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Tag: tax debt

  • CRA Convictions – Yes, People Really are Prosecuted for Filing Taxes Late

    Yes, it’s true — CRA convictions are a real thing and they happen to average people across the country.

    When it comes to filing taxes late, tax debt, and tax evasion, the Canada Revenue Agency (CRA) has many measures at its disposal. This includes collection action — such as wage garnishments, freezing bank accounts, and placing liens on assets — but they can also prosecute when they choose.

    Here are some examples of average, everyday Canadians who ended up with CRA convictions:

    1.     A British Columbia lawyer failed to report $1,284,254.81 of taxable income for the 2005, 2006, 2007, and 2008 tax years. He was sentenced on January 10, 2019 to a 22-month conditional sentence, including eight months of house arrest. He was also fined $418,865.66 after pleading guilty to one count of tax evasion under the Income Tax Act.

    2.     An Ottawa resident was sentenced to a nine-month conditional sentence, including six months of house arrest, and a fine of $68,000 after failing to report net business and rental income totaling $410,148 for the years 2009 to 2013. He was also required to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.

    3.     A New Brunswick man pleaded guilty on June 10, 2019 to eight counts of tax evasion under the Income Tax Act. He was sentenced to a fine of $53,959. In addition, he will also have to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.

    4.     The CRA seized six rental properties and an automobile belonging to two Ottawa residents charged with tax evasion. They were alleged to have underreported their income by $3,114,100 from January 2008 to December 2013, thereby evading $523,532 in federal income tax. The duo was arrested and then released with court-imposed conditions. 

    5.     A British Columbia land developer and builder was sentenced to pay a $23,100 fine after being found guilty on two counts of tax evasion and one count of making false statements under the Income Tax Act, and one count of GST/HST evasion under the Excise Tax Act.

    According to the CRA, for the five-year period of April 1, 2013 to March 31, 2018, the courts have convicted 307 taxpayers of tax evasion. This involved $134 million in federal tax evaded and court sentences totaling approximately $37 million in court fines and 2,964 months in jail.

    When taxpayers are convicted of tax evasion, they must still repay the full amount of taxes owing, plus interest and any civil penalties assessed by the CRA. In addition, the courts may fine them up to 200% of the taxes evaded and impose a jail term of up to five years.

    Tax evasion can be a slippery slope — you may fear filing taxes late or know you can’t pay, so you don’t file them at all, which can end up leading down an even worse path.

    If you do file taxes late, you may also be subject to CRA interest and late-filing penalties, which can add to the amount you owe.

    But there is a better option than filing late or not filing at all — work with a tax debt expert.

    At DebtCare Canada, we can help you deal with a tax debt situation. If you haven’t filed yet, or have filed but can’t pay, we provide access to one of the only programs that can resolve a CRA back tax problem.

     ·       Often your principal tax debt can be reduced.

    ·       Interest and penalties immediately stop.

    ·       Frozen bank accounts are unfrozen.

    ·       Wage garnishments are lifted.

    ·       Garnishments to customers are lifted.

    ·       You are able to make a single monthly payment.

    And you won’t be subject to CRA convictions!

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Liberty Tax Filers – What to Do if You Will Have a Tax Debt You Can’t Pay?

    It’s income tax season and many Canadian filers may be turning to online tax preparation services, like Liberty Tax.

    These services are great options for submitting your income tax return, and for finding more deductions and rebates you may not have known about. But what happens if you’re assessed with a tax debt that you can’t afford to pay?

    Online tax preparation services like Liberty help you file your taxes – but they don’t help you avoid CRA collections.

    If you owe a tax debt that you can’t pay, either through filing with an online tax service or with an accountant, here are some best practices to keep in mind:

    1. File even if you can’t pay.

    If you know you will owe a tax debt, file anyway before the income tax deadline of April 30. Not filing will only makes things worse.

    If you don’t file, you can be assessed with failure to file penalties, and even be charged with tax evasion.

    It’s better to get your return in and look into options for how to clear the tax debt, instead of just letting it fester.

