Filing a Request for Taxpayer Relief
When the Canada Revenue Agency (CRA) assesses you with interest and penalties, it is their procedure that they apply them to every late payment and return. These costs can add up very quickly, leading to many people looking for CRA taxpayer relief. While the CRA recognizes this and has a taxpayer relief provisions that are known as the Taxpayer Relief Program, there are potential downsides as well.
Once you have been assessed or reassessed by the CRA, your tax debt is due immediately. Failure to file or pay may lead to huge penalties and daily compounding interest. In order to seek relief, you will have to complete a taxpayer relief form and apply to be accepted into the program.
Once you are in the program, the CRA may grant relief on interest and penalty amounts that you owe. The good news is that the program works – but you have to do absolutely everything right. The CRA’s main goal is to collect the money owed to it, so while there are taxpayer relief provisions, the CRA strongly prefers that they collect their debt in full.
The CRA has made the program appear easy but have built in many complex tripwires that can quickly disqualify you (so they can get the interest and penalties anyway). You might start out thinking that you just need to read a few examples taxpayer relief letters, fill out a taxpayer relief form and you’ll be accepted. Unfortunately, that often isn’t the case.
To be successful you need to navigate the program correctly and, like all CRA processes, the steps are complex and often confusing. Experience is the only way to increase your chances of success and that means you need professional help.
It is not just filling out a taxpayer relief form. You have to build a strategy that heavily depends on the facts, your unique situation, and your position. This will allow you to make a request for taxpayer relief in a manner that plays to your strengths.
The answer lies with one of the few tax solution specialist companies that has experience using CRA’s bureaucracy and rigidity against them.
Making a Successful Request for Taxpayer Relief
Working with an experienced team that understands the ins and outs of CRA processes, how to analyze tax situations, and how to successfully negotiate with the agency is essential when making a request for taxpayer relief.
The CRA has the advantage of knowing its own processes inside and out, plus it knows that taxpayers often desperately need relief and that this desperation can lead to mistakes. If you work with tax professionals, you level the playing field and give yourself the best opportunity at getting CRA taxpayer relief.
Here are some of the main factors a successful Taxpayer Relief application needs to take into account:
- Taxpayer Relief time limitations – Previous cases have clarified that individuals are eligible for relief for up to 10 years retroactive from the date of the Taxpayer Relief application (and no longer that the tax year in question must itself be within that 10 year period).
- To qualify, your application needs to lay out grounds in one or more of the following areas: extreme financial hardship, medical issue, death, error on the part of CRA, extreme circumstances. Then you need to show support and how this reasonably caused the interest and penalties to occur.
- Error on the part of CRA would include undue time delays by CRA in assessing the taxpayer. This is very common with objections and most recently with the long, drawn out legal fights that CRA has had with tax shelter schemes (such as Global Learning and Gifting Initiative or GLGI) and suspended dealings with objections to old assessments until the first batch of cases was through the courts.
- Document, document, document – the more you can prove, the better. CRA’s bureaucracy loves “show me, don’t tell me” packages. Make it easy for the CRA agent to tick off his boxes leading to a recommendation to approve your application. Remember that as soon as the bureaucrat sees a hole or weakness in your application, the “DENIED” stamp can come out and he can stop working on your file.
Remember, this is not a case of looking for examples taxpayer relief letters and copying them. Each tax situation is unique and each taxpayer relief form and application must be structured based on your individual circumstances if you want to have success.
If you are facing a rejected application for Taxpayer Relief, you may resubmit with rebuttals for a second review. A very experienced professional at a tax solutions company knows exactly how to work situation into one of two advantages for you: (a) get a proper second review done, or (b) catch the CRA in not doing it properly and bring this forward at a judicial review.
If you resubmit for a second review, the CRA appoints another agent to review your file but this agent will have similar goals and processes as the first agent, so the likelihood of a different result is quite small.
Despite the potential difficulties of the process, filing for CRA taxpayer relief properly is important. If you have a legitimate case, you should certainly have your case filed properly so that you have the best chance of success. Taxpayer relief provisions are in place so that those with legitimate issues have a chance at relief.
Taxpayer Relief can offer significant savings when it comes to penalties and interest – but these waters need careful navigation to obtain approval. Farber Tax Solutions has the knowledge and expertise required to do so. Our team is made up of ex-CRA, legal, and accounting professionals who understand how to handle CRA taxpayer relief cases and a wide variety of other tax issues. We know that dealing with the Canada Revenue Agency can be very complex, time-consuming, stressful, and difficult. However, we also believe that it is important to have your issues heard and your situation resolved as best as possible. Contact us today for more information.