Insolvent or in Tax Trouble? Don’t Let the CRA Decide.

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

 

Go Bankrupt!

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;

  1. Bank garnishment
  2. Wage garnishment
  3. Lien on a property
  4. 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;

  1. Are you committed to finding me a tax-solution first.
  2. 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 info@intaxicating.ca and let’s talk!  We’re here for you.

How To Avoid The Canada Revenue Agency (CRA) Phone Scam

As a former Canada Revenue Agency Business Collections employee – almost 11-years – from collector to Resource Officer and Manager, I understand the fear people have when they receive calls from the Canada Revenue Agency (CRA).

I also understand how scary it is when someone calls you, or leaves a recorded message for you, claiming to be from the Canada Revenue Agency (CRA), and demanding payment with threats of jail or immediate legal actions. I’ve been called as have many of my clients.

With a little knowledge and understanding of the CRA and the people who work there, I am going to list 10 signs that every Canadian needs to be made aware of in order to not be caught up in this scheme.

10 Facts Every Canadian NEEDS to Know About the Canada Revenue Agency (CRA)

 

10. Yelling and Screaming are NOT permitted, nor tolerated.

Regardless of what you have heard or experienced, the people who work in the Canada Revenue Agency are everyday people like you and I. If we yelled and screamed at our “client base” we would be disciplined or fired. They are no different.

9. Threats are NOT allowed.

The staff at the CRA will not threaten you with jail time, to send in the Sheriff, have you deported or to take every penny that you have.  Even is the call is not a scam you do not have to tolerate any threats from anyone at the CRA.

If you have been evading the paying of taxes, you already know that you could be charged and that jail time is possible. Any other type of collection action usually comes with pre-warning by a letter, Notice of Assessment or is started once you file / pay your taxes.

The CRA will not seize your principal residence!  Your cottage, rental properties, maybe, but house you and your kids live in… No.

8.  The Element of Surprise

If the call catches you by surprise, AND the person on the end of the phone is screaming at you, threatening to take your

7. Ask Questions.

In the instance you get a live person on the phone and they are trying to give you a hard time and force you to pay money, turn the conversation back to them and ask lots of questions. Ask them what the account number / social insurance number is, what periods or years the debt relates to (the debt they want you to pay). Ask them for a break-down of the total tax owing and the amount of penalties and interest – either the total amount or broken down by period or year. (They have this at their finger tips). Ask them what Tax Office they are calling from, and what the address and phone number is at that office. Ask them to send you a remittance voucher so that you can make that payment at the bank.

6. Defer

Tell them that while you would love to speak to them, you have an accountant who handles all your tax information and you would like to take down their information so your representative can call them back.

5. Do NOT Agree to Pay anything over the phone!

This rule applies not only to the CRA but to anyone else who ever calls your home / phone asking for money. Never, ever make a payment over the phone with your credit card.

4. Receipt Please!

If you are self-employed, you understand the importance of getting and keeping receipts.  Why would you buy a pre-paid gift card or charge card to send to some stranger who is not going to give you a receipt for payment?

You wouldn’t.

The CRA has recently allowed payment of some taxes by credit / debit card.  They will likely NEVER accept payment via gift cards, etc.

3. If you get such a call, hang up and report it to the Canadian Anti-Fraud Centre

The Canadian Anti-Fraud Centre can be found online at http://www.antifraudcentre-centreantifraude.ca or toll free at 1-888-495-8501.

If you believe you may be the victim of fraud or have given personal or financial information unwittingly, contact your local police service.

2.  Confirm, Confirm, Confirm.

If you want to confirm the authenticity of a CRA telephone number, call the CRA by using the numbers on its Telephone numbers page. The number for business-related calls is 1-800-959-5525. The number for calls about individual concerns is 1-800-959-8281

1.  The CRA NEVER…

Requests prepaid credit cards;

Asks for information about your passport, health card, or driver’s licence;

Leaves personal information on your answering machine!

Asks you to leave a message containing your personal information on an answering machine.

Emails seeking information or asking for payment.

 

 

So when in doubt, ask yourself the following questions:

Is there a reason that the CRA may be calling?

Do I have a tax balance outstanding?

Is the requester asking for information I would not include with my tax return?

Is the requester asking for information I know the CRA already has on file for me?

Are they too mean / demanding / aggressive?

 

It’s always better to defer the conversation than make the mistake of giving information or money to criminals.

