Imagine that you owe the Canada Revenue Agency (CRA) a lot of money (or maybe you don’t have to imagine) and you’ve been ignoring their collection letters and now the phone calls have begun. You decide to ignore those calls too. Guess what the CRA is going to do next and without any further warning? That’s right…a CRA wage garnishment!
A CRA wage garnishment is one of the most common collection tools that CRA will use to enforce payment of your outstanding debt. CRA does not need to go to court and get permission before issuing this powerful document. A CRA wage garnishment can be issued at any time once your debt becomes legally collectible (i.e. if you haven’t filed a Notice of Objection to dispute the amount). CRA will usually give you one written warning that legal action will commence if they do not receive payment in full within 14 days. Once that deadline passes, all bets are off in terms of what CRA will do next, but whatever they do, it won’t be pleasant.
What does a CRA wage garnishment mean for you? If you are an employee, CRA will issue this garnishment to your employer, directing them to take up to 50% of each of your pay cheques and send it to CRA. Once the garnishment is received, your employer has no choice but to do as CRA commands. In addition to the financial pain that a wage garnishment will inflict on you, what about the pain of embarrassment? Now your employer has been made fully aware of all your tax problems with the CRA. Word will often start to spread throughout your company, and soon most of your colleagues become aware of your CRA problems.
The best thing to do is to seek help before the problem reaches the point of a garnishment. However, don’t despair if the garnishment has already been issued! There is still an excellent chance to get it reduced or better yet removed all together! Make no mistake, once CRA has the garnishment in place, they are now in a position of strength and have you at a distinct disadvantage.
This is where knowing how to properly negotiate with the CRA collector comes in handy. The collector is playing a game – a very serious one – but you don’t know the rules. You do have rights – and CRA cannot keep legal action in place that causes you “undue hardship”. The key is that you have to prove to CRA what your ability to pay is toward this debt. If you can only afford $500/month and the garnishment is taking $1,000/month from you, then they are violating their own collection policies! A voluntary payment arrangement is the way forward with the CRA, but that is easier said than done. Dealing with a CRA collector is not a “do-it-yourself” project.
Don’t turn to just anyone to solve your tax problem. Call Tax Solutions Canada today for expert advice from their ex-CRA and tax specialists: 1-888-868-1400 FREE.