August 13, 2020
The CRA has the power to cancel penalties, interest and more under the Taxpayer Relief Program. Contact Farber Tax to learn more.
What is Taxpayer Relief?
If you don’t pay your tax debt on time, the Canada Revenue Agency (CRA) begins to charge daily compound interest on the outstanding amount. Even if you make a partial payment or if you have negotiated a payment arrangement with the CRA, the agency will keep charging interest daily on the remaining amount. Obviously, this can quickly add up to a very large amount. The agency can also charge penalties if you file your taxes late.
When you’re faced with a large tax bill and interest that keeps accumulating, it can sometimes seem like there’s nothing you can do and no hope to change your situation. However, there are CRA taxpayer relief provisions in place that can potentially help you afford your taxes.
The Minister of National Revenue is permitted to:
- Cancel or waive penalties or interest
- Accept late, amended, or revoked income tax elections
- Issue a refund or adjust a refund or reduce tax payable
One of the main reasons that people apply for relief is due to the potential reduction in interest and penalties.
The way the CRA taxpayer relief program works is that, in some circumstances, the CRA may agree to reduce or even eliminate penalties and interest charges. However, taxpayer relief is only available to people in certain situations. In addition, you must apply to receive taxpayer relief. This involves completing the RC4288 form and this form must be completed with great care. A successful application will require more than simply searching for a request for taxpayer relief letter sample and copying it.
The CRA will only grant relief in certain situations where circumstances beyond a taxpayer’s control prevented them from being able to file or pay on time, such as:
- Actions of the CRA
- Extraordinary circumstances (such as natural or human-made disasters, death, or illness)
- Significant financial hardship
Situations other than the ones listed here may also be accepted, at the discretion of the CRA.
The CRA requires specific poof and a strong case being presented before it will accept a request for taxpayer relief. The agency wants the tax debt that is owed to it and, in the eyes of the CRA, this includes interest and penalties. These charges are put in place to ensure compliance and to encourage people to pay their taxes on time. If they could easily be removed for anyone who wants them removed, the CRA would lose some of the leverage it has when dealing with taxpayers.
If you want to be accepted into the CRA taxpayer relief program, working with experienced professionals is critical. CRA processes are confusing and dealing with the CRA can be frustrating. Almost every interaction with the agency will be lengthy and possibly difficult.
The team at Farber has the skill and experience necessary to give taxpayers the best chance at being accepted into the taxpayer relief program. We will review your situation, determine the best course of action, prepare your argument, assist you in completing the RC4288 form, and work alongside you every step of the way. For more information on our services and how we can help, please contact us today.
How to File for Taxpayer Relief
As mentioned, if you want to have the best chance at being accepted by the taxpayer relief program, the process is more involved than simply completing a taxpayer relief form and waiting for the CRA to respond. Yes, you can potentially do this by completing the RC4288 form, but if you want to increase your chances of receiving relief, it is a good idea to have experienced professionals on your side.
CRA processes are complicated and often confusing. The Farber Tax team has extensive experience in managing taxpayer relief processes and negotiating and communicating with the CRA on a wide variety of tax disputes. We are comprised of experienced ex-CRA and legal professionals who know what it takes to get through CRA red tape and resolve tax disputes. When you work with our team, you are doing much more than finding a request for taxpayer relief letter sample and copying it with your name on top. You are gaining access to our professionals and increasing your chances of a successful taxpayer relief application.
When it comes to making a request for taxpayer relief, there are several factors that you need to keep in mind. Some of these factors include:
- An application must accurately explain the grounds that the relief is being requested under. You need to explain why the relief request is valid and provide supporting documentation and evidence to back up your claims. You must also explain why the situation you are detailing caused interest and penalties to be charged.
- If you are claiming that CRA delays or errors are the reason why the penalties and/or interest were charged, for example, you will need to accurately explain why the CRA’s actions resulted in delays or missed deadlines and provide proof to support your claims.
- The more proof you have to back up your claims, the better. The CRA would much prefer to receive the interest and penalties, so you will need concrete proof in the form of documents, letters, etc. to show that your situation, as you describe it, is accurate.