CRA News Release: Reminder – Registered Charities Prohibited From Devoting ANY Resources to Partisan Political Activities

The Canada Revenue Agency (CRA) has issued a Press Release on their website; http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/pltcl-ctvts/dvsry-eng.html, reminding registered charities that they are prohibited from devoting any of their resources to partisan political activities.

The CRA has determined that a “partisan political activity is one that involves the direct or indirect support of, or opposition to, any political party at any time, whether during an election period or not, or a candidate for public office.”

For those of you quick to conclude that this is a recent change – made by the Conservative Party of Canada to protect themselves from negative press, the prohibition on partisan political activity is a long-standing requirement under the Income Tax Act (ITA).

Charities are responsible for their resources, and must devote these resources to exclusively charitable purposes.

Charities that devote any resources to partisan political activities may no longer be eligible for registration. A charity’s resources include funds, property, and personnel (volunteers, employees, and directors).

Partisan political activity may include, but is not limited to:

  • providing financial or material contributions to a political party or candidate
  • making public statements (oral or written) that endorse or denounce a candidate or political party
  • criticizing or praising the performance of a candidate or political party
  • organizing an all-candidates meeting or public forum in a way that could be seen to favour a political party or candidate
  • inviting candidates to speak at different dates or different events in a way that favours a candidate or political party
  • posting signs in support of, or opposition to, a candidate or political party
  • distributing literature or voter guides that promote or oppose a candidate or political party explicitly or by implication
  • explicitly connecting its views on an issue to any political party or candidate

These restrictions on partisan political activities do not prevent volunteers, employees, or directors of charities from:

  • helping in a political campaign, as long as they do this in their personal capacity and do not suggest they represent a charity
  • making partisan political comments in public (including on social media), as long as they make it clear they are speaking in their personal capacity and not as a representative of a charity

Charities that use the Internet or social media to post information should ensure the information does not contain partisan political statements. Also, the information should not link to statements made by a third party that support or oppose a candidate or political party.

An important note surrounds the responsibility charities have to ensure their social media also complies with these rules, and as such, when a charity invites comments on its website, blogs, or on social media, it should monitor them for partisan political statements and remove, edit, or moderate such statements within a reasonable time.

For more information on political activities, you can refer to the CRA’s website, specifically their section on Resources for charities about political activities, including Policy Statement CPS-022, Political Activities, and Partisan political activities, or call the CRA’s Client Service Section at 1-800-267-2384.

CRA Press Release: Tax preparer extradited to Canada (from Italy) for tax fraud in Canada

The following news items was released by the Canada Revenue Agency (CRA) on September 8, 2015, regarding a former Tax preparer from Vaughan, Ontario, who was convicted of Tax Fraud for adding fictitious deductions to 4,200 tax returns from 2003 – 2005.  She was sentenced to 10-years in jail and fined almost $700,000.

The news release read:

“The Canada Revenue Agency (CRA) announced today that Ms. Doreen Tennina was extradited to Canada from Italy on September 4, 2015, and is now in custody serving a 10-year sentence for tax fraud.

On May 31, 2013, Ms. Tennina was found guilty in the Superior Court of Justice in Oshawa, Ontario, on two counts of fraud over $5,000 under the Criminal Code and was sentenced in absentia to the maximum period of 10 years in jail on each count to be served concurrently.  A news release publicizing Ms. Tennina’s conviction and sentence was issued on June 4, 2013.

Ms. Tennina, a former Vaughan, Ontario tax preparer, fraudulently claimed carrying charges and charitable donations totaling $58,500,000 in 4,200 tax returns prepared on behalf of her clients from 2003 to 2005, inclusive. The false claims reduced the amount of federal taxes owed by over $10 million. She was also ordered to pay a fine of $699,608 for causing her company, Executive Accounting, to fail to report income received from the tax evasion scheme.

The preceding information was obtained from the court records.

Taxpayers who claim false expenses, credits or rebates from the government are subject to serious consequences. They are liable not only for corrections to their tax returns and payment of the full amount of tax owing, but also to penalties and interest. In addition, if convicted of tax evasion, the court may impose jail time and fine them up to 200% of the tax evaded.”

Remember, taxpayers who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs if the CRA has not contacted them first for the returns.  If applicable, the Voluntary Disclosure Program (VDP) allows for filing / amended filing without penalty or prosecution provided the disclosure is full and complete.  These taxpayers may only have to pay the taxes owing, plus interest.

More information on the Voluntary Disclosures Program (VDP) can be found on the CRA’s website at www.cra.gc.ca/voluntarydisclosures.

