When the Canada Revenue Agency assesses a tax debt, they can be unyielding in their quest to collect what is owed. CRA powers are great, and if you owe, consider that debt one that WILL be collected.
When CRA collections calls start, this should not come as a surprise. They are usually calling for one of two reasons: you have not filed and it is your legal obligation as a Canadian citizen to do so, or you have filed, and your assessment has led to a tax debt owing.
You’ve ignored the calls thus far – what is the worst that could happen? We’ll tell you.
If you have not made any steps to correct the above two scenarios, the CRA will likely send out a Requirement to Pay. This 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. It may be sent to your bank ordering the bank to immediately freeze all of your bank accounts, and then to forward any money in the account to the CRA to pay off the debt. A Requirement to Pay may also be sent to your employer requiring them to garnish a portion of your 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 they may face having to cover the amount themselves.
A frozen bank account, wage garnishment, even a lien on property, are all common enforcement actions taken by the CRA every day. They are legal actions being issued with the hopes that you will comply – either filing your taxes, or more often, paying your tax debt.
If your bank account has been frozen, your wages garnished or a lien placed on your property, there are a few actions you can take to remedy the situation.
Pay off the debt. Since these enforcement actions are most often leveraged for outstanding debts, the best way to have them removed is by paying the debt, in full. If this is possible, do it.
If you don’t have the ability to pay, you will need to negotiate a realistic repayment plan. One might assume the best way to do this is to go directly to the CRA. We strongly urge you to reconsider, as this will often lead to divulging more information than anticipated – information which could then be used against you – and will result in a payment plan you likely won’t be able to stick to. The CRA considers their debt the most important, and thus will place it before all others – making it hard for you to make other payments.
Our advice? Speak with an experienced tax specialist, one with the knowledge regarding CRA methods and expectations, and the ability to negotiate on your behalf. This will result in a payment plan which you can actually afford.
At Tax Solutions Canada, our team of ex-CRA professionals know how to handle each unique case that comes our way. Call us today at 1 888-868-1400.