- CRA officials are very experienced and they have a detailed understanding of tax law and CRA processes, so it’s crucial to have a strong cased that is supported by evidence. Errors in your reasoning, missing documentation, and other such situations are likely to result in a rejection by the agency.
- Taxpayer relief provisions have a 10-year limitation period. This means that you can only apply for relief if the tax year that you are dealing with is within 10 years of the date on your taxpayer relief application. For instance, if you are hoping to receive relief for your 2010 tax return, you must complete and submit your application to the CRA by December 31st, 2020.
As you can see, the process of receiving relief can be complex. If you have any questions about your tax situation or if you are hoping to receive relief from interest and penalties, contact us today. We will work with you and give you the best chance of having your situation resolved successfully.
CRA Taxpayer Relief Provisions
The CRA will only potentially grant relief in certain situations. When completing a taxpayer relief form, you need to explain which of these situations applies to you.
CRA taxpayer relief provisions may apply in the following circumstances:
- Extraordinary circumstances beyond a taxpayer’s control that prevented them from filing on time or paying tax debt on time
- This includes situations of natural or human-made disasters (such as fires or floods), as well as civil disturbances or disruption of services (such as a postal strike), serious illness or accident, or significant mental or emotional distress (such as the death of an immediate family member).
- Actions of the CRA that were the primary reason for interest or penalties being charged
- For example, processing delays that caused a taxpayer to not be informed that an amount was owing in a reasonable time may be considered.
- Other CRA actions that may apply include errors in CRA material that caused a taxpayer to incorrectly make a payment or file a return, processing errors, undue delays in resolving objections and appeals, delays in completing an audit, or delays in providing information that resulted in a taxpayer being unable to meet their tax obligations on time.
- Severe financial hardship
- If there is a confirmed inability to pay the amount outstanding, the CRA may consider waiving or cancelling interest. This situation can occur when:
- Collection is suspended due to the loss of employment and subsequent financial hardship
- Situations where interest payments represent a significant portion of the payments. In these situations, a taxpayer would be unable to conclude a payment arrangement due to a large amount of interest
- Instances where paying the accumulated interest would cause the inability to afford basic necessities (such as food, shelter, medical expenses, etc.) for a prolonged period.
- The financial hardship must be considered severe and prolonged in order for a request for taxpayer relief to be accepted.
- The CRA requires significant financial disclosure before it will grant CRA taxpayer relief to someone on the grounds of financial hardship. For example, the CRA may ask for:
- Income statements
- Details of expenses
- Information on assets and liabilities
- Other financial information
- Before you provide the CRA with this important and sensitive information, you’ll want to make sure that you are using care and that you only provide the agency with the information it needs. While you will likely want to supply certain relevant information to increase your chances of having your request for taxpayer relief accepted, you will also want to avoid giving the agency too much information since it could possibly use these details against you.
- The CRA considers tax debt that is owed to it to be the top priority. This means, once it sees the details of your financial situation, it may require you to pay less towards certain other debts (such as paying only the minimum on your credit cards) so that you have more to put towards your tax debt.
- This is another reason why it is important to work with a professional. Our team understands what the CRA needs to consider taxpayer relief provisions and ensures that the agency gets only what it needs.
- If there is a confirmed inability to pay the amount outstanding, the CRA may consider waiving or cancelling interest. This situation can occur when:
What Qualifies for Taxpayer Relief (Extraordinary Circumstances)
As mentioned, if you hope to be approved by the taxpayer relief program, you will need to provide details about your situation and why you feel you deserve relief. The CRA taxpayer relief provisions can be offered in certain situations, but you need to explain why your situation applies and provide proof to back up your claims.
There are certain circumstances that may warrant relief, including:
- Extraordinary circumstances, such as natural or human-made disasters, civil disturbances, service disruptions, serious illness, accident, or emotional or mental distress.
- In these situations, the circumstances must have prevented the taxpayer from filing on time, making a payment when due, or otherwise meeting their tax obligations.
- Actions of the CRA
- In cases where the CRA provided incomplete, late, or inaccurate information, where processing delays resulted in a taxpayer not being informed that an amount was owing, or if other delays or errors prevented a taxpayer from filing or paying on time, relief may be granted.