A link to the news release is below;

Lien on Me: Canada Revenue Agency (CRA) Policy and Procedures around Property Liens

Quite a few questions this morning surrounding liens and the Canada Revenue Agency (CRA).

I thought a re-post of this article I wrote might provide some clarity.

When searching for lien information relating to the CRA in Ontario, this post comes out 1st in Google, for obvious reasons as it mixes CRA policies with their internal procedures.

 

 

Lien on Me: CRA Policy and Procedures around Property Liens.

CRA Reminder! This Monday, June 15th 2015, is the Deadline for Self-Employed Individuals to File their 2014 Income Tax and Benefit Return!

inTAXicating and The Canada Revenue Agency (CRA) would like to remind those taxpayers who are self-employed individuals (and their spouses or common-law partners) that the 2015 personal tax (T1) tax filing deadline is midnight on Monday, June 15, 2015.

If you had an outstanding balance for 2014, it would have had to be paid to the CRA on or before May 5th 2015, which is different from the normal April 30th deadline as a result of that extension granted by the CRA this year.

If you miss the deadline, you might be liable for a late-filing penalty (cumulative if you have been filing late in multiple consecutive years), and / or a late-filing penalty on amounts owing which applies to returns received after the June 15, 2015 deadline.

The CRA suggests you file electronically, using NETFILE , which allows you to file your individual income tax and benefit return over the Internet quickly and easily.  For a list of software and web service options, including those that are free for everyone, go to http://www.netfile.gc.ca/software.

If you have a balance owing, you can make your payment using your financial institution’s telephone or Internet banking service. For more information about online payments, go to http://www.cra.gc.ca/payments or contact your financial institution, or search through the blog posts at inTAXicating.wordpress.com for a post on how to make payments to the CRA.

You can also pay using the pre-authorized debit online service offered through the CRA’s “My Account” feature. The pre-authorized debit allows you to:

  • Set up a payment to be made from your bank account to the CRA on a pre-set date
  • pay an overdue amount
  • make instalment payment

You can also make your payment using the CRA’s “My Payment” service. My Payment lets you make one or more payments in one simple online transaction.  You can use this service if you have access to online banking at a participating financial institution.

You can also sign up for direct deposit to receive your refund in your account at your Canadian financial institution-no more waiting for a cheque to arrive in the mail, however as I have mentioned in many previous posts, signing up for this service provides the CRA with your banking information which is the first place they will try to seize if you ever have a balance owing to them.

Save time – go online!

The CRA’s online services make it faster and easier to handle your business’s tax matters. You, your employee, or your representative can file, pay, and access detailed information about your tax accounts-all online, all at your fingertips. To learn more about the CRA’s electronic services for businesses, go to http://www.cra.gc.ca/businessonline.

If you have questions or concerns regarding your taxes or a letter / notice you have received from the CRA, drop us an email at info@intaxicating.ca or intaxicatingtaxservices@gmail.com.  Take advantage of our free consultation.

Money Mentors’ Advice for 2014 Taxes

I came across this article relating to Canadian Tax Filing for 2014, and thought it was worth a share.  The article can be read via the link below.

Money Mentors’ Advice for 2014 Taxes.

This article outlines how the Canada Revenue Agency (CRA) website, http://www.cra.gc.ca, can be used to keep up to date on any changes for 2014, and for 2015, which could help Canadians save money.

Money Mentors list themselves as being “the only Alberta-based, not-for-profit credit counselling agency.”   What I like about this article is that this firm also believes that credit counselling, money coaching, retirement planning, tax saving and community financial literacy are essential to contributing to a healthier financial future for all Canadians.  

Read the article, but as an outline, the topics covered include;

1) RRSP’s and TFSA’s

2) Charitable Donations

3) Medical Expenses 

4) Public Transit

5) Child’s Art/Fitness Amount

6) Childcare Expenses

7) Job-Hunting Expenses

8) First Homes

9) Students 

Enjoy, and please do not forget to get your Canadian Tax Return filed and paid – if at all possible – by April 30th!

If you have any tax-related questions, specifically relating to collection matters with the Canada Revenue Agency (CRA), you can reach out for a free consult with us via email at intaxicatingtaxservices@gmail.com, or to me, Warren Orlans, at worlans@intaxicating.ca.  We can also be reached on the phone or by text at 416.833.1581.

Please be patient as we are swamped and it may take some time for you to get a response.  Feel free to follow up and bug us in the same manner as the CRA bugs you.  We’re okay with that.

Also feel free to get more information about us at http://www.intaxicating.ca.