Talk to a Licensed Insolvency Trustee (“LIT”)
In past newsletters we have discussed what to do if you owe taxes and the collection process by Canada Revenue Agency (“CRA”). Now that both the personal and business tax deadlines have now passed, most people have either received their refund or an assessment indicating a tax debt is owing.
If you owe taxes and are struggling to come up with the funds to pay the CRA, you need to speak with us right away. Don’t delay.
Why? When you owe a tax debt, the CRA has the responsibility to collect it. When your file gets assigned to an agent, that agent will use their best efforts to collect because that is their job. This will likely include calling you and/or sending you letters demanding payment.
If you receive a call from CRA, be sure that the person contacting you actually works for CRA. If you receive a call saying you owe money to the CRA, you can call CRA to confirm that you do or if you are registered online, check “My Account” to be sure.
CRA uses a number of methods to try and collect the tax debt:
Firstly, CRA collections will demand payment. If you pay, all further action stops. If you don’t pay, the collection action gets stepped up a notch.
If you fail to pay, the agent assigned to your case will begin contacting you to try and find out as much as they can about you.
Once you have engaged in a dialogue, the agent may try to negotiate with you if you provide further information. They may offer to consider a payment plan. They will provide you with a financial disclosure form asking you to disclose where you live, work, bank, monthly income and expenses, debts, and assets.
Lastly, if you can’t make the payment, for whatever reason, the CRA collections department will take action. Remember that financial disclosure form? It now proves very handy for that agent:
- Your banking information will be used to freeze your account;
- Your employment information will be used to garnish your wages;
- Your housing information will be used to place a lien on your home.
The best thing to do if you have a tax debt that you know you can’t pay is to speak to an LIT. The LIT can go through your finances and help you determine the best financial plan for your situation.
You need to act fast, because depending on what enforcement action CRA deploys, because by not doing so may lessen your negotiating power in the future.
Start by scheduling a meeting with us to discuss the solution best suited to your situation. This meeting is free and there is no pressure or obligation for you to make a decision right away.
We have the expertise to find the solution best suited to you.
Call us, it’s not too late. (604) 605-3335.