Finding Ways To Tax Debt Relief

Feb. 27, 2012 - PRLog -- The Canada Revenue Agency regulates tax debt, and other creditors do not have the same authority as the agency. Measures the Canada Revenue Agency can take include placing a lien on one's house, seizing money in investment and savings accounts, and more. A lot of factors can contribute to income tax debt, including cashing a RRSP, improper deductions when a large account is being closed, pensions of newly retired persons, working multiple jobs, and more.

Persons who look for information on applying for debt consolidation wonder whether this is possible - can they make a deal with the CRA (http://www.canadabanks.net/default.aspx?article=What+Debts+to+Consolidate+With+a+Consolidation+Loan)? This is a possibility in certain occasions. Borrowers who owe taxed but are unable to pay the full amount may want to discuss the terms of payment. The first step is to contact the nearest office of the Canada Revenue Agency and detail your financial situation. When offering a payment plan, you may propose to break down a larger amount, say $1,500 into 15 monthly payments of $100. It is up to the CRA to accept or reject your offer, taking further action as to collect the amount you owe them.

Keep in mind that even if the CRA accepts your proposal, you will still be charged interest and penalties until you pay your debt in full. Then, if the Canada Revenue Agency rejects your offer, they have the right to withhold GST credits and child tax credits until you pay off your debt in Toronto. In addition, they can garnish your wages and access money in your bank account. So, it is important to treat tax debt seriously.

The CRA does not accept payment plans that propose to pay less than the amount owed. This makes sense. If some people pay less, many others will seek the same. One option is a repayment plan where you work with the Canada Revenue Agency and a second option is to consider government programs such as the former CRA Fairness, now Taxpayer relief provisions. Under this program, the CRA can accept late-filed, revoked, and amended tax elections, waive penalties and interest, and offer income tax refunds. This can happen beyond the allowed 3-year period, but it is only offered to individuals and testamentary funds.

All this is possible because the Canada Revenue Agency is aware that in some cases, taxpayers are faced with unforeseen events and circumstances, making it difficult to meet their tax obligations. Among them are natural disasters like fire and floods, personal misfortunes such as sickness and death, service disruptions, and errors and incorrect information by the CRA (http://www.canadabanks.net/default.aspx?article=Get+Rid+o...).

In what cases does the CRA cancel interest and penalties? This is possible when human-made and natural disasters occur, as in the case of fire and flood. Serious accidents and illnesses form another category, including serious mental and emotional distress. Finally, disruptions in services and civil disturbances are a third category. The CRA also cancels penalties and interest when they result from the agency's own actions, such as processing errors as a result of which people are not aware of certain obligations.

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