Tax debts typically come with serious penalty and interest charges. Fortunately, as its name indicates, the Taxpayer Relief program (formerly known as fairness) allows taxpayers to apply for relief from penalty and interest charges. Individuals and businesses can request remission of penalties, arrears interest, and/or waiver of the accruing interest.
The legislation also enables taxpayers to request acceptance of late, amended, or revoked elections; as well as make requests for refunds or reductions in amounts payable that are beyond the normal reassessment period.
Getting relief from penalties and or interest, or acceptance of a statute barred reduction can often save folks huge money and make a life changing difference.
How to apply for Taxpayer Relief?
Filing a Taxpayer Relief application requires the completion of an RC4288 form (available on the CRA’s website) or submission of a letter outlining the specifics of the request. The Agency has the discretion to grant relief from penalty and/or interest when the following types of situation prevent a taxpayer from meeting their tax obligations:
- extraordinary circumstances;
- actions of the CRA;
- inability to pay or financial hardship;
- other circumstances
If filed using the correct form, with sufficient supporting documentation, a response from a Taxpayer Relief Officer can take anywhere from 4 months to 1 year or more depending on the program’s workload. The decision-making criteria used for determining who will be granted relief are:
- taxpayer’s history of compliance;
- whether the taxpayer knowingly allowed interest to accrue on a debt;
- whether the taxpayer exercised reasonable care and was not negligent in conducting their affairs; and
- whether or not the taxpayer acted quickly to remedy any delay or omission.
Taxpayers often request relief on the basis that “I cannot afford to pay my taxes, so I did not file my tax return, and then the CRA assessed me big tax debt, I can ask for relief because I had no money.” Big mistake. Failure to file a tax return is a criminal offence which can result in prosecution, so you should always file. Before an application is made to the Taxpayer Relief program, all outstanding returns must be filed up to date, otherwise the CRA will not even consider the application.
If you’re thinking that the Taxpayer Relief Provisions may be an option for you, do some research or speak to a tax solutions professional about how to construct the best argument for relief. And you should always make arrangements to pay the penalties and interest in any case in order to stop the interest clock from ticking should the request be denied. However, if you are not satisfied with the Officer’s decision, you may apply for a second-level review and there is an option for judicial review if the second-level review is unfavourable.
The Taxpayer Relief program is a great option, if you qualify, to reduce penalties and interest. Ready to file? Call Tax Solutions Canada today at 1 888-868-1400.