Saturday, July 10, 2010

Knock Knock It's The Tax Man

I have already posted about some issues I have been having with the CRA, them making a mistake and me having to fight with them and pay for it. Tonight I was watching W5 and it happened to be about A Taxing Problem where small business owners were taken out to dry by the CRA and even after it was eventually proven that the CRA was wrong, these people were left with nothing.

My employer has been facing a similar problem for years. We run a very small business and it's very easy to do the books because it's a daycare and the only money coming IN is from parent fees, and all the fees are the same. The only output is regular bills, food bills, etc.... Her books are clean and easy to follow. With only 3 staff members, it's easy to do the payroll. No overtime hours, we are not open on holiday, etc. Easy as pie right? NOPE. She has been audited so many times over the past 10 years it's ridiculous and the bills pile up. I have even helped her do payroll and tax payments because she could not figure out what she was doing wrong. She gets a booklet from the CRA and it's all there in charts,,, you follow along a line and put in the numbers and tada you're done, yet she still gets these gigantic bills from them.

In December 2009 an auditor from Lethbridge showed up and this time he said he had good news - that THEY owed HER just over $1000. She was thrilled! He said that she will be receiving bills but NOT to pay them because the credit will take a little while to appear on her account and if she keeps paying the bills it will muck up things. That sounded retarded but we thought 'okay, yay'. So she got a bill in January and did not pay it. A few weeks later she got their threatening reminder notice to pay right away or face late penalties. She phoned the man in Lethbridge and he assured her that the credit would be placed on her account soon, and NOT to pay ANYTHING... so then Feb and March roll around with more nasty letters from the CRA, and more phone calls to the Lethbridge office, and more assurances that all would be well.

Finally in April or May she got a bill showing the $1000 credit but guess what else was on there? Over $800 in late payment charges for January to March. Only $149 was left of her 'credit' for overpaying in the last year. Then she got a letter this month with more late payment charges for April. Her credit was totally chewed up by late payment charges and she has made repeated calls to the Lethbridge office and received NO calls in return. I heard the messages she left for the man who seemed so helpful in December. The man who kept telling her NOT to pay any of the bills until the credit had been applied. We are a small business and $1000 is a lot of money and now she owes MORE than that credit she was supposed to receive. So she overpayed last year and lost all of it to crap. It's nothing compared to the hundreds of thousands the men in the W5 slot lost, but it's still a loss and we wonder back to the times she received $3000 and $6000 bills and think about how much of that money was an error as well. What are they playing at? I don't get it. And it drives me insane to see this keep happening.

Believe it or not, taxation like this is supposed to be VOLUNTARY. It's even spoken of in the W5 clip. Voluntary participation in income tax my ass! If it's voluntary, why can people be sent to jail or have all of their assets sold off, or have their credit ratings destroyed by a boo-boo the taxman made? How long are we going to put up with this, knowing that our personal taxes are only going to keep increasing as time goes on, in order to pay for ridiculous programs that end up causing more havoc than good?


  1. I just wonder how long before people just "Go John Galt". I'm seriously considering it myself.

  2. Listening to this, the audits bring in an additional $250 per audit. If this is after the costs to CRA, then perhaps we'd be better off ditching these auditors and just letting the money get back into the economy.

  3. When a CRA person says 'don't pay', DO NOT LISTEN. Continue to pay until the credit actually shows up.

    Did your employer get the name of the CRA person in question? I am now at the point of getting at least the first name, and the second if I can extract it, just for my own protection.

    That said, I have seen too many tax situations where the taxpayer was overly economical with the truth not to be somewhat cynical. The honest do suffer because of the cheaters.

    By the way, given the number of audits your employer has faced, is it possible that someone in the community is anonymously 'reporting' your employer as a tax cheat? This sounds almost like harassment, and I am wondering if CRA is receiving tips.

    By the way, your employer can appeal under the fairness rules. However, if the CRA person who said 'don't pay' recants, there could be problems.

  4. We are learning the hard way as we go along. Yes we have the agents full name because he left his business card with his direct line written on the back. He even gave one to me because I asked him about my own personal tax problems stemming from some supposed CCTB and GST overpayments in 2008 and early 2009. He was so nice we were at first thrilled.... but now not so much.

    We are now going to ask for everything said over the phone, such as 'do not pay!' to be put in writing and faxed to our office. We are also going to record dates and times that we have spoken to various agents in case they really do record calls and can therefore zero in.

