Category: Canada Revenue Agency Tax Debt

Dangerous Canada Revenue Agency Requests and What to Do if You Get One
Tax, tax, tax. There is nothing fun about tax – especially when you owe. If you owe the Canada Revenue Agency money, you are sitting on a ticking time bomb. They want that money and they will get it.

The Canada Revenue Agency is not your friend. Agents can be sneaky when it comes to finding and collecting tax dollars. Just remember: the more they are willing to negotiate with you, the less information they have – hence the willingness to ‘cooperate’. They will only negotiate to get information from you. And once they retrieve that information, that ‘cooperation’ can turn ugly, really quickly, leading to a payment plan that you can’t conceivably manage.

Here are some of the Canada Revenue Agency requests that may seem harmless at first:
- Asking where you work
- Asking where you bank
- Sending you a financial disclosure statement
- Asking you to submit info on your income and expenses in exchange for a payment plan
Sure, these may seem like basic requests, but this is how the information is used:
- Knowing where you live = search to see if you own your home, can be used to leverage a lien
- Knowing where you work = can be used to leverage a wage garnishment
- Knowing where you bank = can be used to leverage a frozen bank account
- Knowing who your clients are = can be used to set-off your receivables
If you have received any Canada Revenue Agency requests for information, you could be in serious trouble and should not try to deal with them directly, on your own. Any questions you answer, no matter how harmless they may seem, can be used against you. So, what can you do?

If you have a tax debt that you can pay, stop ignoring it and pay it. Once you’ve paid the balance on the debt, the Canada Revenue Agency will stop collection action because you no longer owe them money. This is the best solution to the problem.

However, if you have a tax debt you can’t pay, you have a financial problem, so get counsel before taking any action. Speaking to a financial specialist, one with the knowledge and experience helping individuals deal with Canada Revenue Agency requests and collection action, will help you determine the best course of action to deal with debt.

In the end, our best advice is to refrain from offering the CRA any recourse for action using information willingly handed over by you, the taxpayer.

Have a tax debt and receiving CRA requests for info and don’t know what to do? Call DebtCare. We can help you deal with the CRA and get rid of that tax debt. 1-888-890-0888.
February 17, 2016
Missed the Small Business Tax Deadline? Canadian Tax Penalties, Interest and Options!
Running a business is tough! Most small business owners are experts in their individual trades, but not necessarily experts in all aspects of business – or other businesses for that matter. For example, you may know how to unclog a toilet, or even install one, but you wouldn’t necessarily want to take on the task of outfitting the plumbing for an entire house. The same is often true when it comes to taxes; many small business owners are well versed in their own finances, but when it comes to their taxes, GST/HST and payroll deductions, etc., this can represent a whole different level of accounting know-how.

When the small business tax deadline passes, there are always a significant number of individuals who have missed it. Most often, small business owners miss the deadline for 5 reasons:
1. Unsure of when it was
2. Procrastinated on hiring someone to come in and prepare the books and returns
3. Think that money will be owed and are not sure how it will be paid
4. Missing some type of information, proof of expenses are just one example, and so don’t think that their return can accurately be prepared
5. Think they will not owe and thus the deadline is more of a guideline…
If you are a sole proprietor or part of a partnership in Canada, the small business tax deadline was in June. We are now officially past that date, and so, if you have not filed, you’ve missed it.

If you missed the deadline, the following are the financial penalties:
- If it is your first time filing late the penalty is up to 5% of the amount owing plus 1% per month for up to 12 months.
- If you filed late in any of the preceding 3 tax years the penalty is up to 10% of the amount owing and then 2% per month for up to 20 months.
- Keep in mind that interest is back-dated to the tax year, and accrues on both the principal and penalties!
If you missed the tax deadline, this is considered tax evasion and you could also be subject to criminal prosecution and further financial penalties. Owing money to CRA is not tax evasion, but failing to file is! One will lead to financial challenges, while the other could land you in court.

Often, late filing and tax avoidance is due to an underlying financial problem and an inability to pay. If you missed the small business tax deadline the best course of action is:

Step 1 – Get your books and returns prepared. If you don’t have receipts or other documentation, tell the accountant and they will tell you what you can and cannot include in the return.

Step 2 – Once the return/returns are prepared you will have a better idea about what you owe and can use the numbers above to estimate penalties. Be realistic about your finances. Consider CRA debt, other debt you have and what assets you want to protect.

Step 3 – Meet with a financial professional before you file to get a game plan in place for dealing with what you will owe to mitigate the blow-back of collection problems.

If you are worried about filing late and considering not filing at all because of a looming tax debt, our advice is to file right away to avoid a tax evasion charge, then deal with the debt with professional financial help. Call DebtCare Canada at 1-888-890-0888.
August 19, 2015
Your Rights: Canada Revenue Agency Collections Policy

With this year’s tax deadline long gone, for many individuals, the stress that comes with income tax filing is also long forgotten. However, if you are one of the many Canadians now stuck dealing with a tax debt, the stress may just be in its infancy, growing exponentially as the days pass and interest continues to accumulate. How well do you know the Canada Revenue Agency collections policy?

Of course the Canada Revenue Agency has a right to their money, but that does not mean that you don’t have rights as a taxpayer. The CRA is a very powerful organization, and often that power means intimidation and fear – just know that you do have rights and can fight the CRA if you so choose.

Taxpayer Bill of Rights. This is a set of rights established to protect the taxpayer when it comes to things like language, privacy, harassment, objections, etc. For example, if you feel as though you are being unfairly treated, you are able to file a formal complaint under the Bill of Rights. Intimidation is a tactic that often works, but largely because people are unaware that avenues for recourse exist.

