A CRA Requirement to Pay is a very powerful enforcement action that the CRA uses to collect a tax debt or to motivate a taxpayer to file a past due return.
With no advance warning to you, the CRA sends a Requirement to Pay Notice to any of the following parties who may owe you money or who may hold your assets. The Requirement to Pay Notice informs them of your tax debt. For example, the Requirement to Pay Notice orders the bank to immediately freeze all your bank accounts. Money in the account is then forwarded to the CRA to pay off the debt. A Requirement to Pay may also be sent to an employer, requiring them to garnish a portion of an employee’s wages in order to pay off the tax debt. In both situations, the person receiving the Requirement to Pay is legally required to comply or face having to cover the amount themselves.
A CRA Requirement to Pay will likely cause a number of problems:
- Disruptive to businesses because it eliminates cash flow.
- Extreme financial hardship to individuals and businesses.
- It can strain relationships with creditors because pre-authorized payments will be returned, which will trigger both NSF fees from the bank and the creditor.
- It can damage your relationship with your bank once they learn that you have a tax problem.
There are ways to get a bank account unfrozen. However, once a CRA Requirement to Pay has been issued to the bank, if the CRA learns that funds were in the account that was frozen, they will be even less likely to discuss the removal of the Requirement to Pay. You will need a professional CRA negotiator to go in and work towards getting the CRA Requirement to Pay lifted. This can be achieved by showing that the CRA Requirement to Pay is interfering with your basic ability to live and pay for basic necessities of life like food and shelter, through negotiating a voluntary payment plan, or by leveraging other programs that will legally require the CRA to lift the Requirement to Pay.
You can entirely avoid a Requirement to Pay Notice by dealing with all your corporate and personal tax issues. Regardless of how far behind your filings are and how much you owe, a professional experienced in managing these situations can guide you and work on your behalf to resolve these issues.
The faster you get a Requirement to Pay lifted and your account unfrozen, the better off you will be – but it is not something that you will likely be able to accomplish on your own.
If a Requirement to Pay has been issued against you, we can help. Visit www.taxsolutionscanada.com or call 888-868-1400.