- Serious financial hardship
- Relief may be granted in situations where the taxpayer is unable to pay due to loss of employment and severe financial hardship, where interest charges make up a significant portion of the outstanding amount, or where paying the interest and penalties would result in a prolonged inability to afford life necessities.
- Situations other than the ones listed here may also be accepted by the CRA on a case-by-case basis.
One section that many people have questions about and want more details is “Extraordinary Circumstances.” This includes situations such as:
- Natural or human-made disasters
- This include fires, floods, or other such issues
- Civil disturbances or service disruptions (such as a postal strike)
- Being in an accident or suffering serious illness
- Significant emotional or mental distress
- For example, the death of an immediate family member
When you complete a request for taxpayer relief, you will need to provide specific details about your situation and why you were prevented from filing or paying on time. The CRA will also want to see that you have proof to back up your points. Contact us today if you have any questions.
The CRA charges interest that compounds daily. This means the longer you take to pay your outstanding tax debt, the more you will owe. These charges can add up very quickly, and that can make paying your tax debt quite difficult. If extraordinary circumstances prevented you from filing or paying on time, and now you are faced with interest and penalty charges that are straining you financially and making it difficult to pay your taxes, applying for taxpayer relief can be a very good idea.
However, you’ll want to have experienced professionals on your side when you do. CRA agents are obviously very knowledgeable about its own policies and with all aspects of tax law. This puts taxpayers at a significant disadvantage when it comes to dealing with them. Working with the professionals at Farber levels the playing field and gives you the best chance of having a successful taxpayer relief application. For more information on how our team can help, please contact us today.
Filing a Request for Taxpayer Relief
When the Canada Revenue Agency (CRA) charges interest and penalties, it is their procedure that they apply them to every late payment and return. These costs can add up very quickly, leading to many people looking for CRA taxpayer relief. While the CRA recognizes this and has taxpayer relief provisions that are known as the Taxpayer Relief Program, there are potential downsides as well.
Once you have been assessed or reassessed by the CRA, your tax debt is due immediately. Failure to file or pay may lead to huge penalties and daily compounding interest. In order to seek relief, you will have to complete a taxpayer relief form and apply to be accepted into the program.
Once you are in the program, the CRA may grant relief on interest and penalty amounts that you owe. The good news is that the program works – but you have to do absolutely everything right. The CRA’s main goal is to collect the money owed to it, so while there are taxpayer relief provisions, the CRA strongly prefers that they collect their debt in full, including interest.
The CRA has made the program appear easy but has built in many complex tripwires that can quickly disqualify you (so they can get the interest and penalties anyway). You might start out thinking that you just need to read a few examples taxpayer relief letters, fill out a taxpayer relief form (the RC4288 form) and you’ll be accepted. Unfortunately, that often isn’t the case.
To be successful you need to navigate the program correctly and, like all CRA processes, the steps are complex and often confusing. Experience is the only way to increase your chances of success and that means you need professional help.
It is not just filling out a taxpayer relief form. You have to build a strategy that heavily depends on the facts, your unique situation, and your position. This will allow you to make a request for taxpayer relief in a manner that plays to your strengths.
The answer lies with one of the few tax solution companies that has experience using CRA’s bureaucracy and rigidity against them.
Taxpayer Relief can offer significant savings when it comes to penalties and interest – but these waters need careful navigation to obtain approval. Farber Tax Solutions has the knowledge and experience required to do so. Our team is made up of ex-CRA professionals who understand how to handle CRA taxpayer relief cases and a wide variety of other tax disputes. We know that dealing with the Canada Revenue Agency can be very complex, time-consuming, stressful, and difficult. However, we also believe that it is important to have your issues heard and your situation resolved as best as possible. Taxpayer relief provisions are in place so that those with legitimate issues have a chance at relief.
Contact us today for more information. Our experienced team of ex-CRA and legal professionals is here to help. We will give you the best chance at having your taxpayer relief application accepted.
The Taxpayer Relief Form
The request for taxpayer relief begins with the RC4288 form. When completing this form, you need to accurately state why you are applying for relief, the grounds under which you are applying for relief, and provide documentation and other evidence to support your points.
To give yourself the best chance of success, you will need to do more than look for a request for taxpayer relief letter sample and add your name and contact information. While this may technically meet the requirements needed on the RC4288 form, you will want to add more detail if you hope to have your request accepted by the CRA.
