subject: The Cra Will Accept Payment Plans! Some Conditions Apply [print this page] If you have or, are about to have a large tax debt you may be thinking how am I going to pay this? I want to start this article by clearly stating that if you have a tax debt (even if you have a dispute over the amount) and you have the ability to pay your tax debt, pay it.
The interest the CRA will charge on the tax debt will be astronomical. Also, as long as the CRA has determined that you owe them money they will try to collect it. This could include imposing a wage garnishment, property lien, freezing your bank account or placing a set off on your receivables. These are just a few of the most common CRA enforcement measures.
If you dont have the means to pay the tax debt in full, this means you will have to make a satisfactory repayment plan arrangement with the CRA, if you want to avoid enforcement action. You should never attempt this type of negotiation with the CRA on your own. Negotiating with the CRA is never easy. Its always best to deal with an accounting firm who is familiar with CRA policy and negotiates with the CRA on a regular basis.
Here are some things that will usually happen during a typical CRA payment plan negotiation.
1. The CRA will always demand payment in full.
2. A CRA enforcement agent can usually accept repayment plans up to 24 months. The only way to entice them to do this is to prove that you cannot otherwise pay the debt in part or in full now.
3. This is where financial disclosure comes in. The CRA will often require financial disclosure that supports your claim that you cannot pay your tax debt in full but you could repay the debt in over 24 months or less. This disclosure statement will include disclosure about where you work, bank and what assets and investments that you have. This is why trying to negotiate with the CRA your own, can be dangerous. What if they gather all of your personal financial information and then still wont accept a monthly payment plan? Now they have all of your financial information and are able to proceed with enforcement action.
When we negotiate with the CRA we use general information. We do not provide any disclosure to the CRA about our clients, until we have a firm agreement from the CRA that the payment plan will be accepted. This ensures that the CRA doesnt use your payment plan proposal as a fishing expedition to obtain your financial information. The CRA is more inclined to believe and agree to a payment plan that is proposed by a professional firm as opposed to self represented taxpayer.
The CRA will entertain any offer as a means to gather more information about you as they ultimately have the final decision whether they will accept or reject your proposal. If this article speaks to, you need to determine, do I have the means to pay the tax debt in full? If the answer to this question is no you should seek a professional firm to negotiate a payment plan with the CRA as soon as possible. You literally cant afford to wait. For more information visit www.fightbacktoday.ca.
by: Mark Feldstein, CA, Mark Feldstein and Associates
