National Post (Latest Edition)
Be prepared when Canada Revenue Agency comes calling
Tax lawyer Dale Barrett has one simple question for smallbusiness owners and self-employed people who run afoul of the Canada Revenue Agency: Can you really afford to go up against the CRA alone?
Barrett, president of Barrett Tax Law and bestselling author of the 2013 guide, Tax Survival for Canadians: Stand up to the
CRA, says that at any given time thousands of Canadians are involved in disputes with the CRA over everything from back taxes to unfair audits. “Whatever the reason is for the dispute,” he says, “the CRA can be an intimidating organization.”
Barret warns that the Canada Revenue Agency wields enormous power, especially when it comes to applying penalties and collecting on what it figures it is owed. Unlike a regular creditor, the CRA can (and will) freeze bank accounts, intercept monies payable to the business, garnishee wages, and seize and sell assets — all without a court order, Barrett says.
“The CRA doesn’t have to inform you they are doing this,” Barrett says. “They can take a series of steps to quickly discredit and suffocate a business — forcing it to shut down. The biggest misconception people have is that the CRA is on their side, but there’s an adversarial relationship.”
Barrett Tax Law has represented thousands of self-employed and corporate clients in many types of CRA disputes, including cases where the taxpayer fell victim to a tax scam and unwittingly supplied false information on a tax return. In such cases, many taxpayers have the full weight of the CRA come crashing down on them with gross negligence penalties equal to 50% of the tax reduction that would have been obtained had the return been processed as filed.
What angers Barrett is that this penalty has been applied to victims of highly skilled tax scammers. “People are shocked,” he says. Instead of receiving the tax reductions they were promised, victims are slapped with a crippling CRA penalty that is payable in full immediately. Barrett is petitioning the government to amend the Income Tax Act to allow for a range of penalties for gross negligence (below the standard 50%), and to provide immediate relief to taxpayers who have been penalized as a result of participation in a tax scam.
Barrett also has a division that works exclusively with accountants to support their clients, and along with tax court files, his client list includes a growing number of referrals from accountants uncomfortable going up against the collections arm of the CRA. “We’ve dealt with most of these collectors already,” Barrett says. “It’s like a hostage negotiation, and we’ve got credibility. We make a payment arrangement in which the CRA gets the tax debt repaid over time and the business gets to keep operating. I like to address a situation before a company’s reputation has been destroyed.”
Watch for Barrett Tax Law’s new office opening in Ottawa this spring, but take the first step toward cleaning up your tax problem now by contacting Barrett Tax Law toll-free at 1-877-8-TAX TAX (829 829). Investigate the firm’s full line of services, including cross-border tax assistance and business succession planning, at www. barretttaxlaw.com.
the biggest misconception people have is that the cra is on their side