Secured Corporate Taxes Payment Plan To Continue Running Business

Case Background:

Farber Tax Law was asked to meet with the directors of “ABC Company” (ABC), who had originally reached out to Farber Financial in late 2017. 

ABC had been audited by the Canada Revenue Agency (CRA) for HST and Payroll source deductions, resulting in a total debt exceeding three-quarters of a million dollars. 

The directors had grave concerns regarding solvency, but after consultation with Farber Tax Law’s Director, James Bell, they decided to engage Farber Tax Law to represent ABC in negotiations with the CRA to secure a payment arrangement. 

The mission would be to resolve the arrears at a pace acceptable to the CRA, while allowing the company to continue operating successfully, and keeping ABC’s directors from potential personal insolvency.

The Farber Tax Law Approach:

Our first mission was to take over communication with the CRA and negotiate the removal of the Requirements to Pay that had been sent to the company’s bank. 

After intense conversations with the collector, we were able to convince him of giving us the opportunity to provide full financial disclosure in order to establish ability to pay, and successfully negotiated the cancellation of the legal action. The bank account was unlocked within the first week of our engagement.

During the following month, we invested time in building rapport, credibility and respect with the collector through timely updates and a steady flow of the information requested. The final disclosure and proposal from ABC was submitted to the collector. Within a very few days, the collector responded with acceptance of the 6-month payment arrangement to address the GST debt. 

The CRA also agreed to our proposal to suspend collection action on the Payroll debt, and was prepared to wait for the GST debt to be resolved in full, before demanding an arrangement be negotiated to pay the Payroll debt.

The 3-month initial engagement between ABC and Farber Tax Law had long concluded, and so ABC reengaged our services to assist them again with the required second round of negotiations. 

Since we developed a good professional relationship with the collector through the first negotiation, Farber Tax Law fostered a high level of credibility in the CRA’s view; and so our continued representation of ABC was a key element in a positive outcome for the next negotiation, as the quantum of Payroll debt had increased significantly due to the recent filing of the company’s T4 return. 

Once again, we were successful in getting the CRA to accept the desired payment arrangement proposed by ABC.

Unfortunately, a month and a half later, ABC breached the arrangement and failed to remain current. The CRA launched swift legal action against the corporate bank account, which all clients are made to understand will occur if a negotiated arrangement is not honoured.  

Once again we engaged with the CRA collections department in serious negotiations on behalf of ABC , and Farber Tax Law succeeded in getting the CRA to accept an amended payment arrangement that would remedy the missed payments.

The Result:

While ABC’s challenges to resolve all tax debts were daunting, Farber Tax Law involvement and credibility with the CRA was the key element in CRA’s willingness to work with ABC despite the length of the payment arrangement, and the unforeseen lapses in compliance. The company continues to operate successfully and works towards full payment of all taxes owing.