CRA Getting it Wrong - Ombusdman Stories

I hate to sound like a broken record or be perceived as someone with a vendetta against the CRA, but I feel it is my duty to let everyone know that the CRA do make mistakes (regularly), can be hard to deal with, and are slow in dealing with requests.  You can do everything right and still end up with problems that seem insurmountable.  The keys to remember are these.  Always keep your source documents (especially payment advices and cancelled cheques).  Don’t assume that you (or your accountant) did anything wrong (it’s a 50/50 chance that it was CRA who screwed up).  Don’t give up.  Fight till it is done right.

With this in mind the following are from the Taxpayers’ Ombudsman Report on the CRA.  The following are reproduced directly from the report verbatim.  They are actual complaints that the Ombudsman helped fix.

Mr. A is a small business owner who makes payroll remittances on a regular basis for his two employees. Mr. A told us that he took extra care when preparing his payments to the CRA to ensure that his instructions were clear.

For example, he wrote the applicable pay period on both the back and the front of the cheque, as well as in the fields specified on the remittance voucher. Mr. A complained that even with these clear instructions to the CRA, his monthly remittances were credited to the wrong month eight times in a three-year period. This misallocation caused the CRA to claim that Mr. A’s remittances were not up to date. To make matters worse for Mr. A, he was being assessed a penalty of 10% in addition to the debt that the CRA still considered he owed.

According to Mr. A, he called the CRA business enquiries line on five separate occasions in an attempt to rectify the errors, but was usually put on hold for long periods of time. Feeling frustrated, he wrote three letters of complaint to the CRA about these persistent problems. The CRA responded by correcting the allocation errors and offering him an apology for the inconvenience. Mr. A was even assured by the CRA that, in order to ensure quality service in the future, the employees in the payment processing section had been made aware of his complaint. It appeared to Mr. A that his complaints had been heard and meaningfully addressed by the CRA. However, several months after he received the letter of apology, the misallocations started again. Mr. A subsequently filed a complaint with our Office.

In reviewing Mr. A’s file we discovered that the most recent misallocation was due to a keystroke error. His payment had been entered manually into the wrong month by a CRA employee. Furthermore, our review of CRA’s letters to Mr. A confirmed that this was the second time the CRA had issued a written apology to him for its misallocation errors.

Ms. B’s story – Collections action due to misallocated payment

Ms. B was contacted by CRA Collections regarding debts arising from her corporate tax account for 2007, 2008, and 2009. Ms. B claimed, however, that she had paid off all her balances and should not have had any outstanding debts with the CRA — especially a debt consisting of penalty and interest charges for late remitting. She tried to explain this to the collections officer assigned to her account, to whom she appealed for assistance in correcting the accounting mistakes on her file. Instead, she was told to send copies of the front and back of the cancelled cheques in order to prove that the payments had in fact been made. Ms. B was also instructed to send a separate letter to her local tax services office requesting relief under the Taxpayer Relief Provisions for the penalty and interest charges that had accrued on the account, even though she insisted that they were assessed in error. She felt it was unfair that she had to spend so much of her time to prove and correct an error made by the CRA. As far as she was concerned, she had followed all of the instructions for making payments to the CRA yet her credibility was being questioned. She felt that the CRA was not taking responsibility for its own mistakes.

Our Office was able to intervene and resolve Ms. B’s complaint. We discovered that the CRA had misallocated the payment to her previously closed corporate account rather than her current account. While the CRA did eventually correct the problem and reverse the penalty and interest charges, Ms. B explained that her confidence in the CRA had been diminished. She was convinced that without the intervention of the Ombudsman, she would still be trying to navigate through the various departments of the CRA in order to undo the CRA’s misallocation errors.