In my last article I talked about how to prevent or stop a garnishee issued by Banks, Credit Card companies and Collection Agencies. In this article I will talk about how to prevent or have released a garnishee from the Federal Government (Canada Revenue Agency, or CRA). This type of garnishee is called a Requirement To Pay.
As you may have guessed, the government has different powers than a bank or credit card company. Because the government is the creditor and the courts are the government, the government does not need to ask itself permission first to garnishee. Therefore, the government offices responsible for collecting past due accounts can issue Requirements To Pay directly from their offices. Therefore to stop their garnishees you have to react quicker; you will not get a “heads up” as you would when a private sector creditor gives you notice that they are about to sue you.
As with the private sector, the faster you act, the more time you have available to arrange payment. So people say to me, “You used to work for the Canada Revenue Agency, when should I call them to discuss payment? After someone from the local tax office calls?”
“No,” I tell them. “April 30th ,when the payment was due.” At this point they look astonished. I explain that this gives them the most time to pay the tax arrears. Then I tell them that if they cannot pay their overdue taxes in eight months, then one day they will likely be filing a consumer proposal or a bankruptcy. Then they look stunned and they will either ask why, (or they tell me that I am crazy).
Everyone will stop working one day, and when that happens, your income will be significantly less than the year before. If you are not paying your Income Taxes in the year you make the money, you will have an Income tax debt to pay without the income necessary to pay it.
Should you decide to wait until the Canada Revenue Agency calls, be prepared to pay off your taxes in a relatively short time period or face a garnishee. Deal with it and work out a mutually satisfactory arrangement. That means one you can afford and that pays the income taxes within the time frames allowable by the Canada Revenue Agency.
Should you wait until the Requirement To Pay was sent, call the person who issued it (their name and phone number are on the requirement To Pay in the top right corner) and try to work out a payment arrangement. If they will not make a payment arrangement, there are only a couple of reasons why.
First, you have been negligent in filing your returns and have become a problem for the government.
Second, what you are offering to pay will never get you out of the problem, i.e., you will be paying this debt off over too long a period of time. They are not allowed to give you advice, so they will either wait for you to bring up bankruptcy or broadly hint at the solution.
Your ability to pay your income tax is not what is left over after everyone else is taken care of, but prior to your normal living. So if your basic necessities (that does not include credit card payments) do not allow you to pay your income taxes, you have to generate more income from your business, or look for another way to make an income.
The Canada Revenue Agency is the only creditor who cannot choose who they extend credit to, therefore, they will take a firmer stance with you if you are a repeat bankrupt.
As with a bank or credit card company, the only way to have a garnishee stopped, if you cannot negotiate a payment arrangement, is to file a consumer proposal, or to file an file bankruptcy. The Canada Revenue Agency will not participate in a debt management program so to pursue that avenue is a waste of time and money.
A Licensed Trustee is the only one who can file either a Consumer Proposal or an Assignment in Bankruptcy. If the Canada Revenue Agency has control of your proposal, they have different standards for approving Consumer Proposals than the private sector.
We can explain this to you, as well as what would be your best alternative based on your specific situation, so please feel free to contact us at 310-PLAN or e-mail us and let us help you with your Canada Revenue Agency garnishee problem.
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