Pay Up and Shut Up or Pay Up and Beg __ CRA SOTW
Alan Baggett
Pay up and shut up or pay up and beg
By Don Cayo, Vancouver Sun columnist
I don’t know if Burnaby contractor Ken Mah actually mailed the
information concerning his part-time helpers’ T-4 forms to Canada
Revenue Agency last February when he was supposed to. But I do know he
says he did.
I don’t know if the CRA actually received Mah’s forms by the April 30
deadline. But I do know the agency can’t find them now, and it
presumes he is at fault.
So, sent or not sent? If I were asked to rule on this, I’d throw my
hands in the air. This is a classic he-said, she-said dispute with no
credible way to determine the rights and wrongs. Could be Mah didn’t
send the forms. Could be they were lost in transit. Could be CRA lost
them and, if so, this might be due to unavoidable happenstance, or to
negligence, or — not likely, but possible — maliciousness.
However, I’m not being asked to arbitrate, and neither is any other
neutral party. CRA isn’t just the accuser in this case, it’s also the
judge. And its policy, in the words of agency spokesman Bradley
Alvarez, is to assign automatic penalties in such cases.
Mah did, of course, send CRA copies of the information as soon as they
told him the papers were missing. But this was in mid-May, already too
late for him to avoid the penalty.
So, this month, he was fined $200 for late filing, notwithstanding the
lack of any evidence — or even any investigation — to determine if he
was at fault. And if he doesn’t pay right away — if he waits while he
goes the only route left open to him and launches a formal process to
ask no lesser authority than the CRA itself to forgive him — he’ll
face the prospect of being assessed interest for however long it
takes. And if you know beans about how the CRA works, you can bet it
will take a long time.
Only $200 is at stake, and many of us would just pay and get on with
life. But the principle — penalties imposed with no onus on the guys
who stand to gain to meet any standard of proof whatsoever — is
odious.
Indeed, think about the incentives built into this policy. In theory,
the more CRA staff screw up, the more money CRA collects. And lots of
people — I can’t say if it’s CRA staff or the tax filers themselves,
but likely it’s some combination of the two — obviously do screw up.
The CRA was unable to tell me the total amount of money it rakes in
each year from these “automatic” penalties, but it’s substantial.
Indeed, more than 63,000 taxpayers a year go through the humiliating
process that is Mah’s only option now. They apply for “relief” from a
penalty imposed by CRA.
The good news for Mah is that a little over half these applicants — or
do I mean supplicants? — do win at least a partial reprieve. And he
can pay now to avoid further potential penalties, yet still have his
case heard.
But the fact the deck may not be totally stacked against him doesn’t
disguise the arrogance or soften the heavy-handedness of CRA’s
presumption of guilt.
It’s not clear to me how the agency gets away with this. When I asked
Alvarez for the legal justification for imposing a penalty without any
process to establish guilt, he simply gave me a copy of the act that
covers people who “fail to file.” When I asked how CRA determines when
it’s really failure to file, not just the agency itself losing a
document that was sent on time, I got no answer.
But maybe they don’t need formal authority to presume guilt when most
of their clients lack the time, the money and/or the courage to take
on even their most arbitrary decisions, especially when the sums are
small.
So, whether it’s your mistake or theirs, you seem to have two choices.
You can pay up and shut up. Or you can pay up and then beg for
forgiveness.
dc...@vancouversun.com
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Alan Baggett – Tax Collector’s Bible