You file your taxes, but cash is tight, so you don’t remit payment. Time goes by and you still don’t manage to pay. You may occasionally receive a statement of account from the CRA, reminding you of your outstanding balance and indicating the amount of interest that continues to increase your taxes owing. More time passes – maybe as little as 90 days from the date your tax return was assessed, or maybe several months or even years.
And then one day you open a letter from CRA Collections, notifying you that you only have 14 days to pay your debt in full, and to contact CRA Collections. The letter warns you that failure to do so will result in legal action. Receiving this letter means that CRA is no longer willing to wait for you to pay your taxes in your own timeframe, and has assigned a collector to your account whose mandate is to get your account paid NOW. So, what do you do?
If you choose not to respond to this letter, you can expect increasingly unpleasant correspondence from the CRA to follow in due course. You will likely receive a form which confirms that the CRA has certified your tax debt in federal court, which is the official pre-cursor to the CRA proceeding with formal legal action against you. Failure to respond to the CRA at this point will most certainly result in legal action being taken. CRA may issue a Requirement to Pay – to your employer (garnishment of wages), to your bank (to freeze and drain your bank accounts), or even to your customers (forcing your accounts receivable to be paid directly to the CRA). The CRA may also register a lien on your home, or on other property you own.
CRA’s authority to impose collection action on taxpayers is vast. Add to this the fact that while some collectors will treat a taxpayer fairly and respectfully, there are many collections agents who will intimidate, threaten or pressure a taxpayer into a payment arrangement which they actually cannot afford, leaving them in even worse circumstance than before.
The CRA’s own Taxpayer Bill of Rights (found at http://www.cra-arc.gc.ca/E/pub/tg/rc4417/rc4417-13e.html) clearly spells out how taxpayers are entitled to be treated. However, collectors aren’t actually required to inform you of those rights – it’s up to you or your authorized representative to know the boundaries that CRA must respect, even while trying to collect money from you. Being uninformed puts you in an extremely vulnerable position when negotiating with the CRA – know your rights!
Call Tax Solutions Canada before you call CRA. We can help inform you about your rights as a taxpayer and protect you through the negotiation process. 1-888-868-1400.