    2. Seek outside tax help.

    While online tax services like Liberty are good tools for filing your return, they are not debt consultants. Case in point: at our last check, Liberty Tax Canada didn’t appear to have a dedicated resource page about owing a tax debt.

    Even if you use a tax service to get filed, the best people to help with an outstanding tax debt are, of course, people who understand debt. Even if you work with an accountant to get your taxes filed, the accountant will not necessarily have access to tax debt resources.

    Instead, you want to seek advice from an experienced tax debt consultant, preferably one like DebtCare Canada with a specific program for dealing with the Canada Revenue Agency (CRA).

    3. Don’t negotiate with the CRA on your own.

    The CRA offers options to negotiate a payment plan and even has some debt forgiveness programs for outstanding interest and penalties. While these can help do not attempt to use them alone.

    This is because the CRA can take the information you provide through these programs and use it to start collection action. For example, if you fill out a financial disclosure form with your banking information, the CRA now knows where you bank and can decide to freeze your account if you miss a payment.

    It’s far better to work with a CRA negotiating specialist.

    4. Look for ways to pay the outstanding tax debt.

    Ideally, it’s better to not owe the CRA at all. So, if you know that you will owe a tax debt you can’t afford to pay, you would (generally) be better off financially taking out a loan or accessing home equity and paying the CRA with that money, and then owing the lender instead of the CRA.

    This is because CRA collection action is so much more aggressive than what the majority of creditors can enforce.

    Also, many lenders will arrange a fixed payment plan, so you can plan out repayment in a realistic timeframe with realistic terms. The CRA may not do the same.

    5. Consider debt consolidation options.

    What can you do if you can’t get a loan big enough to cover the tax debt? The answer here lies in debt consolidation.

    If you have too much debt to qualify for a loan, or a bad credit history, you might look into debt consolidation options, or filing for insolvency.

    Filing for a consumer proposal or for bankruptcy effectively takes care of your unsecured debts by declaring that you are unable to pay them.

    In a consumer proposal, you make a settlement proposal to your creditors – including the CRA. If accepted by the majority of your creditors, your unsecured debts are paid for with a lesser amount. You must be able to prove that your creditors will get more money this way than if you were to file for bankruptcy. In a consumer proposal, there is a debt limit of $250,000 (not including your mortgage).

    If you have more than $250,000 in debt, you might consider a different kind of proposal, or filing for bankruptcy. In a bankruptcy, your assets are often sold to make up the debt owed.

    While filing for insolvency is often not the first choice, it’s a better option than owing a tax debt to the CRA. If you owe a tax debt, the CRA can start collection action – which could include wage garnishments, freezing bank accounts, liens on assets, and in some cases even criminal charges.

    Also, if you wait to pay your tax debt, you will be charged even more because you’ll start to incur interest and penalties.

    If you file your taxes through an online service, like Liberty Tax, remember to:

    • File your taxes on time.
    • Reach out to a debt consultant if you can’t pay.

    At DebtCare Canada, we provide access to one of the only programs in Canada that can resolve a CRA tax problem. We can help you deal with your tax debt quickly.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • 30-Day Countdown: How to Tackle Back Taxes and Tax Debt

    The 2017 income tax deadline is on April 30, 2018. Have you filed your taxes yet? If you’re waiting or afraid to due to back taxes or because you’ll owe a tax debt, read on…

    If you have back taxes:

    When you owe back taxes, the best thing you can do is consult a financial professional before the income tax deadline. Don’t try to negotiate with CRA directly — that can be a dangerous game. A debt consulting organization can help you take stock of your situation and make a repayment plan. DebtCare Canada has one of the only programs that can resolve a CRA back tax problem.

    If you’ll owe a tax debt:

    Not filing because you know you’ll owe? That’s about the worst thing you can do. Tax evasion is illegal, but it’s not illegal to owe. Failing to file your taxes before the 2017 deadline will only lead to more trouble — namely CRA interest and penalties.

    In 2018, CRA starts charging interest on May 1, 2018 at a daily compound rate. And CRA late-filing penalties are also hefty: 5% of your 2017 balance owing, plus 1% of your balance owing for each full month your return is late to a maximum of 12 months. Plus, if you’ve been charged a late-filing penalty in a previous year, you could be charged 10% of your balance owing, plus 2% for each full month your return is late for up to 20 months.

