Tax Debt & Payment Arrangements

A call or letter from a CRA Collections officer can be stressful, particularly when you do not have the money available to pay the entire balance immediately. For a small business, CRA Collections action can also create an immediate cash-flow problem that affects payroll, suppliers and day-to-day operations.

At Fiszman Tax Law, we help individuals, business owners and small businesses deal with CRA Collections, negotiate payment arrangements and respond to enforcement action.

We assess your financial circumstances, deal directly with the CRA Collections officer and work toward a practical resolution based on what you can realistically afford.

The important thing is to act. Ignoring CRA Collections usually gives you fewer options, not more.

Book a Consultation or call 613-505-0877

Can You Negotiate a CRA Payment Plan?

Yes. If you cannot pay your CRA tax debt in full, it may be possible to negotiate a payment arrangement that allows you to repay the balance over time.

Many people refer to this as a CRA payment plan. The CRA generally calls it a payment arrangement.

However, CRA payment arrangements are not simply handed out to anyone who asks for more time. The CRA may look closely at your ability to pay and can require information about your income, expenses, assets, liabilities and overall financial circumstances.

The question is not simply whether you would prefer to pay over time. The CRA Collections officer may want to understand why you cannot pay the debt immediately and what you can reasonably afford to pay.

That is where preparation can make a significant difference.

How We Help With CRA Collections

We begin by reviewing the tax debt, the status of the CRA Collections file and your financial circumstances.

We can then deal directly with the CRA Collections officer on your behalf and work toward a resolution that reflects your genuine ability to pay.

Our work may include:

• reviewing the amount owing and the status of your CRA Collections file;

• communicating directly with the CRA Collections officer;

• assessing your income, expenses, assets and liabilities;

• preparing financial disclosure to demonstrate your ability or inability to pay;

• developing a realistic repayment proposal;

• negotiating a CRA payment arrangement;

• responding to existing or threatened CRA enforcement action;

• dealing with Requirements to Pay, wage garnishments and bank account garnishments;

• addressing liens and other CRA Collections measures;

• reviewing refund and credit set-offs;

• considering taxpayer relief for interest and penalties where appropriate; and

• helping you understand the obligations that must be maintained while a payment arrangement is in place.

How Long Can a CRA Payment Arrangement Last?

There is no single repayment period that applies to every CRA Collections file.

The appropriate arrangement depends on the amount owing, your financial circumstances, your ability to make payments and the CRA's assessment of the situation.

In appropriate cases, we have negotiated CRA payment arrangements that spread repayment over a period of approximately 6 to 24 months.

Every situation is different, and a particular payment period cannot be guaranteed. The objective is to put forward a payment proposal that is realistic, supportable and based on genuine financial need.

Preparing Financial Disclosure for CRA Collections

A successful CRA payment arrangement may require more than telling a Collections officer that money is tight.

The CRA may want financial information showing what you earn, what you spend, what assets you own, what liabilities you have and what funds are realistically available to pay the outstanding tax debt.

For a business, this can involve looking at cash flow, operating expenses, payroll, rent, supplier obligations, receivables and other financial commitments.

For an individual, it can include employment or self-employment income, housing costs, household expenses, debts, assets and other financial obligations.

We help prepare and present the financial information supporting the proposed payment arrangement and explain why immediate payment of the full CRA debt is not realistic.

CRA Collections and Enforcement Action

The CRA has significant legal powers to collect unpaid tax debt.

If a debt is not resolved voluntarily, CRA Collections may take enforcement action to recover the money owing. Depending on the circumstances, this can include garnishing wages or other income, issuing a Requirement to Pay to a bank or another third party, redirecting money otherwise payable to you, registering the debt with the Federal Court or taking steps against assets.

For someone already struggling financially, CRA enforcement can make the situation considerably more difficult.

If you have received a warning from CRA Collections or enforcement action has already started, getting advice quickly can be important.

CRA Requirements to Pay

A Requirement to Pay is one of the collection tools available to the CRA.

It can require a third party that owes or holds money for you to send funds to the CRA instead of paying them to you.

Depending on the circumstances, a Requirement to Pay can affect:

• bank accounts;

• wages or other employment income;

• business receivables;

• payments owed to a contractor or business; and

• other amounts that would otherwise be payable to you.

If you have received a Requirement to Pay or have been told that one may be issued, contact us to discuss the status of the CRA Collections file and the options that may be available.

CRA Wage Garnishments

If you owe tax debt, the CRA may in some circumstances take collection action against wages or other sources of income.

A CRA wage garnishment can have an immediate impact on your ability to pay rent, mortgage payments and normal household expenses.

If CRA Collections has contacted your employer or you have received notice that wage garnishment is being considered, it is important to understand what has happened and what options remain available.

We can review the collection file, communicate with the CRA and determine whether a payment arrangement or another response is appropriate.

CRA Bank Account Garnishments

CRA Collections can also issue a Requirement to Pay to a financial institution.

