If you owe the Canada Revenue Agency (CRA) money for unpaid taxes, then you should probably know that they benefit from a special set of laws which empower them to collect outstanding debts in some non-traditional ways. Unlike regular creditors, the CRA can garnish your wages, freeze your bank accounts, intercept money that’s payable to you, impose tax liens on property that you may own, as well as seizing and selling any assets that are in your name.
For those who have unpaid tax debts, you should know that the CRA charges interest on the outstanding balance, which is compounded daily beginning on the 1st of May and continuing until the preceding year. As such, the interest on your unpaid tax debt begins to accrue interest from the day after your tax return is due. In addition, if you file your tax return late, then you’ll be subject to a late penalty, which amounts to 5% of the total unpaid tax debt.
Thankfully, there are solutions to this vicious cycle of debt. The taxpayer may seek relief from the penalties and interest charges that are owed, in addition to the unpaid tax debt. This can be done by filing a request for taxpayer relief. The request must usually be based on the occurrence of some major event that had an effect on the taxpayer’s ability to pay the unpaid tax debt. At LawyerSelect.ca, we work with many Toronto Tax Lawyers who specialize in seeking Taxpayer Relief requests from the CRA. Contact a client specialist now to get connected to some of the best Toronto Tax Lawyers.
Anyone whose owed money to the CRA knows that it can be a nerve-racking experience, especially because they have the power to withhold HST rebate cheques and child tax credits, as well as the ability to freeze your bank accounts and garnish your wages. What’s worse is that they won’t stop charging your penalties and interest charges on the unpaid tax debt until it is paid in full.
One thing you should know right from the get-go is it’s futile to appeal to the CRA’s compassion; they have none. If you attempt to contact the CRA directly in an effort negotiate the quantum of the unpaid tax debt, you’ll likely be told that they’re not going to reduce the amount owing, nor will they waive the penalties and late-payment interest charges. This is because CRA agents lack the power to accept an amount less than that which is owing. What they may offer you, however, is to enrol in a structured payment plan, whereby you make incremental payments in satisfaction of the unpaid tax debt. Not surprisingly, many people default on those payments as they’re unable to afford them based on their current financial situation.
Well this all seems bleak. Is there a way out of this vicious cycle? The answer is yes, there is a program called Taxpayer Relief, which allows the CRA to reduce the penalties and the interest owing on the unpaid debt, but you have to qualify. The follow is a list of situations where a taxpayer may be granted Taxpayer Relief by the CRA:
It is very important to note that the process of seeking Taxpayer Relief is highly formalized, and very technical. There is no room for error, and any mistakes that are made may permanently prejudice your eligibility into the program. As such, it is unwise for you to venture into the process alone, and unrepresented. At LawyerSelect.ca, we take the guesswork out of finding the right Toronto Tax Lawyer for you. We know the area of speciality for many Toronto Tax Lawyers, and we’ll gladly put you in touch with one who specializes in the Taxpayer Relief program.
If you applied for the Taxpayer Relief program and were rejected, or if you were accepted, but are still unable to pay your tax debt because of its large sum, then you may want to speak to your Toronto Tax Lawyer about the possibility of filing a consumer proposal. The benefit of making a consumer proposal is that it will stop any collection actions that have been initiated, allow you to pay your tax debt in structured monthly payments, freeze the interest that’s accruing on the unpaid tax debt, and in some cases, even reduce the quantum of the unpaid tax debt.
At LawyerSelect.ca, we work with many Toronto Tax Lawyers who specialize in assisting individuals with complicated tax problems by engaging the services of other tax professionals, like licenced trustees and accountants. Contact us anytime to get connected with a skilled Toronto Tax Lawyer who can assist you in making a consumer proposal.
One thing is for sure: the unpaid tax debt needs to be paid, someway, somehow. As such, the worst thing you can do is ignore it hoping it’ll go away. It won’t. In fact, the debt will continue to grow as penalties are levied and interest accrues. The CRA will also gradually get more aggressive in attempting to collect the debt. There’s no question that engaging in direct negotiations with the CRA can be futile, and even dangerous. You may unwittingly prejudice yourself by making an incorrect statement, or disclosing information that should have remained secret. That’s why the best way to protect yourself is by retaining the services of a skilled Toronto Tax Lawyer who can expertly navigate through the various programs offered by the CRA. At LawyerSelect.ca, we work with many Toronto Tax Lawyers, and we know what their areas of specialty are. So take advantage of our free Lawyer Referral Service and get connected with a Toronto Tax Lawyer who will help you pay off your unpaid tax debt.