CRA Collection and Enforcement Action Questions

If you are facing CRA collections, It is vital to be armed with the right information. Better yet , get the right representation. With ex-CRAs, tax lawyers and tax accountants on staff, Farber Tax Solutions can handle the CRA on your behalf.

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How can the CRA collect on my tax debt?

 

The CRA has extensive powers that enable them to collect on debts owed to them by taxpayers. The CRA must provide a taxpayer with legal warning, and an opportunity to pay the tax debt. However, if an acceptable arrangement cannot be made for payment, there are three primary tools the CRA will use to ensure that a taxpayer’s debts are paid:

  • liens;
  • garnishments; and
  • bank account freezes.

 

A lien is a legal claim against a piece of property, usually real estate. After placing a lien on property, it is possible for the CRA to seize and sell the property. Any amounts gained from the sale of the property are then placed against the tax debt. If the earnings from the sale exceed the tax debt, the remainder is paid to the taxpayer. The existence of a lien will be communicated to a taxpayer in writing. It is usually used as a tool of last resort, after the CRA has attempted to contact the taxpayer numerous times.

 

Garnishments are tools used by the CRA to take funds directly from sources paid to the taxpayer. For example, the CRA can require that a portion of your wages be paid directly to them, bypassing the taxpayer entirely. The CRA can garnish wages, pensions, support payments, accounts receivable, and many other forms of payment to the taxpayer. This is a very common tool used by the CRA to reclaim tax debts.

 

A bank account freeze is an order by the CRA to a bank to freeze an account held by a taxpayer. The taxpayer will be unable to withdraw funds, or take any action using this account until the freeze is lifted. The bank is also required to seize all funds in a frozen account and remit them to the CRA to be applied as arrears payments to the associated tax debt. This tool is used to place pressure on a taxpayer, as the taxpayer will have no access to funds from a frozen bank account.

Additional Frequently Asked Questions:

Does CRA need a court order to garnish me?

The CRA does not need a court order to legally garnish wages. They have the power to notify your employer directly and require wage garnishments to begin immediately.

If CRA has a lien on my house can they take it away?

Typically, CRA’s internal policy is that it will not seize and sell a taxpayer’s home, if it will result in the taxpayer having no place to live. The CRA can, however, seize and sell any property that is not the Taxpayer’s primary residence including vacation property and/or investment property.

Does CRA need a court order to take action against me?

Typically, CRA’s internal policy is that it will not seize and sell a taxpayer’s home, if it will result in the taxpayer having no place to live. The CRA can, however, seize and sell any property that is not the Taxpayer’s primary residence including vacation property and/or investment property.

Farber Tax Solutions can help you successfully deal with CRA problems. We utilize the experience of our tax experts to:

  • 1| Offer a comprehensive solution that is focused on achieving the most favourable possible outcome for your tax issue;
  • 2| Communicate with the CRA on your behalf and navigate the entire CRA dispute process; and
  • 3| Offer a complete solution to your tax problems, including ex-CRA professionals and tax lawyers from Farber Tax Law.

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