For an individual, losing access to money in a bank account can create an immediate personal financial problem.

For a small business, CRA action against a bank account can be particularly disruptive. Money required for payroll, suppliers, rent and other operating expenses may suddenly become unavailable.

If your bank account has been affected by CRA Collections, or you believe enforcement is imminent, obtaining advice quickly may give you a better understanding of the available options.

CRA Liens and Federal Court Registration

CRA Collections may also take steps to register an unpaid tax debt with the Federal Court.

Once properly registered, the debt can have the same effect as a judgment of the Court and may support additional enforcement action against property or other assets.

If the CRA has registered or threatened to register your tax debt, we can review the circumstances and discuss how the debt may be addressed.

CRA Refund Set-Offs

The CRA may apply certain tax refunds, credits or other government amounts that would otherwise be payable to you against an outstanding CRA debt.

This is sometimes referred to as a set-off.

If you were expecting a refund or government payment and it has instead been applied against a tax balance, we can review the broader CRA Collections situation and advise you on your options for dealing with the remaining debt.

Taxpayer Relief for CRA Interest and Penalties

In some circumstances, it may also be possible to ask the CRA to cancel or waive some interest or penalties through the taxpayer relief provisions.

Taxpayer relief may be considered in circumstances involving events beyond the taxpayer's control, certain actions or delays by the CRA, financial hardship or an inability to pay.

Relief is discretionary. Simply owing a large amount of money does not automatically mean the CRA will reduce interest or penalties.

A taxpayer relief application should explain the circumstances clearly and provide appropriate supporting evidence.

We can assess whether taxpayer relief may be appropriate, prepare the application and supporting submissions, and deal with the CRA regarding the request.

Can Taxpayer Relief Reduce the Tax I Owe?

Generally, taxpayer relief is concerned with interest and penalties. It is not simply a mechanism for negotiating away income tax or GST/HST that was properly assessed.

That distinction is important.

A taxpayer may potentially have both a CRA Collections issue and a taxpayer relief issue at the same time. For example, we may work toward a payment arrangement for the outstanding tax debt while separately considering whether circumstances justify relief from some of the interest or penalties that have accumulated.

Personal CRA Tax Debt

CRA Collections problems are not limited to businesses.

We assist individuals dealing with personal income tax debts, reassessments that have resulted in balances owing, accumulated interest and penalties, CRA payment arrangements, wage garnishments, bank Requirements to Pay and other collection measures.

Sometimes the problem begins with a tax balance that appeared manageable but became increasingly difficult as interest accumulated or financial circumstances changed.

Others contact us only after a CRA Collections officer has called or enforcement action has begun.

Wherever you are in the process, the first step is understanding the amount owing, what CRA Collections has already done and what realistic options remain.

CRA Collections for Small Businesses

CRA tax debt can be especially challenging for a small business that is otherwise viable but experiencing cash-flow problems.

We work with owner-operated businesses, contractors, professionals, restaurants, hospitality businesses and other small businesses dealing with CRA Collections.

A business may owe:

• corporate income tax;

• GST/HST;

• payroll-related amounts;

• personal income tax owed by the owner; or

• amounts across several CRA accounts at the same time.

When the business is still operating, the goal may be to address the CRA debt without creating a repayment schedule that makes it impossible for the business to continue paying employees, suppliers, rent and other essential expenses.

That is why a properly prepared financial analysis and realistic CRA payment proposal can be so important.

GST/HST Debt and CRA Collections

GST/HST debt can become a serious CRA Collections issue for a small business.

When a business falls behind on GST/HST remittances, balances can accumulate while the business is also dealing with normal operating expenses and cash-flow demands.

If your business cannot pay an outstanding GST/HST balance in full, we can assess the situation, deal with CRA Collections and determine whether a structured payment arrangement is appropriate.

We can also help prepare the financial information needed to explain what the business can realistically afford to pay while continuing to operate.

What If a CRA Collections Officer Has Already Called Me?

Do not panic, but do not ignore the call.

A CRA Collections officer contacting you usually means the account has reached a stage where the CRA expects the debt to be addressed.

You do not have to negotiate the matter without understanding your financial position or your options.

We can review the collection file and, where appropriate, communicate directly with the Collections officer on your behalf.

This allows us to understand what the CRA is seeking, what enforcement action may already be underway and whether a payment arrangement or another strategy is appropriate.

Do Not Wait for CRA Collections to Escalate

Tax debt rarely becomes easier to deal with by ignoring it.

Interest can continue to accumulate on unpaid balances, and CRA Collections has enforcement tools available when a debt remains unresolved.

If you know you cannot pay a CRA balance in full, it may be better to address the problem before a garnishment, Requirement to Pay or other enforcement action occurs.

If collection action has already started, there may still be options.

The sooner you understand the CRA's position and your own financial situation, the sooner you can determine a practical way forward.