Stopped CRA Legal Action And Secured Tax Payment Plan To Avoid Penalties
Mr. M. is a motor-cycle mechanic based just north of Toronto. His business is seasonal and fluctuates.
Mr. M approached Farber Tax Law as a sole proprietor owing both a personal and HST/GST balance. In addition, he had not filed his personal or business return for some years.
The Farber Tax Law Approach:
This was a complex case that required a two-part solution.
Initially, we informed the Canada Revenue Agency (CRA) that the figures currently owing on these accounts were arbitrary in nature and worked with them to set a schedule for filing. Secondly, we had to negotiate a payment arrangement, understanding that there would be amounts owing subsequent to the filing of proper returns.
To initiate negotiations with the CRA regarding a fair payment arrangement, Mr. M. had to complete an Income and Expense statement. Based on this information, it was further determined that Mr. M. did not have enough assets that could be sold or used as collateral to obtain a loan of any kind.
The CRA always requests payment in full immediately or regular payments in the shortest time frame possible. This generally equates to no longer than twelve months. In Mr. M. ‘s case, based on the combination of debt, his demonstrated ability to pay and the fluctuations in his business, he would require over thirty-three months to pay the total amount outstanding based on staggered payments.
Conversations with the CRA were lengthy due to Mr. M.’s filing situation, his ability to pay and the nature of the CRA’s policies and procedures.
Discussions with the collector on the account and the nature of the proposed payment arrangement escalated beyond the collector to her supervisor. This resulted in successfully making two separate arrangements that accommodated Mr. M.’s financial limitations.
The first arrangement was of nineteen months and addressed the HST/GST balance. This was to be followed by a fifteen-month arrangement which would take in Mr. M.’s T1 tax debt. Of particular importance was the fact that one arrangement would follow the other, essentially equating to a thirty-three-month arrangement and that the CRA effectively put a stay of legal action on the personal account while the HST/GST payments ran their course to make the situation work even though it was well outside the ordinary payment arrangement and the CRA’s normally undertaken policies and procedures.