Back Taxes: Taxpayer Relief

How do you Spell Tax Relief from back tax interests and penalties?

If you have filed your tax return and have been assessed interest and penalties that are unfair, there may be some tax relief. CRA has the ability to waive or cancel back tax interest and back tax penalties in certain situations. CRA will consider waiving or canceling the interest and penalties for extraordinary circumstances that were out of your control. Some of examples of situations that may have delayed a taxpayer in filing a tax return on time or making a back tax payment when due or otherwise complying with a tax obligation are as follows:

• Natural or manmade disasters such as floods;
• Civil disturbances such as a postal strike;
• Serious illness or accident;
• Serious emotional or mental distress such as a death in the family.

Actions by the CRA may also be cause for taxpayer relief. Actions such as:

• Processing delays that result in the taxpayer not being informed within a reasonable time that an amount was owing;
• Errors in material available to the public that led to the taxpayer filing returns based on incorrect information;
• Incorrect information provided to the taxpayer such as incorrect installment information;
• The information in the disclosure must be more than one year out of date. This requirement exists because the Voluntary Disclosure program was not intended to allow for penalty avoidance for recently late-filed returns.
• Errors in processing;
• Delays in providing information resulting in taxpayers not being able to meet their tax obligations in a timely manner i.e. information to make installment payments or arrears payments;
• Undue delays in resolving an objection, appeal or an audit.

Financial hardship can be another reason that CRA will waive or cancel the interest and penalties. Some situations where financial hardship would be considered are as follows:

• A collection has been suspended because of an inability to pay caused by the loss of employment and the taxpayer is experiencing financial hardship;
• A taxpayer is unable to conclude a payment arrangement because the interest charges represent a significant portion of the payments; or
• Payment of the accumulated interest would cause a prolonged inability to provide basic necessities (financial hardship) such as food, medical help, transportation, or shelter; consideration may be given to cancelling all or part of the total accumulated interest.

Usually relief is not provided because of financial hardship unless the situation is accompanied by extraordinary circumstances. For example, when a business is experiencing extreme financial difficulty and enforcement of such penalties would jeopardize the continuity of its operations, the jobs of the employees, and the welfare of the community as a whole, consideration may be given to providing relief of the penalties.

For requests to cancel or waive interest or penalties based on an inability to pay or financial hardship, the CRA requires full financial disclosure from taxpayers, including a statement of income, expenses, assets, and liabilities.

CRA will also look at other factors when considering your case. Some of the other factors are as follows:

• Whether or not the taxpayer has a history of compliance with tax obligations;
• Whether or not the taxpayer has knowingly allowed the balance to exist on which arrears interest accrued;
• Whether or not the taxpayer has exercised a reasonable amount of care and has not been negligent or careless in conducting their affairs;
• Whether or not the taxpayer has acted quickly to remedy any delay or omission.

CRA is not obliged to provide tax relief. If you simply filed your tax return late for no apparent reason or you have been consistently late in filing your tax returns, you probably are not going to have success with this approach. This process is not a quick solution. The process can take anywhere from two months to multiple years. The CRA does not use the Taxpayer Relief Provision (TRP) to settle debts. If you are interested in settling your tax debt, you would have to investigate a consumer proposal or bankruptcy. If you do want to utilize the TRP, you will have to have all your tax filings current. However, if you do have a case, it would be a good idea to engage a certified professional tax accountant from Tax Doctors Canada for help to improve your chances of success with your back tax relief.

Tax Doctors Canada has 3 office locations (by appointment only) in Toronto, Markham and Mississauga to serve you. You can also have one of our certified tax accountants assist you with your personal tax return requirements remotely from the comfort of your home utilizing Tax Doctors Canada's secure document transfer portal. We accept clients from Canada and worldwide.

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Tax Doctors Canada offers a stress free Initial Phone Consultation with one of our professionally certified tax accountants. We Welcome Your Business!

Do not hesitate any longer. Contact Us by Email or call 1 855 TAX DOCS (+1-855-829-3627) for a free no obligation consultation regarding all your back tax filing needs. If you have back tax issues, the professional tax accountants at Tax Doctors Canada can negotiate a settlement for you with the tax department and possibly save you interest, penalties and prosecution.