Is There Any Way to Make Tax Debt Easier to Pay?
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- 1 Is There Any Way to Make Tax Debt Easier to Pay?
- 1.1 Making it Easier to Pay Tax Debt
- 1.2 Negotiate a Payment Plan
- 1.3 See if Taxpayer Relief Applies to you
- 1.4 Get Assistance from a Professional
- 1.5 Debt Settlement Resources & Articles
- 1.6 What Is A Consumer Proposal (updated 2021) And How Much Does It Cost?
- 1.7 Bankruptcy Oshawa
- 1.8 New – What is Surplus Income Payments
Making it Easier to Pay Tax Debt
When you owe money to the Canada Revenue Agency (CRA), it can be surprisingly tough to pay it down if you don’t have the money right away. One reason that tax debt is so hard to pay off is because of the way the CRA charges interest. The agency charges compound daily interest on all outstanding tax debt starting with the day after it’s due. If you owe a large amount, and you’re not able to pay for a while, this interest can add up quite quickly. After a while, it can grow to an amount that is very tough to deal with.
Another reason why it’s often so hard to deal with tax debt is that the CRA has several powers that makes it different from other creditors. While most creditors can take you to court if you do not pay your debts, the CRA is able to take significant actions even without a court judgment.
One of the strongest powers that the agency has is a Requirement to Pay notice, and this notice can be sent without going to court. The CRA can send a Requirement to Pay to any third party that owes you money or that holds money for you. This means they can send the notice to an employer, a client, a bank, or any other such party.
When a Requirement to Pay is received, the party that receives it must comply with it. A Requirement to Pay typically states that the party that receives it must direct money to the CRA where it will go towards a person’s tax debt. For example, if a Requirement to Pay is sent to your employer, they will need to send a specified percentage of your pay to the CRA rather than to you. If this notice is sent to your bank, the bank must freeze your account and direct the funds in the account to the CRA.
Obviously, no one wants to end up in a situation where their income or the money in their bank account is taken. This means you’ll need to come up with a way to deal with your tax debt. Here are some tips that can make dealing with tax debt easier.
Negotiate a Payment Plan
In most cases, the CRA wants people to pay their tax debt in full right away. However, if this isn’t possible for you, the agency may be willing to accept monthly payments. You will need to negotiate a payment plan with the CRA if you wish to pay your tax debt in monthly payments.
Note that the agency may require you to provide it with details on your income, expenses, and other financial information to show that you attempted to pay in full before you requested a payment plan. Since this is sensitive financial information, it’s a good idea to speak with a tax professional before you provide the CRA with these details. A professional can help you understand how this data could be used before you agree to submit it to the CRA.
See if Taxpayer Relief Applies to you
In some cases, such as instances where circumstances beyond your control prevented you from paying your taxes or filing a tax return on time, the CRA may be willing to reduce or eliminate interest and penalty charges. This may also be possible in situations of severe financial hardship.
However, the CRA will still require the full amount of tax debt to be paid. It will not accept less in any negotiation.
Applying for taxpayer relief can be a difficult process and it is one that needs to be handled properly to ensure the greatest chance of your application being successful. Working with a professional can greatly improve your chances.
Get Assistance from a Professional
If you are unable to deal with your tax debt, getting professional assistance can be a good idea. One type of professional that you can turn to is a CRA tax expert. When you work with a tax solutions organization, they can help you understand the situation you are dealing with, communicate and negotiate with the CRA on your behalf, and give you the best chance of having your tax situation resolved.
A Licensed Insolvency Trustee can also be helpful since tax debt can be included in consumer proposals and bankruptcies. If you are unable to pay what you owe, one of these processes may be right for you. Most trustees offer a free consultation where they review your situation and provide you with details on the debt relief options that may help.
Debt Settlement Resources & Articles
A consumer proposal is a legal procedure that is developed for people that are not able to pay their debts completely, but who have the capability to pay a portion of the cash owing.
Filing for bankruptcy in Oshawa it was never easier than right now. Contact our LITPro Licensed Insolvency Trustee in Oshawa for a free consultation and start being debt free.
Your Surplus Income Can Determine The Length Of Your Bankruptcy. Your bankruptcy trustee takes a lot more into account than simply your paycheque.
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