If you have been holding off filing your taxes because you know that once you receive your assessment you’ll have a debt hanging over your head, you are not alone. For many Canadians, unpaid tax debts represent a significant amount of debt that many people are carrying. Just remember: owing money to the Canada Revenue Agency (CRA) is not illegal (even though it is extremely stressful), but it is illegal not to file your income taxes – so get that done!
An unpaid tax debt can be stressful and intimidating, especially since the CRA has the power to withhold HST/GST and child tax credits, freeze money in your bank account and garnish your wages. The CRA will also continue to charge penalties and interest on the money you owe until your debt is paid in full. This week, we will go ahead and assume that you’ve filed all of your paperwork and are now trying to figure out a way to deal with that tax debt and get some tax debt relief.
First of all, if you are thinking that the best approach is to appeal to CRA sympathies and plead your case, we urge you to reconsider. Calling the CRA directly and attempting to negotiate a reduced amount isn’t going to get you anywhere, except sitting with a payment plan you can hardly afford and the knowledge that the CRA now has the information required to come after you with enforcement action (frozen bank account, property lien, wage garnishment).
Unfortunately, the CRA won’t reduce a debt because you can’t afford to pay it. Agents don’t have the power to make a settlement for less than what is owed. If you owe X amount of money, X is what you will be required to pay.
Additionally, as mentioned, the CRA is not interested in establishing a payment plan for an extended period of time. If you can’t reasonably pay the debt in full in a short period of time, you will likely be looking at enforcement action in the near future.
So what options are available to you? Tax debt relief does exist in the form of Taxpayer Relief. This is a program which allows for a reduction in penalties and interest (which can often grow rapidly and surpass the initial tax debt amount). There are a few stipulations though, certain requirements that need to be met.
These are the circumstances where a taxpayer can file for CRA Taxpayer Relief:
- A natural disaster
- A death
- Medical/health problems
- Financial hardship
- An error on the part of the CRA
Applying for Taxpayer Relief is a formal process, one that does not permit mistakes, so it is best to enlist the services of a tax professional to ensure the process is completed in a way to ensure your best chance for approval.
Want to find out more about CRA tax debt relief and the Taxpayer Relief Program? Call Tax Solutions Canada today at 1-888-868-1400.