Dealing with CRA Collections
Some CRA collectors can be very aggressive and their job is to collect the amount owing as they see it on their screen. It does not matter if the amount is inflated as a result of an incorrect CRA audit outcome, sometimes the aftermath of a Net Worth Audit. Therefore it is key to protect your rights and prevent CRA from ruining your personal or business achievements.
Note, CRA cannot collect tax debt that is in dispute except for amounts considered to be held in trust by the taxpayer for the government such as GST/HST and payroll deductions (CPP/EI). Otherwise, if a taxpayer files a Notice of Objection CRA must cease collections action, such as lifting the hold they may have on a bank account. An appeal to the Tax Court of Canada has the same effect.
Dealing with an inaccurate/inflated tax assessment and debt is difficult under normal circumstances. When there are no, or partial restrictions, on CRA’s ability to collect, taxpayers face the unenviable position of having to dispute the assumptions underlying CRA’s assessment while at the same time limiting the damage from collections action.
For instance, CRA may garnish your business’s bank accounts making it difficult to continue operations. Note, they will do this, and are legally obligated to, even if the tax debt is clearly inflated as a result of a CRA audit. Accordingly, expert assistance is recommended to successfully navigate the fine line between appeasing CRA and the complete destruction of your personal and/or business finances.
Methods to Dispute the Tax Debt or Avoid Liability?
We can conduct a comprehensive review to determine if there are options to dispute the amount at issue. Options only discernable to experienced tax practitioners.
What is a CRA Payment Plan?
If there are no options to dispute the respective tax debt then taxpayers may be able to arrange a payment plan.
A payment plan is an arrangement with the CRA to pay the tax debt over a specified period. The CRA will consider a payment plan under certain circumstances. They will request financial details to determine ability to pay. Based on that CRA may work with the taxpayer to establish a timeline and regular payment amounts.
Tax Collection Limitation Periods
CRA cannot collect tax debts beyond certain time periods. The periods vary according to the type of tax debt. For example, if it is a payroll tax debt CRA cannot collect beyond six years from the date of the tax assessment. However, this may not stop them from trying.
How Can We Help?
We can conduct a comprehensive review to determine what options are available to avoid or reduce liability. Note, it is not always ideal to hire an ex-CRA collector to handle your matter. There have been documented cases where the ex-CRA collector has covered up the inappropriate behaviour of their former colleagues, severally handicapping their client’s case.
Contact us for a free consultation. We will review your facts and outline the steps necessary to challenge CRA’s position.