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;
- Bank garnishment
- Wage garnishment
- 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 firstname.lastname@example.org and let’s talk! We’re here for you.