    The key is to avoid enforcement action. CRA is powerful and can garnish wages and freeze your accounts even without a court order. They will come after you, and fast. And if you can’t pay in full, CRA may negotiate with you, but it’s not likely to be to your benefit.

    What can you do instead? Don’t contact CRA until you know how you will proceed. They will use your information against you.

    If you owe a tax debt, don’t delay filing, but do consult a financial professional. With 30 days to the deadline, you still have time to do so. A debt counsellor can help you explore your tax debt repayment options.

    DebtCare Canada offers one of the only solutions that stop CRA, freeze CRA interest, stop collection action, and can actually reduce the principal tax debt.

    Call us today for a free consultation at 1-888-890-0888 or visit us online at www.debtcare.ca.

  • Question Corner: When Will CRA Garnishment Happen to Me if I Owe?

    The 2017 income tax deadline is looming on April 30, 2018 and with it the consequences of not paying a tax debt in full. One such consequence if you fail to pay a tax debt is Canada Revenue Agency (CRA) garnishment.

    A CRA garnishment is just one of several scary collections tactics that can happen if you fail to pay your taxes. CRA can garnish up to 50% of your employment income and 100% of your other income, such as contracts or pensions, simply by sending a letter to your employer, or your clients if you are self-employed. The person who receives this letter is legally obligated to send your money straight to CRA or they could face court action.

    Unlike other creditors, the CRA doesn’t need a court order to obtain a wage garnishment. And, scarier still, you may not even know when a CRA wage garnishment will start.

    A CRA garnishment can start any time after the 2017 income tax deadline once CRA has processed your income tax return and provided you with a notice of assessment. This is where you will see the exact amount that you owe.

    If you can’t pay the tax debt in full, that’s when wage garnishment and other collection tactics can begin. You may be able to make a payment arrangement with CRA, but this is nearly impossible for an individual to do on their own. And even if you are sending payments to CRA, they may still garnish.

    If you don’t pay your tax debt and CRA finds out where your income comes from, you are at risk for a wage garnishment.

    CRA can find out your income source in many different ways, such as:

    • You tell CRA or name your employer on a budget or disclosure forms given to CRA.
    • Tax filings by your employer(s).
    • Your client or supplier is audited.
    • And many more.

    There are options to stop a CRA wage garnishment depending on your income, assets, and debt. Some of these options will immediately stop a wage garnishment. Debt consulting companies, such as DebtCare Canada, can assess personal circumstances and arrange whatever solution is the right one.

    Don’t wait – call DebtCare today. We can walk you through the various options and help you avoid a CRA garnishment. 1-888-890-0888.

  • The 2017 Income Tax Deadline is Right Around the Corner – Will You Owe?

    The 2017 income tax deadline is looming — April 30, 2018 to be exact. Are you ready?

    There are two scenarios that can happen if you miss the 2017 income tax deadline.

    Scenario #1 —  you are owed money on your return. If you wait to file, this means you’ll have to wait longer to receive your refund — and why would you want to wait to get money back?

    Scenario #2 — You’ll owe a tax debt.

    If you owe a tax debt and miss the 2017 income tax deadline, not only will you still owe, but also that debt will continue to grow bigger the longer you wait. The Canada Revenue Agency (CRA) late filing penalty means interest builds up at an alarming rate. The CRA can begin charging compound daily interest on May 1 on any unpaid amounts owing for 2017. And then there’s the late-filing penalties.

    The CRA late-filing penalty is 5% of your 2017 balance owing, plus 1% of your balance owing for each full month your return is late to a maximum of 12 months. And if you’ve been charged a late-filing penalty in a previous year, you could be charged 10% of your balance owing, plus 2% for each full month your return is late for up to 20 months. That’s a lot of extra money to pay on top of the balance you already owe.

    So, what can you do instead?

    First, if you’ll owe a tax debt, even if you can’t pay the full balance owing on or before April 30, 2018, file your return on time. As we outlined above, if you miss the 2017 income tax deadline, you’ll only be subject to more fines and penalties, which doesn’t help anyone.

