Tax debt is a problem that can sneak up on you very quickly. They can cause you headaches in the present and in the future if you don’t know how to deal with it. Luckily, there is debt help available in Toronto and across Southern Ontario from a Licensed Insolvency Trustee (LIT) such as Harris & Partners Inc.
Tax debt results from owing money on your income taxes after you have filed your tax returns. Generally, you should be able to work out a payment plan with Canada Revenue Agency, but in the event that you are not, other options are available.
The first step to dealing with tax debt is to file any outstanding tax returns. Many people feel overwhelmed and confused by these, but you don’t need to worry – there are several options available for help with this, from software or CRA guides. It is important to file even if you think you owe money. Failing to file your taxes properly can incur additional fees, leading to a greater amount owed. If you find that your debt is over $10,000, then you should get an accountant or tax preparer to review your returns and ensure you are taking advantage of all the possibilities under the Income Tax Act to reduce what you owe. If you are genuinely unable to pay at all, then you have a few options available to you:
The first avenue that you should try is applying to the CRA under the Taxpayer Relief Provisions. They may grant you relief from penalty or interest when certain situations prevent you from meeting your tax obligations. These include:
Extraordinary circumstances that might prevent you from paying include, but are not limited to:
Actions of the CRA may also cause them to cancel or waive penalties, such as delays in processing, errors in CRA material or processing, or other delays.
Even if your circumstances do not fall in to one of the situations above, you may still be eligible for relief. You need just apply for it.
Another option available is to file a consumer proposal with the help of a licensed insolvency trustee. At Harris & Partners Inc., we will help negotiate with the CRA to try and reduce the amount you owe. Many Canadians use this option to set up a payment plan that is feasible for them to pay and is acceptable for the government. It allows you to decide the amount you can realistically afford to pay based on your budget and financial situation.
If the government does not find your terms acceptable or you cannot pay at all, then the final option is to declare bankruptcy. Harris & Partners Inc. will help you do so, filing the paperwork necessary. Declaring bankruptcy should only be used when you have no other options, however. It does cancel all your debt, but it will also leave a mark on your credit for at least 6 years, making rebuilding your financial credit much more difficult.
A Licensed Insolvency Trustee (LIT) is a federally regulated professional that provides advice and services to individuals and businesses in debt trouble. Meanwhile, a tax lawyer is someone that will represent you in court when fighting legal charges relating to taxes, such as tax evasion. A LIT is a much better option for getting out of debt as they are trained in these matters, providing a range of options and negotiating with creditors on your behalf.
When you need debt help in the Toronto area, contact Harris & Partners Inc. today and we will help you through the entire process.