    The thing about the 'do not pay' is that this man was the office HEAD. He was not a mere agent sent out to do this, he was taking over as the person running that department in Lethbridge. So we thought for sure he must know what he is talking about. His reasons for telling her not to pay were something like it messes up their whole system. He actually got annoyed with her because she did send in a payment once after getting a nasty letter. HE called HER and said 'why did you make a payment on that account? I told you not to do that!'. So after all that business, we thought he would know what he was talking about. It has been 2 months and we have not heard back from him despite numerous messages at his own main number. We also have had no luck with trying to explain the situation to other agents. They, as usual, say there is nothing they can do about the late fees. It's ridiculous.

    But from now on we are going to take much more careful record of everything. If we receive advice, it has to be put in writing and faxed on their letter heads with signatures, dates, etc or we are not going to listen to them. It is getting out of hand.

    As for the numerous audits, they all came after my boss would question why she was receiving all of these notices for more and more money. She at least three times over the past few years has gone back in her files and photocopied all of her cheques that she sent in and they cashed, and totalled it up with all of the bills she received, and NOT once has she come up short. then we get a call that one of their agents is going to visit and go over the books, and he magically leaves with even MORE money owed. We have a massive pile of past letters from the CRA, my boss keeps all of them, and the bills always match up. It's the one bill she actually manages to pay on time all the time... and then we will get a mystery bill.

    However, we have also had several from them saying she sent NO payment, when in fact the cheque was already cashed and returned to her from her bank BEFORE the mailing date of their letters. Something is seriously going wrong in their offices and a lot of people are out money because of it.

  5. Which reminds me of another govt office we had to send money to earlier this year. We were supposed to get our Accreditation certificate after sending in our membership fee but we never got it despite the cheque being cashed by them almost 2 months prior. When we phoned about it, the edmonton office said we cannot get our certificate until we send in the money.. we said we did.. they said they did not receive it or it hasn't cleared yet... my boss opened her file and said 'that's funny cos i am looking at it right now and it has already been sent back to me by my bank'. the woman on the line fluttered around for a bit and said she would call back. Miraculously she calls back and said 'yes you did pay!'. My boss said 'i know!' and they finally mailed us our certificate.

    It happened to me years ago with another office for when I moved back here with my england-born son. They told me they did not receive my tax package and I said I mailed it express post. They said they could not do anything for me (releasing my income tax refund) without it. I was very upset and cried because I was trying to move into an apartment and needed my return to pay for it... then I got a call the next day from the official telling me 'youll never believe what I found on my desk this morning... your papers,, and they are marked received by our mailing room 3 WEEKS ago despite me marking RUSH on them'... yeah no kidding lady. I told you I sent them... but they never beleive you because of all the liars and cheaters out there and I don't think that is fair either. Each case should be treated seperately and with respect instead of making a person feel like an idiot. It has happened before, it will happen again, and our money is paying for all these mishaps.

  6. Not to be too.. uh.. paranoid.. but have other daycare providers encountered similar problems to your knowledge?

    It just seems odd that your employer has these problems, almost as if, there is an intention to undermine her business.

    Might be curious to send a FOIP request to determine how many daycares have been audited by Rev. Can. in the last few years.

    Could be your business area is being unfairly targeted.. could it be that Rev. Can. administrators, who, no doubt, are predominantly liberal, aren't in a big hurry to assure that private daycare succeeds?

    1984 was 26 years ago.

    We're due.

  7. Sometimes we get paranoid too because we can't figure out what they could possibly get by going after us over and over. The most they have increased a bill is by $6000 and eventually that was cut back in half again. It's not like we are talking millions lol and by the time they cover the cost of someone coming up from Lethbridge to get the books, work on them, bring them back -- how much is left from random $600 bills? But it means a LOT to our business because that is half of someone's salary.

    I don't know how many others have been audited over the years, but the big one that just closed down at the end of June after almost 30 years of service was audited a few years ago. They shut down citing financial distress and it didn't surprise me at all. Two other centers have closed in the past few years citing the same thing. This big one was the most painful though, leaving over 200 kids without care and literally no notice for summer camp kids that were to start 2 days later. It was a big mess and we now have more kids on our waiting list than we have spaces for TOTAL. It's been a nightmare of having parents come in crying, calling and yelling in frustration, etc. The not-for-profit centers have been closing down (that's what this big one was) just as much as the private 'for-profit' centers have. There are always allegations and rumors of fraud and embezzelment floating around - but I work in the field and know how difficult it is to keep above water when 3/4 of your income ends up coming from the govt due to subsidy programs, and it's like getting blood from a stone to collect the rest. Generally, the families who pay the full fee are the ones who are on time, but when most of your kids are subsidized, you don't get the money for another 6 or so WEEKS and it just becomes and endless cycle of being in debt, out of debt for a day or two, then back in debt again. It's not pleasant.

    I don't know if there could be an ulterior motive to this but I would not be surprised.



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