Mark Feldstein & Associates

Mark Feldstein Personal Taxes, Video

Tax payers have disputes with the Canada Revenue Agency all the time. The problem is that if the CRA assesses or re-assesses you as having income and until the dispute is resolved, in most cases the CRA will pursue the money that they believe you owe.

Sometimes you may have claimed expenses or not declared income with the legitimate belief that it was okay. You may even be able to pay the tax debt in full, but out of principal, want to fight the CRA.

The CRA is the Federal Government with unlimited resources at their disposal. Here are some examples of what can happen if you are in the midst of a dispute where the CRA believes you owe them money and you are resisting.

1. Even if you have not filed your returns, the CRA can “arbitrarily” assess your income based on estimates.
2.  The CRA may assess penalties and will assess interest on the amount owed.
3. The CRA will pursue the collection of the debt and could garnish your wages, freeze your bank account and place a lien on your home (just to name a few enforcement remedies).

It is hard to be objective when you are in the middle of a tax dispute with the government. The best thing to do if you are in this situation is to hire a professional to deal with it. You want to choose a professional organization that has a good reputation and record for resolving tax payer disputes.

There are steps you can take, while resolving your dispute that will keep the CRA happy and enable you to avoid enforcement action all together. With this said, as long as you are perceived as “owing” money, the CRA will want to collect it, which is why you do not want to attempt to negotiate with the CRA on your own.

Mark Feldstein Personal Taxes

Mark Feldstein, Chartered Accountant, discusses some of the CRA’s tactics that even include the CRA publishing the names of those convicted of tax offences on their website.

Mark Feldstein Corporate Taxes, Personal Taxes, Video

Mark Feldstein, Chartered Accountant, discusses what can happen if you don’t declare your income to the CRA and what you can do to correct the problem if you are in this situation.

Mark Feldstein Corporate Taxes, Personal Taxes, Video

While an unresolved tax debt can wreak financial havoc on an individual and their family, what can be worse is the potential medical implications. Many Canadians who have left a tax problem (undeclared income or past due tax returns) unresolved for many years, begin to feel mounting anxiety, stress and often have physical side effects.

In 2008 the Associated Press reported on an AOL Health poll. According to the Associated presses report on the AOL poll, people dealing with mountains of debt are much more likely to report health issues like ulcers, anxiety, panic attacks, severe depression and even heart attacks. According to the AP/AOL poll and among the people reporting high debt stress:

• 27 percent had ulcers or digestive tract problems, compared with 8 percent of those with low levels of debt stress.
• 44 percent had migraines or other headaches, compared with 15 percent.
• 29 percent suffered severe anxiety, compared with 4 percent.
• 23 percent had severe depression, compared with 4 percent.
• 6 percent reported heart attacks, double the rate for those with low debt stress.
• More than half, 51 percent, had muscle tension, including pain in the lower back. That compared with 31 percent of those with low levels of debt stress.

People who reported high stress also were much more likely to have trouble concentrating and sleeping and were more prone to getting upset for no good reason.

In our business we primarily work with taxpayers, resolving tax problems that have existed for many years.

Here is one example of a common cycle we see:

1. A tax payer doesn’t file one or two years of returns. They don’t worry about it, usually because they may not have been contacted by the CRA and they think “it’s only a year or two”.
2. Another year passes and they realize maybe it is time to get the tax returns filed. Some will even go to an accountant, review their records, try to go backwards and estimate income, expenses and what they will end up owing. At this point, they think “uh oh, this is quite a bill”, not even considering how much it will be once the CRA assesses interest and penalties and applies it to balance.
3. One more year passes and along comes a demand to file from the CRA. Now the problem has quickly become serious. The CRA is after them and after all, what’s easier – filing the tax returns and facing the payment of the large tax debt that has been accumulated, or just ignore it a little bit longer? Some hope that, “maybe in another year they will be in a better financial position to pay the debt”.
4. Year five rolls around. They can’t sleep at night. They are getting demand after demand from the CRA. It is too embarrassing to ask family or friends for help. The CRA and the stress and anxiety associated to the tax debt becomes too much to bear.
5. Year 6 arrives and the CRA wants their file closed! The CRA proceeds to assess what they believe the taxpayer owes and demands payment of their estimate of the debt. Even worse, the CRA will freeze the tax payer’s bank account or place a lien on their home in an effort to force the tax payer to file their later returns.

