Thursday Thirteen: 13 Ways to Know You Need New Tax Representation.

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…”

  1.   “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!”

 

 

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Why Your Tax Representation Matters

Every couple of days I receive a call from a taxpayer or corporation regarding huge sums of money they have paid to other so-called “tax solution” firms, without any apparent movement or resolution of their file.  Usually these stories involve secrecy and the requirement for additional funds in order to bring the file to a close.

Would you go to a dentist who treated you like that?

Or have your vehicle repaired at a shop where you were not even sure they had any mechanics there?

When dealing with tax-related matters there should be no secrecy.  There should be questioning whether work was done or not and there certainly should not be doubt that the job was not completed.

Unfortunately this happens more and more.

The representation you chose, when under fire by, not just by the CRA, but all areas of government, like the WSIB, RST, or CRTC, is far more important than you could possibly imagine.  Especially in light of the fact that the CRA, for example, keeps a permanent diary record of your conversations and their attempts to resolve your tax file.  They also carry forward an account summary every 6-months, so in the instance where an account has been transferred to another collector, that new collector will know within minutes how the CRA wants to treat you and / or your representative.

Lie to them.

Break promises.

Call them names, like the “taxman”.

It’s all there and its used against you… Forever.

Case in point:

A couple of years ago I met a couple of directors of a corporation who booked a 2-hour meeting with me for only $500 plus HST. They had come with the intention of having me assist them in negotiation with the Canada Revenue Agency (CRA) who were in the process of raising a Director’s Liability Assessment against them the unpaid debts of the Corporation they operated.  They could not afford to pay the balance in full and were worried the CRA would take their house.

These directors had also heard about a way to reduce penalties and / or interest and they wanted more information.

They had already met with 2 other tax solution firms and one of them had fed the CRA with a sob story which the CRA did not buy, and after failing to return calls, and have any meaningful conversation with the CRA, disappeared with their money.  The CRA kept trying to reach this representative and the directors had no idea how quickly the collections efforts had progressed and how upset the CRA had beceome.

The second firm charged them a lot of money, then set out to make a payment arrangement with the CRA, even accusing these directors of “fudging” their records in order to show less income than they actually had.

They were frustrated, had spent a lot of money and had now incurred the wrath of the CRA.

Then we sat down together to talk, and after only a few questions and a review of the notices they brought with them, I notified them of the statute of limitations the CRA must follow when raising a Director’s Liability Assessment under s.227.1 of the Income Tax Act and S323.1 of the Excise Tax Act, which was 2 years from the date the corporation ceased to operate or the date the director officially resigned from the corporation.

They said the business closed 3 years ago, and that their accountant had officially closed the corporation with the government.

We talked about the Taxpayer Relief Program and about key language to use when speaking to the CRA in order to begin to change the permanent diary record they keep on the corporation and the directors.

The meeting concluded.

I immediately pulled a corporate profile report, checked that against the date of the assessments the CRA were raising and found them to be beyond that limit.

I used the signed authorization forms to contact the CRA, and that 5-minute conversation resolved the account… Forever.

I provided the directors with a report of the meeting, including the information we discussed, the CRA’s actions to date, their likely next steps, plus recommendations about how to deal properly with the CRA going forward, and I explained to them that there was no need for a payment arrangement because the account had a zero balance.

Luck?

No.

Additional fees?

No.

Were they happy… You could say that.  After they wiped away the tears and finished squeezing the life out of me, they talked about the relief they felt knowing this matter was finally behind them, and how they had other tax matters they wanted me to handle for them.

If representative #1 or representative #2 knew anything about collections or looked beyond their huge payout, they could have helped these directors with this assessment, with the 9-month-long audit that followed or the issues with WSIB, and the CRTC so that these directors owed nothing and their files were closed and in good order.

Does representation matter?

You bet it does!

#inTAXicating