Here is a link to the CRA website and the Rights in their entirety:

http://www.cra-arc.gc.ca/rights/.

Additionally, when it comes to a tax debt, individuals are often not aware of the programs that exist to help fight CRA collection action, actions such as a wage garnishment, frozen bank account, or property lien. These collection actions can cause extreme financial hardship and getting them lifted can be a challenge. Some of these programs can also stop interest and penalties. For example, the Taxpayer Relief Program or even the Voluntary Disclosure Program may give you the chance to deal with what you believe are tax debts leveraged as a result of personal circumstances which prevented you from filing or impacted your ability to pay.

Just remember, any negotiations you enter into directly with the CRA can have negative impacts long term; often in exchange for a repayment plan the CRA will require personal information, information that will later be used against you! The CRA will never voluntarily negotiate to reduce principal, and typically this can only be achieved through a consumer proposal or bankruptcy.

If a CRA tax debt has you feeling anxious and overwhelmed, our advice is NOT to call directly to negotiate, but rather to speak first with a debt counsellor with the experience and knowledge that will help you protect yourself. Call DebtCare Canada today at 1-888-890-0888.

August 5, 2015
Are You Dealing with a CRA Frozen Bank Account?

Small Business Alert: Are You Dealing with a CRA Frozen Bank Account?

The deadline for filing your business tax returns has passed – for many, this season is a stressful one, but if you filed on time and don’t owe, that stress if finally out of the way. However, if you do owe, or are still dealing with a debt following last year’s deadline, you may be facing the reality of a CRA frozen bank account.

In the past, the CRA tended to take at least a few months before issuing a notice to freeze a bank account. However, they are now freezing them far sooner, adding to the already existing mountain of stress when it comes to dealing with your small business finances.

Furthermore, not only are they freezing accounts far sooner than they used to, they are also freezing them for far less – amounts as low as $1000. This is causing a great deal of trouble for many businesses that get stuck in the CRA web. Not only is this an embarrassing situation to have to deal with, it can be ruinous for your business reputation – especially when payments can’t be made or cheques begin to bounce…

With most creditors, collection action, such as a frozen bank account, requires court approval, but one of the biggest problems with the CRA is that they don’t need a court order to freeze your account – and your bank must comply once they receive notice.

Wait – how does the CRA know where you bank? Often you’ve told them yourself. Any negotiations you enter into, cheques you send, etc., likely provide them with personal information that makes obtaining this information easy (if you haven’t provided the exact information yourself). Even without this information, a little extra legwork and a letter to the 5 major banks will often yield the same results. The reach of the CRA is long – once collection action has been decided upon, the ball is entirely in their court.

So, does this mean that once your account has been frozen that you are dead in your tracks? Of course not – you do have a few options, but the right solution will depend on your personal circumstances. There are programs offered by the government that have the ability to immediately unfreeze your account. Furthermore, if you invoke these programs very quickly, you may be able to get your account unfrozen before CRA removes the funds from your account.

At DebtCare Canada, we are experienced in dealing with various tax problems, including CRA frozen bank accounts. Call us today to discuss your options: 1-888-890-0888.

July 8, 2015
How to Deal With a Frozen Bank Account as a Result of a Canada Revenue Agency Tax Debt
When an individual or business has a tax debt owing to the Canada Revenue Agency, the Canada Revenue Agency will begin to pursue enforcement action to collect the debt. One method that the Canada Revenue Agency uses to collect debt is by freezing a bank account.

A frozen bank account can be extremely disruptive and can cause incredible financial hardship. Many people feel blindsided when they go to the bank and find out that the bank has frozen all of the funds in their bank account. However, a frozen bank account that is the result of a tax debt generally doesn’t occur without warning.

A Canada Revenue Agency collection practice usually is as follows:
1. 1. First you will be notified in writing that a tax debt is owed.
  2. Second, you will be sent another letter demanding payment of the tax debt.
  3. Finally, a “Requirement to Pay” letter will be sent to you and your bank, requiring the bank to freeze your bank account.
When the “Requirement to Pay” letter is issued and sent to the bank, the bank must freeze the bank account indicated. The bank will then hold the money that is in the frozen bank account for 30 days and then will send the money to the Canada Revenue Agency.

The frozen bank account (even after the money has been sent to the Canada Revenue Agency) will remain frozen. Outside of losing all the money that was in the frozen bank account, the frozen bank account will now cause significant disruption because if your pay is directly deposited into the frozen bank account, the bank will continue to seize the money deposited into the frozen bank account and send it to the Canada Revenue Agency.

Once the CRA has frozen your bank account, you will almost always have to open a new account with another institution. Generally speaking, once the CRA has frozen a bank account the account holder will also see that the relationship they once had with their bank has been severely damaged. Most banks will stop offering credit and may even close existing credit products if they become aware that a customer has a tax debt owed to the Canada Revenue Agency. This is because some people who have tax debts end up filing for bankruptcy after being put under the pressure of CRA enforcement action.

Of course, if you have a tax debt and your bank account has not yet been frozen, it is advantageous to act before things come to that. Acting now doesn’t necessarily mean coming up with money you don’t have to pay off the tax debt. Acting now means seeking out professional guidance to deal with your tax problem before things get that far. If your bank account has been frozen you still have a chance to get your account unfrozen. Getting a bank account unfrozen is difficult but can be achieved through programs that involve legislation that carries the power to stop certain collection actions, such as a frozen bank account.

If your bank account has been frozen or if you owe money to the Canada Revenue Agency that you do not have the means to pay, we can help – including getting your bank account unfrozen and coming up with a plan to deal with your tax debt. Contact DebtCare at 416-907-2582 or visit www.debtcare.ca.
October 22, 2012