Do you have a frozen bank account courtesy of the Tax Man? You’re not alone!

Thousands of Canadians owe the tax man – this is a simple but often startling fact. Owing the Canada Revenue Agency (CRA) isn’t illegal, but that doesn’t mean the organization is lenient – far from it.

If you owe, the CRA will do whatever it can to collect. This often involves freezing your bank account – and if you have a frozen bank account, you are not alone.

Over the last few years, the tax man has become more aggressive than ever – even freezing bank accounts within a year of the amount owed being assessed.

The CRA will not wait for you – if money is owed, it needs to be paid.

For example, we spoke recently with an individual who filed taxes in April 2014, and the CRA froze their account in January 2015!

When it comes to enforcement action, the CRA is not like other creditors who are required to take you to court to retrieve funds.

At least with those cases you have a chance to defend yourself. The CRA does not require a court order, and as a result you can have a frozen bank account with no notice to you. All that is required is a notice to the bank – with this, the bank is legally required to freeze the account.

Once you have a frozen bank account, the bank holds the money in your account for a period of time and then it is sent to the CRA. Once this happens, it becomes even more difficult to negotiate with the CRA.

Many individuals see a frozen bank account and assume that a quick call to the CRA will thaw things out. This is not the case. In order to have this enforcement action lifted, you will need to pay or come to a payment arrangement.

Paying the amount in full, if possible, is the best option.

Negotiating a payment plan – this is where the challenges continue. If you try to negotiate with the CRA, agents will use the opportunity to get personal information from you which can then be used to take more action against you – such as a wage garnishment or property lien.

Perhaps it was a negotiation call which led to the frozen bank account in the first place?

We suggest not calling the CRA directly, so what options are available?

Step 1 – Put a professional in between you and the tax man.

Step 2 – Evaluate your options. What do you have that you can leverage to pay the CRA? If you can’t pay the CRA in full, what can you afford monthly?

Step 3 – Consult a financial professional who has access to government programs that can force the CRA to unfreeze your account.

You have to act quickly before the bank sends the money to the CRA. Federal government programs stop interest, stop collection action, allow a single reduced monthly payment and sometimes the tax debt can even be reduced.

To get relief from a frozen bank account, call DebtCare. We know how to help: 1 (888) 890-0888.