    Second, you’ll have to deal with the tax debt itself. Even when you file on time, you’ll still need to pay the tax debt. If you can pay it off in full when you file, do that. This will solve the problem before it starts and is the ideal scenario.

    If you file, but don’t pay the debt, the CRA will levy collection action against you, which could include a frozen bank account, wage garnishment, and even a lien on your property or other assets. It is in your best interest to pay your tax debt, even if you need to look into financial options to afford it.

    Remember, filing your taxes late and not paying your tax debt are two of the worst things you can do for your financial standing. There are better options available that can help you meet the deadline and make your payments.

    If you’ll owe a tax debt, but can’t afford to pay, DebtCare Canada can help you assess your options. Contact us for a free consultation before the 2017 income tax deadline by calling 1-888-890-0888 or visit us online at www.debtcare.ca.

  • Collection Agencies and The CRA – Do You Know Your Rights?

    Collection Agencies and The CRA – Do You Know Your Rights?

    When you owe money, whether to a creditor or the Canada Revenue Agency (CRA), this knowledge can be stressful. If you can’t pay and are being contacted regarding the debt, that stress is likely to increase tenfold. However, there are limits, and if a collection agency or the CRA is becoming more aggressive than you’re comfortable with, know that you have rights and are protected.

    Collection Agencies

    Collection agencies in Ontario are regulated by the Consumer Protection Act and their activities must adhere to certain guidelines.

    Before any contact occurs, a collection agency must first send you a written notice through regular mail notifying you of the person or business that says you owe them money, the amount you owe, the name of the collection agency and a statement that the creditor has asked them to collect the debt. Only after this has been sent can you be contacted, and not for at least 6 days after the notice has been sent.

    Here are some of the things a collection agency can’t do:

    • Contact you on a Sunday, except between 1 pm and 5 pm
    • Contact you on any other day of the week between 9 pm and 7 am
    • Contact you on a holiday
    • Use threatening, profane, intimidating or coercive language
    • Use undue, excessive or unreasonable pressure or harass you
    • Charge you any fees

    If you feel as though your rights have been violated by a collection agency, you have every right to file a complaint. You can find out more information about your rights and how to file a complaint here: https://www.ontario.ca/page/filing-consumer-complaint.

    The CRA

    The CRA is considered very different from collection agencies. That being said, their activities must also follow a strict set of guidelines. They are required to treat you with respect and integrity, and there is an entire Taxpayer Bill of Rights which outlines the rights of individual taxpayers when dealing with the CRA.

    Some of these rights include:

    • The right to privacy and confidentiality
    • The right to service in both official languages
    • The right to be treated professionally, courteously, and fairly
    • The right to complete, accurate, clear, and timely information
    • The right to lodge a service complaint or request a formal review without fear of reprisal

    The entire Taxpayer Bill of Rights, as well as the steps to take if you feel your rights have not be respected, can be found here: http://www.cra-arc.gc.ca/E/pub/tg/rc17/rc17-12-16e.pdf.

    At DebtCare, we often receive calls from individuals requesting information about their rights as far as collection agencies and the CRA are concerned. No matter what, you should never feel harassed or disrespected. If you’re currently dealing with a debt that is being enforced, we can help you better understand the various solutions.

    Call us today for a free consultation: 1 (888) 890-0888.

  • Tax Debt: Are You Self-Employed but Haven’t Filed Yet?

    Tax Debt: Are You Self-Employed but Haven’t Filed Yet?

    tax debtWe are well into July now and that means, if you are self-employed, your tax filing deadline has passed.

    If you filed on time, great, you’re set for another year. However, if you’ve yet to file, for whatever reason, you may be facing some serious penalties and a significant tax debt.

    Many people don’t file because they know they will end up owing and can’t pay or don’t have proof to support various write-offs.

    Often these individuals put off filing until the money to pay can be amassed (whether or not this is a realistic goal), while others choose to hold off in the hopes that the Canada Revenue Agency (CRA) will not be made aware of the transgression. Trust us, they will find out.

