Poor accounting practices, procrastination, failed businesses and major life changes are just a few of the causes of income tax debt. Fear will inevitably set in as time passes and you will continue to fall further behind in filling your returns. Coming clean becomes harder to face as you realize what you are going to owe and the stark reality that the Canada Revenue Agency is going to come after the money.
The Canada Revenue Agency is known for taking aggressive collection action against those who owe them money. Not declaring income or failing to file your tax returns is far more daunting than most realize. Here is why:
1. Not declaring your income is income tax evasion in Canada
2. Not filing your income tax returns is tax evasion in Canada
There is no question that owing money to the Canada Revenue Agency can be financially devastating; however the simple fact is that it is not illegal to have a tax debt. With that in mind, what would be the next logical step if you haven’t filed your tax returns in many years? Act now, do not keep ignoring the problem.
Once you have filed your tax returns, declared all income, and your tax debt has been assessed, you may still realize that satisfying the Canada Revenue Agency is no easy task. They can be difficult by demanding payment in full and adding interest and penalties or not accepting a monthly payment plan. In this case, what you are dealing with is a financial problem.
If you know/agree that you owe the money and there is no way you can pay in full, do not let fear lead you to expensive tax lawyers or trustees in bankruptcy.
A tax lawyer may charge you thousands of dollars to devise a payment plan with the Canada Revenue Agency.
A trustee in bankruptcy represents not only the person filing for bankruptcy, but ALSO the Canada Revenue Agency and the individuals other creditors. Directly providing your personal financial information to a bankruptcy trustee would be akin to handing it directly to the Canada Revenue Agency. While the bankruptcy trustee may offer great services to get you to sign, they will be the first one to come after you on behalf of the Canada Revenue Agency. Keep in mind that they are compensated based on the amount of the settlement they negotiate. Simply put, if they get the Canada Revenue Agency a larger settlement (you pay more), they will, in turn, earn more money.
An accountant may not be the solution if the problem has gone too far. More often than not accountants don’t know how to effectively negotiate for taxpayers who have a significant tax/financial problem.
Where do you turn if you owe the money and cannot pay?
There are Federal Government programs available to individuals in financial crisis. A good financial consultant can review your specific tax debt, and explain all of the options that are available to you. This includes government programs that will protect you from the Canada Revenue Agency. For more information call 888-890-0888 or visit www.debtcare.ca.