CRA Collections - Do they play fair?

How many people know their rights when it comes to dealing with the CRA?  My guess is not many.  Did you know that the CRA posts your rights on their website?  This is all good I know until you get the phone call or letter out of the blue saying you owe lots of back taxes and by the way we are charging huge interest on it as well.  This type of thing usually scares the crap out of most people and they assume (we know what happens when we assume, right?) that the CRA are only doing what is proper and are not infringing on our rights, right?  Besides they are the tax experts (insert roll of eyes here) they would let me know what my rights are correct? (I am getting tired of using the word right).  I mean, they are not going to lie to me are they?  If they tell me to do something it is going to be correct, right?  Well here is the rub.  Is it wrong to only tell you half the story?  Is it wrong to not let you know you have choices?  The truth is everyone has to make up their own mind on this one, but the CRA thinks it is ok to only tell you what they want you to know.  If you don’t know your rights then that is your problem.  So, you guessed it, it is story time yet again.

 I have a client who is going through an audit.  The audit is done, and yes the CRA is out to lunch yet again.  So we are objecting.  Here are some quick facts:  1) You have 90 days to object from the date of the reassessment, 2) CRA cannot start collection action (garnishee, seize bank accounts, etc) until the 90 days is up. They can still send letters, phone you and harass you though.    3)  If you miss the 90 days you can still object, but you must do so within one year of the notice of Reassessment.  4) Once you have objected to the reassessment CRA is not allowed to take collection action (as listed above) until the objection is resolved.  5)  If your objection is unsuccessful you can appeal.  If you appeal, the same rules as 1-4 above apply all over again.  6)  If the appeal fails then you can go to tax court.  Again 1-4 above apply again until the Tax Court renders a decision.

Now back to our story.  The client got a letter shortly after the reassessment (read 7 days) which stated the following:

“Your notice of assessment showed you had a balance owing.  That amount was due on the day you received the notice.  Our records show that you have not yet paid this amount.  The purpose of this letter is to inform you that if your outstanding balance remains unpaid, we may take legal action against you.  This could include garnishing your income or bank account, or seizing and selling your assets”

Legal action?!  Really?!

If you had not read above, where I told you your rights, would this type of wording scare the hell out of you?  If I did not know what I know, it would have scared me.  Problem (see #2 above) is that CRA cannot start legal action until the 90 day appeal period is up, and they cannot take legal action if the amount is under objection or appeal.  This means if you send in an appeal or are going to send one in then they have to back off.   Funny how the CRA forgot to mention those facts in the letter.    If this is not fear mongering, then I don’t know what is.  I mean you don’t suppose that they are deliberately trying to scare people, do you?  As Arsenio Hall use to say “kinda makes you go hmmmmmm, doesn’t it?   In the past there used to be a paragraph telling you that if you are appealing then you have the choice whether to pay or not, but interest will continue to accumulate.  At least they used to inform you of your rights.

Any way now you know.  Make sure you know your rights.  Don’t trust anyone else to look out for your best interest.  Above all else, DO NOT TRUST THE CRA TO TELL YOU YOUR RIGHTS.  After all they are on the CRA website so technically they have told you, right (insert sarcastic eye roll here)?

Last thought, if you want to read for yourself check out Information Circular 98-1R3 – Collections Policy.  It is always best to get things from the source.  CRA website:    www.cra.gc.ca