This is a vicious and personally destructive cycle. A tax debt can be brought under control and it is important that an individual who has this type of problem, seek a professional to handle it. Our tax management practice places great emphasis on not only assisting the taxpayer to become compliant with the taxing authority but also to deal with the financial debt that will be left over once all income has been declared and past due returns are filed.

We see the physical consequences of avoiding and allowing a tax debt to get out of control every day.

If you are in this situation you don’t have to hide anymore and you should make a commitment to yourself to stop avoiding your tax problem. In the case of a tax problem, time is your enemy.

Mark Feldstein Corporate Taxes, Personal Taxes

if you are the shareholder of more than one corporation in Ontario, or across Canada for that matter you want to watch this video blog. Mark Feldstein discusses the Canada Revenue Agency and shareholder appropriation.

Mark Feldstein Corporate Taxes, Video

Mark Feldstein discusses possible ways that the new Harmonized Sales Tax (HST) will impact the way that the Canada Revenue Agency (CRA) pursue unpaid taxes.

Mark Feldstein Corporate Taxes, Personal Taxes, Video HST

I thought it was important to focus on discussing charitable donations as this week’s tax topic. The government is cracking down on individuals who have declared charitable donations from unauthorized charities on their tax returns.

You see, the Canada Revenue Agency publishes a list of authorized charities on their website and if you have claimed a donation to a charity that is not on the list you could be facing a reassessment and significant interest and penalties.

The CRA requires that all receipts for authorized charitable donations have the following content:

1. a statement that the receipt is an “official receipt for income tax purposes”,
2. your name and address,
3. the charity’s Business Number (BN)/Registration Number,
4. the amount of the cash donation or the fair market value of the non-cash donation,
5. the date of the donation (the year is sufficient for donations of cash),
6. the Canada Revenue Agency’s (CRA’s) name and Web site address (www.cra.gc.ca/charities), and
7. a unique serial number.

If you have made a donation that you have declared on a tax return that is not on the CRA list of authorized charities or it was on the list but your receipt does not contain the information outlined above the CRA will show you absolutely zero compassion, not IF but WHEN you get caught.

If you are in this situation there are a couple of things you can do. One thing you should not do is attempt to negotiate with the CRA on your own.

1. If the CRA does not know about your improper tax filing, you can make an application under the Voluntary Disclosure Program that if accepted, will save you from penalties and prosecution.
2. If the CRA has sent you a re-assessment or has already questioned a donation you have declared you may be subject to aggressive interest and penalties. If you cannot pay the debt, the CRA determines that you owe, in full, the CRA will then proceed to collect their money through enforcement remedies that could include wage garnishments and bank account freezes.

Mark Feldstein Corporate Taxes, Personal Taxes

I can’t say I was surprised when the CTV in British Columbia recently reported that Toronto has topped the list as Canada’s tardiest tax filing city in 2007, 2008 and again in 2009.

The reason this didn’t come as a surprise to me is because my firms focus is to work with taxpayers who have these types of problems. Being located in the GTA I see this more and more. So many individuals and business owners fall behind filing their returns unwittingly make errors on their returns or fail to maintain proper records. We usually meet our clients when the CRA has started to close in on them.

If you are in this situation you don’t have to let it go that far!

Not filing returns or failing to declare income on your returns is tax evasion and it is true that you could face administrative and even criminal penalties. The CRA even publishes the names those who have been convicted under the income tax act on their website!

If you owe tax for 2009 and do not file your return for 2009 on time, the CRA will charge you a late-filing penalty. The penalty is 5% of your 2009 balance owing, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months.

If they charged a late-filing penalty on your return for 2006, 2007, or 2008 your late-filing penalty for 2009 may be 10% of your 2009 balance owing, plus 2% of your 2009 balance owing for each full month that your return is late, to a maximum of 20 months.

There are 3 main elements to any tax problem:

• Administrative – getting your paper work prepared and filed.
• Financial – coming up with a long term financial strategy to deal with your tax debt.
• Personal - the personal, medical, financial, or extraordinary circumstances that may have occurred during that tax years in question.

We apply these elements to get your returns, objections and/or voluntary disclosures filed, to develop a long term strategy to deal with the financial aspect of your tax debt and fend off CRA enforcement action, to evaluate your circumstances to see if you have grounds for an interest and penalty relief, to step in between you and the CRA to help you make a fair deal that you can live with.

If you missed the April 30th deadline penalties accumulate each month after the deadline has passed. The faster you get your returns filed the more you will save in the long run. If you are behind more than one year filing your returns you should take this very seriously.

Mark Feldstein Personal Taxes

Mark Feldstein Video