A key aspect of a successful request for taxpayer relief is to provide specifics and to back these specifics up with documentation and other firm proof.
For example, if you are applying for relief because you were hospitalized due to a car accident and therefore unable to file and pay your taxes on time, you will want to clearly state the date or your accident, how long you were in the hospital, and then back up these claims with physical documents (such as police accident report or hospital discharge papers). The more specific you can be (both on the reason why you are applying for relief as well as information on how and why this reason prevented you from meeting your tax obligations), the more likely your request will be accepted.
Remember, situations that may be considered for relief include instances where circumstances outside of your control prevented you from meeting your tax obligations, such as:
- Natural or human-caused disasters (such as fires or floods)
- Civil disturbances or service disruptions (such as postal strikes)
- Significant emotional or mental distress (such as the death of a close family member)
- Serious illness or accident
- Actions of the CRA (processing errors, incorrect information, delays in providing information, other undue delays)
- Serious financial hardship (such as a situation where paying the interest and penalties would make it extremely difficult to afford basic life necessities, situations involving a loss of employment, or circumstances where interest and penalties make up a significant portion of the outstanding amount owing)
The CRA may also be willing to provide relief in situations that are not noted here.
If you are dealing with significant interest and penalties and you believe that these charges were due to a situation out of your control that prevented you from meeting your tax obligations in a timely manner, and you are considering CRA taxpayer relief provisions, working with an experienced professional is critical.
When you work with the team at Farber, you gain access to our years of experience in communicating and negotiating with the CRA and benefit from our knowledge and skill. When you have our legal and ex-CRA team on your side, you increase your chances of having your request for taxpayer relief be successful. Contact us today to find out how our team can help and what we can do to improve your chances of a successful request.
Making a Successful Request for Taxpayer Relief
Working with an experienced team that understands the ins and outs of CRA processes, knows how to analyze tax situations, and has what it takes to successfully negotiate with the agency is essential when making a request for taxpayer relief.
The CRA has the advantage of knowing its own processes inside and out, plus it knows that taxpayers often desperately need relief and that this desperation can lead to mistakes. If you work with tax professionals, you level the playing field and give yourself the best opportunity at getting CRA taxpayer relief.
Here are some of the main factors a successful Taxpayer Relief application needs to take into account:
- Taxpayer Relief time limitations – Previous cases have clarified that individuals are eligible for relief for up to 10 years retroactive from the date of the Taxpayer Relief application (and no longer than the tax year in question must itself be within that 10 year period).
- To qualify, your application needs to layout grounds in one or more of the following areas: extreme financial hardship, medical issue, death, error on the part of CRA, extreme circumstances. Then you need to show support and how this reasonably caused the interest and penalties to occur.
- Error on the part of CRA would include undue time delays by CRA in assessing the taxpayer. This is very common with objections and most recently with the long, drawn-out legal fights that CRA has had with tax shelter schemes (such as Global Learning and Gifting Initiative or GLGI) and suspended dealings with objections to old assessments until the first batch of cases was through the courts.
- Document, document, document – the more you can prove, the better. CRA’s bureaucracy loves “show me, don’t tell me” packages. Make it easy for the CRA agent to tick off his boxes leading to a recommendation to approve your application. Remember that as soon as the bureaucrat sees a hole or weakness in your application, the “DENIED” stamp can come out and he can stop working on your file.
Remember, this is not a case of looking for example taxpayer relief letters and copying them. Each tax situation is unique and each taxpayer relief form and application must be structured based on your individual circumstances if you want to have success.
If you are facing a rejected application for Taxpayer Relief, you may resubmit with rebuttals for a second review. A very experienced professional at a tax solutions company knows exactly how to work situation into one of two advantages for you: (a) get a proper second review done, or (b) catch the CRA in not doing it properly and bring this forward at a judicial review.
If you resubmit for a second review, the CRA appoints another agent to review your file but this agent will have similar goals and processes as the first agent, so the likelihood of a different result is quite small unless you have professionals on your side.
Despite the potential difficulties of the process, filing for CRA taxpayer relief properly is important. If you have a legitimate case, you should certainly have your case filed properly so that you have the best chance of success.