If you owe money to the Canada Revenue Agency they have many resources at their disposal to collect the money from you. One very common resource that they deploy is called a “Requirement to Pay.”
A CRA “Requirement to Pay” is a document that the Canada Revenue Agency will send to a third party, like a bank requiring them to remit to the Canada Revenue Agency any funds that you have held there. The CRA “Requirement to Pay” will indicate the amount of debt that you owe and will indicate the CRA agent who is assigned to your file. When a CRA “Requirement to Pay” is issued to a bank for example, the bank will freeze your bank account. The bank then holds your frozen funds for 30 days and then remits the money to the Canada Revenue Agency.
Before a CRA “Requirement to Pay” is issued, the Canada Revenue Agency will usually send you a letter demanding payment first. In the demand letter the Canada Revenue Agency will demand that you pay the debt in full or make arrangements within a prescribed period of time.
Many times consumers will receive a demand letter from the Canada Revenue Agency and contact the Canada Revenue Agency to make payment arrangements. Sometimes the Canada Revenue Agency will accept a short term payment plan (3 months – 6 months) with the condition that the consumers make complete financial disclosure to them. This includes where they bank, where they work and with the understanding that after 3-6 monthly payments they will once again review the taxpayer’s financial ability to pay. This financial disclosure can result in a CRA “Requirement to Pay” being issued at the end of the 3 or 6 months because the Canada Revenue Agency will now know where the taxpayer has his or her bank account.
If you have a debt with the Canada Revenue Agency it is important to take action. Owing money to the Canada Revenue Agency can be intimidating, especially when you know that you have no ability to pay off the debt. Waiting for collection action to occur can present many challenges and where a CRA “Requirement to Pay” is issued to a bank, it can harm a taxpayer’s relationship with his or her bank and even result in an account closure. If it is an account where payroll is deposited, it presents an incredible inconvenience and financial hardship because once the bank account is frozen any funds deposited into it will be held and remitted to the Canada Revenue Agency. This is worse than a wage garnishment because in this case the Canada Revenue Agency can not only seize your savings but can also capture 100% of any payroll payment deposited to the account.
Your best plan is to acknowledge that you have a financial problem and work with a debt counsellor who has the expertise, tools and resources to help you avoid a CRA “Requirement to Pay” or work to get your funds returned to you if a CRA “Requirement to Pay” has been filed.
The worst thing that you can do is attempt to negotiate with the Canada Revenue Agency yourself, making financial disclosure to receive a short term payment plan. The CRA has incredible authority and resources and your best chance at being successful is by working with a professional who knows how to deal with them.