spent the majority of my time at the CRA working on the corporate side, so GST/HST, payroll, corporate tax and personal taxes are all in my areas of expertise.
I will tell you what the CRA is doing, and what they will be doing next. It’s nice to be a step ahead!
And throughout this whole process, you have to understand that the CRA will be working with us to resolve your tax matter and not working against us. It’s what they get paid to do. The only difference is they do it with us and not against us.
So, why reach out to me? Why not!
I can be reached at firstname.lastname@example.org, or by phone at 416.833.1581.
After spending close to 11-years working in the Canada Revenue Agency (CRA), I have a pretty good idea what gets people into tax trouble.
Okay, I know exactly what gets people into tax trouble, and while it’s nearly impossible to list all of the reasons, I can tell you that there are ways to get you out of tax trouble which many of the people I come across on a daily basis have never considered.
I can honestly say, without any prejudice that I believe a main part of the problem has to do with targeted advertising this time of year, towards tax filing season and which is aimed at people who equate getting their money back fast through the quick, cheap filing of tax returns.
The ads go something like this;
“Get the Largest Tax Refund Possible”.
“Get the Most Back.”
“Get the Most You Are Entitled To.”
“Get your Money Back Now!”
Just hearing those advertising slogans scare me, and it should scare you too.
Getting money back from the government at tax time, does not mean what you might think it does. You are not getting money from the government because you fell into a threshold, but what you are doing is gettingyourmoney back from the government. Your money that you overpaid (or were over-deducted at source) which the government kept during the year – held interest-free in fact – which you are asking for back.
It’s akin to lending someone money for a year – they use it, or invest it and make money off of it – and then a year later you ask for it back and you get it, while they made money off of it.
So how does this tied into tax debt?
History has shown me that people do not wake up in the morning and decide that they want to start carrying a balance owing to the Canada Revenue Agency. Nobody wants to worry when they go to use their debit card that there might not be funds there as a result of a CRA bank garnishment, or when they go to sell their home find out that there is a lien on it.
Tax problem occur over time and as the time passes and interest accumulates, people find their ability to deal with it declines and before you know it, the amount owing is massive and the CRA is breathing down your neck.
So imagine if after rushing to have your tax return completed – so you can get back a couple of hundred dollars – you find out that you owed money instead. Now you have a tax problem. A tax problem that you have not budgeted for. Now in collections, you have time find a way to pay off this amount owing, and fast, before the CRA takes legal actions. You can ask friends and family for money, or consider a second job to pay that off. It can be done, it can take time, or it can snowball and you become a chronic tax debtor in the eyes of the CRA.
Now the fun starts. Visits to your house, your employer and notices to your bank or clients all run the risk of causing you long-term embarrassment.
If only there was a solution available to help out the repayment.
Well, there is.
This scenario could be completely different if you have taken the time to speak with an accountant, or a reputable tax firm and knew in advance that you might owe and together you had the opportunity to determine the best way to handle this impeding debt by placing money into your RRSP, or applying for, and claiming deductions to reduce your amount of taxes owing at year-end. With a good accountant, your tax planning is not just for the current year, but also for future years.
Wouldn’t that make more sense?
One of the first questions I ask a prospective client, or anyone who comes to me for tax advice, is who completed your tax return and what are their credentials. It’s important because I have taken tax returns which owned $3000, $4000 or $5000 each year and turned them in to $4000 and $5000 credit returns just by claiming deductions and tax credits available to those taxpayers. Nothing illegal and nothing which would cause the CRA to reject the claim.
So instead of rushing to have your return completed for $40 or $50, think about spending the extra money this year and take advantage of an accounting firm which will sit with you, determine how to minimize your tax expenditures for this year and for future years. Pay what you owe and not a cent more, and if you’re getting money back every year find out why. Learn which deductions you may be eligible for and start keeping your receipts. Take control of your year-end tax filing and stop sending the CRA penalty and interest revenue.
If you already have a tax problem, you need to have tax experts review your prior year tax returns to look for missed deductions and credits. With a simple amending of the return, your balance could be reduced or wiped out completely. This really is the best way to start paying back / down a tax debt!
It’s what I do. For you.
It’s worth the money!
If you are looking for an alternative, please feel free to reach out to me here in the comment section, or email me at email@example.com.