    The CRA is often the most aggressive when it comes to trust monies and tax debt. So, if you’ve collected HST all year, but didn’t file by the deadline, and thus have not declared or submitted these trust monies, the CRA is going to come in search of those funds.

    The CRA charges a late filing penalty of 5% of your balance owed plus an additional 1% for each month your return is late.

    As long as your return was filed by the June 15th deadline, you don’t have to worry about these penalties. However, you still have to worry about interest.

    Interest is charged on any unpaid balances at the established rates which are set by the CRA on a quarterly basis.

    Although your tax return is due on June 15th, interest will start to accrue the day after the personal tax filing deadline (April 30th). That means, whenever you do decide to file, if you owe, those penalties will be applied retroactively.

    Once the CRA is made aware of your debt, that’s when things can really start to get ugly. Although it is not illegal to owe a tax debt to the CRA, and thus prosecution is not a consequence, collection enforcement action is.

    Garnishments of your income, a frozen bank account, even a tax lien may be in your future.

    Our goal here is not to scare you.

    If this is the situation within which you currently find yourself, you’re probably already concerned and are looking for tax debt consolidation. Our goal is to impress upon you the importance of dealing with tax debt as soon as possible.

    Ignoring the problem will never make it disappear. It will actually just make things worse.

    If you’ve held off filing your taxes because you know you won’t be able to make the necessary payments, we can help with tax debt relief. At DebtCare, we have years of experience helping Canadian self-employed individuals and small business owners tackle troublesome tax debts.

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

     

  • Dealing with Income Tax Debt – What Happens if You Owe?

    The income tax filing deadline is April 30th, and that means, if you owe a tax debt to the Canada Revenue Agency (CRA), you may be wondering what happens when you owe and how long you’ve got before the CRA will start asking for their money.

    Firstly, failing to file is never a good idea, even if you know you will owe. Failing to file will result in penalties and interest, as well as possible enforcement action. These add up quickly. If you haven’t filed yet, try to do so soon.

    Furthermore, not filing may be considered tax evasion. At the very least, you may be notionally assessed, meaning the government will estimate your income and then assess penalties and interest. The worst-case scenario, if you choose not to file, is that you could be prosecuted.

    If you file and owe a tax debt, you’re in a better position because you won’t have those added penalties and you won’t face prosecution. However, the CRA won’t wait for years to pass before attempting to collect. We have seen taxpayers’ accounts frozen within the current tax year. For example, one taxpayer filed on time, owed $3000, and had their account frozen the following January.

    A tax debt is a financial problem that should be addressed quickly – you can’t wait around hoping for the best. There really is no ‘best’ here.

    The CRA will want to be paid in full. Agents are not interested in making negotiated settlements or agreeing to long-term payment plans. That just isn’t how they operate, no matter how dire your situation is. If you don’t have the money on hand to pay in full, here are some of your financial options:

    • If you have good credit, you may want to consider obtaining a line of credit or loan from the bank. This option will rely on your ability to repay that debt, but on more reasonable terms. However, if you are already loaded with debt, it may not be the best solution because the interest is higher on unsecured credit.
    • Use home equity to finance the tax debt. This is typically the lowest interest option but you will need a home and some equity to take this route.
    • A consumer proposal. This is a no-interest option that will offer a low monthly payment and will sometimes even reduce your amount of total debt. There are some implications to credit to be considered, but if you’re already drowning in debt it could represent the best financial option overall.

    The best way to deal with a tax debt you can’t pay in full is to speak with a financial consultant who understands all of your available options. Don’t go directly to the CRA as this will result in far fewer possible choices and things could become even more problematic as far as repayment.

    At DebtCare, we can walk you through all of your options and get that tax debt off the table.

    Call us today for a free consultation: 1 (888) 890-0888.

     

  • Trying to Negotiate with the CRA is a Dangerous Game

    We are officially reaching the end of the 2017 tax season, and that means that most Canadians have completed filing and many are patiently waiting for their refund cheque in the mail. If, however, you’ve yet to file because you know a tax debt is headed your way, or have filed and have your assessment in hand, you’re probably at the other end of the spectrum. Your first thought may be to call the Canada Revenue Agency directly and attempt to negotiate a payment plan, but we urge you to read on and reconsider that approach. Trying to negotiate with the CRA is a dangerous game – one that can land you in a heap of financial trouble.

