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Tag: collection action

  • Don’t Help the Canada Revenue Agency Take Collection Action

    If you owe money to the Canada Revenue Agency (CRA), you can be sure that the next few months will find you dealing with various attempts to collect. The CRA is quite aggressive when it comes to collecting a tax debt, and waiting for you to pay up just isn’t the name of their game. Don’t make it any easier for them to begin collection action.

    If you receive a legitimate communication from the CRA asking for financial information, you may think that providing such would be harmless or may prove favourable when attempting to negotiate a payment plan. For example, if an agent calls and asks where you bank, or who your clients are (if you’re self-employed), you may feel like this is a reasonable request and provide the information.

    The same goes for forms they may ask you to fill out. While you might think that completing these forms will result in a fair payment arrangement – they may even allude to such – it typically won’t.

    Think those questions are risk-free or safe? Beware. This information will be used for collection action.

    What questions lead to enforcement action?

    • Where do you bank = frozen bank account
    • What is your address = property lien
    • Where do your work = wage garnishment
    • Who are your clients = garnishment to clients, up to 100%

    Aren’t these things the CRA already knows, or can find out on their own? Sometimes yes, sometimes no, but even in the case of things they can find out, why do the legwork for them, thereby making it easier for them to hurt you?

    When you can’t pay, but you’ve answered the questions and filled out the forms, the CRA now has all of the information they need to come after you. The CRA isn’t interested in long-term payment plans and they won’t reduce the amount that you owe! Any arrangement will disallow payments to other creditors (loans and credit cards), thereby decimating your credit, as well as other expenses. If money is owed, the CRA wants it, right now.

    If the CRA is asking questions and you know that you owe but can’t pay in full, it is time to get professional representation. We strongly recommend that you DO NOT complete these forms or answer any financial/personal questions without first speaking with a financial professional.

    At DebtCare, we can help you navigate the dangerous CRA waters.

    Get in touch today by calling 1 (888) 890-0888.

     

  • What is the CRA Late Filing Penalty?

    In Canada, if you file your income taxes late you will be subject to a CRA late filing penalty. This CRA late filing penalty can vary depending on how many times you have filed your income taxes late in the past. In addition to a CRA late filing penalty, you will have to pay interest on both the tax debt and the CRA late filing penalty.

    Here is an outline of current CRA late filing penalties:

    1.       The CRA late filing penalty for not filing your income taxes on time in 2012 is 5% of the balance owing. In addition, the CRA will also charge a further late filing penalty of 1% per month that you haven’t filed, up to a maximum of 12 months.

    2.       Now, if you were charged a CRA late filing penalty in 2009, 2010, or 2011 because you filed late on any of those tax years, your CRA late filing penalty for filing late in 2012 may be increased to 10% of the balance owning. You may also be subject to an additional late filing of 2% for each month you haven’t filed, up to a maximum of 12 months.

    3.       The interest that will be added to the tax debt and penalties will compound daily.

    Individuals who find themselves behind filing taxes for many years can wind up in serious financial trouble. Once many years of tax returns are assessed at one time, the tax debt is determined, the penalties are applied and the interest is applied on the sum, your tax debt can grow to a size that can become impossible to pay.

    Once this occurs, the CRA will demand their money. First you will receive a letter, then perhaps a call, and once your cheque hasn’t arrived your file will be turned over to CRA collections and that’s when the real trouble begins.

    The CRA collections department has the authority to do many things in an attempt to force you to pay.

    • They can garnish up to 50% of your wages
    • They can garnish up to 100% of the income of subcontractors and small businesses
    • They can notify your clients of your tax problem
    • They can freeze your bank account
    • They can place a lien on your home, vehicle and business assets (such as equipment)

    A tax problem that spirals out of control can seem impossible to stop. The good news is that there are financial programs designed to deal with tax debt. These financial programs are quite effective in stopping CRA collection action and enabling you to make a monthly payment that you can afford. Some programs even involve reducing your tax debt and freezing the interest.

    The best thing you can do if you are behind filing returns is to file them. For each month that passes, penalties grow, and for each day that passes, interest grows. Get in to see a financial consultant as soon as possible to start coming up with a financial plan to deal with your tax debt so that you can make arrangements and avoid collection action.

    For more information about CRA late filing penalties or if you need help with your tax debt please contact DebtCare Canada at 1-888-890-0888 or visit www.debtcare.ca.