We came across an individual recently (we promised not to disclose their information) who had a horrendous experience with CRA, one that was so ridiculous that we asked for their permission to post the story.
Jan (name changed) is self-employed and filed her T1 Gens for her 2012 tax year in April 2013, before the tax deadline. She had a small tax debt owing of $10,000.00. When she received her acknowledgement and Notice of Assessment in June of 2013, she promptly made out 10 cheques to CRA in the amount of $1,000 per month, making copies and sending them to CRA by registered mail. CRA commenced cashing the cheques and by January of 2014 Jan’s tax debt was only approximately $4,000.00. Jan was out of the country and unbeknownst to him/her the cheques stopped coming out of the bank account. Around March of 2014 (3 months after the last cheque came out of the bank account), Jan returned to the country, went to the bank and learned that his/her bank account was frozen by CRA.
First, the bank teller said that there was an issue with Jan’s bank account and then went to get a supervisor. The whole thing was extremely embarrassing. In Jan’s case, she had the $4,000 available so CRA received their money right away. Infuriated by the entire situation, Jan called CRA and was told that they didn’t have a record of the last 4 cheques and so when they ran out they proceeded to freeze the account. CRA also acknowledged not sending Jan any notice that they would be freezing the bank account or any sort of demand to pay. The only paperwork Jan had received up until the account was frozen was regular monthly statements.
In this instance, Jan was lucky because she had the money to pay. However, many people in similar situations do not. Those who experience having their bank accounts frozen over much larger amounts of tax debt can face a very serious problem.
The key things to note here are:
1) CRA didn’t need a court order to seize Jan’s bank account.
2) CRA didn’t send any notice or warning to Jan (they do have a form that they often send out called a Requirement to Pay which usually comes around the time an account is frozen).
3) CRA often does not wait for long periods of time before taking enforcement action. If they are in a position to collect on a debt they will do so.
A frozen bank account is both embarrassing and inconvenient, especially when you have other bill payments coming out of it. This can quickly cause significant financial strain, and should be dealt with immediately.
If CRA has taken enforcement action against you, or you are afraid that they are going to soon, please contact Tax Solutions Canada today by calling 1-888-868-1400.