    The CRA is well-known for their oft-nefarious tactics for collecting what they believe is owed. When you have a tax debt, the CRA is not interested in a long term payment plan with low monthly payments, and this is primarily why it is so dangerous to call.

    When you initially call the CRA to negotiate a payment plan, things may not seem so bad. Agents are encouraged to cultivate a ‘friendship’ with you in the hopes that you will willingly share as much financial information as possible. This is usually accomplished with a financial disclosure form. In this form you’ll be asked questions about your income, where you work, where you bank, where you live and your current financial obligations. Don’t be fooled – the CRA is not asking for this information to help create a payment plan that suits your current financial situation.

    Once you’ve provided this information, the CRA may agree to accept a temporary payment plan, but once this payment plan expires, that ‘friendship’ will also expire. Now that the CRA has all of your financial information, the new payment plan will take into account none but the most basic living necessities (all other creditors will be subtracted from the equation) and you’ll be facing a monthly payment far and above what you can reasonably afford to pay.

    What if you don’t pay? Thanks to that financial disclosure form, not paying isn’t really an option. Not only does the CRA now know all about your finances they also know where you work, bank and live, making wage garnishments, frozen bank accounts and property liens that much easier to obtain.

    So, if you shouldn’t be calling to negotiate directly with the CRA, what options are available? Unless you can pay the debt in full, speak with a financial consultant to discuss the various options available to clear the debt before enforcement action is levied against you. Once this happens, things are going to become much harder to navigate.

    At DebtCare, we know how difficult the CRA can be to deal with. We also know how to protect you when it comes to dealing with a tax debt.

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

     

  • What to Do if You Have a Large Tax Debt That You Can’t Pay

    Many of us have been there; sitting with a major tax debt with no foreseeable way to pay it off. This is a common and incredibly stressful situation to find yourself in. The Canada Revenue Agency is ruthless, and when money is owed, you can’t ignore the issue. This week we discuss what you can do if the CRA is knocking on the door and you don’t have a way to pay.

    First of all, what will the CRA do if you can’t pay? The CRA isn’t interested in considering why you can’t pay. Instead, they will take enforcement action as soon as they feel it is prudent. This may include a wage garnishment, a frozen bank account or even a property lien. These are serious actions that can cause significant stress financially.

    Furthermore, the CRA does not require a court order to levy such enforcement action, nor are they required to notify you prior to putting one (or all) in place.

    So, what can you do to deal with a large tax debt if you don’t have the funds to pay it in its entirety?

    One option you may want to explore is taking advantage of the equity you have in your home. If you own your home and have paid off a significant amount, this may be easily done. However, if you don’t own your home, don’t have significant equity or have bad credit, this option likely won’t be open to you. Also, if the CRA has placed a lien on your home as a result of the tax debt, your ability to take this route is greatly reduced.

    Obtaining a personal loan may also be an option. This way you can break down the large debt into manageable monthly payments. However, as with accessing home equity, if you have bad credit you may not quality or will only qualify at a very high rate of interest.

    A consumer proposal or bankruptcy may be another option. These two represent an important option for those with debts aside from the tax debt. Both of these options can not only lower the overall debt, you can also stop worrying about interest accumulating. Both will also stop any current enforcement action the CRA (or any creditor) has taken against you.

    The best thing to do if you have a large tax debt is to formulate a plan. A good financial consultant, hired by you – not your banker or a trustee – can help by looking in depth at your finances and examining the different scenarios that are available to deal with your tax debt.

    A skilled financial consultant should understand financing options such as mortgages and lines of credit, insolvency (proposals and bankruptcies) and also CRA policy. They should be able to help you plan and administer the decided upon solution. You can also count on them to remain in your corner, protecting your interests throughout the entire process.

    If you have a large tax debt and can’t pay, time is not on your side. The longer you wait to deal with it the more leverage the CRA gains.

    Don’t wait. Call DebtCare today at 1-888-890-0888.