It’s a fraught time of the year for many people. Canada Revenue Agency (CRA) is issuing tax assessments. As a former Canada Revenue Agency collections enforcement officer, I can say with considerable confidence that fear and anxiety are among the most common impediments to addressing and resolving tax problems. Fear and Anxiety are at the core of a dynamic I like to call, “The Two P’s” – Panic and Paralysis. It’s a dynamic that plays out every day with thousands of Canadians.
You receive one of those brown envelopes in the mail and the cycle begins. You’ve been re-assessed, a CRA collections officer is threatening legal action; the audit division wants more information. Panic sets in. You don’t know what to do, so you do nothing. If you’re one of many Canadians facing a tax liability or an audit this year, having basic information can go a long way in alleviating the crippling panic and paralysis that makes tax problems far worse than they are.
When it comes to CRA audit and collection matters, the worst possible thing to do is to do nothing. Doing nothing sends the wrong message to a collector or auditor. Failing to answer or respond to their phone calls, or not responding to the letters they send, says to the collector or auditor that you don’t care about taxes. This is not going to help you.
Steps to Making a Tax Problem Manageable
There are a few key steps to making a tax problem manageable. If you haven’t filed taxes for an extended period of time and you want to, evaluate the complexity of your situation first. Can you file the return(s) yourself? If so, get started. If not, gather up the necessary information and seek out a professionally designated tax practitioner. Tax accountants deal with taxes all day, every day. Preparing taxes properly is what they do. Find one you’re comfortable with and that is within your budget and engage them to prepare your returns. Even if you don’t have the money to pay, file the returns anyway. Failing to do so will result in penalties that are avoided simply by filing the return. If you’re on the hook for some interest or penalty, look into the taxpayer relief provisions. The guidelines for relief can be found here.
Canada Revenue Agency auditors and collectors are ordinary people. They’re just trying to get through their day the same as you and me. They are given the extraordinary responsibility of administering and enforcing the Income Tax act and Excise Tax Act. But with that responsibility comes a degree of latitude. Some taxpayers will benefit from the available latitude and some won’t. Be one of the ones that do by being polite, professional, and forthright.