Review of tax debt collection has resulted in several recommendations to the finance minister
Canadians who owe tax debts should be given more information and be treated more fairly.
That’s the conclusion of a review of the Canada Revenue Agency’s debt collection procedures by the Taxpayer’s Ombudsman Sherra Profit.
It’s the latest call for Canada’s tax system to be made fairer.
The Ombudsman’s office looked at the process of the CRA issuing legal warnings to taxpayers following complaints that some people had faced action without notice including garnishing wages or freezing bank accounts.
The review was launched in February 2017 to ascertain whether CRA procedures provided taxpayers with enough information and how debts were collected.
"A debt collection process that is fair means respecting the taxpayer right to complete, accurate and clear information. This means the CRA looking at the information it provides from the taxpayer perspective,” Sherra Profit said. “The CRA has the obligation to collect debts. And, taxpayers have the right to understand that process. They have the right to understand whether the payment arrangement they have made is binding such that the CRA will not proceed with legal action if they are making their payments."
Recommendations
The Ombudsman has made several recommendations to the Minister of National Revenue.
They call for the CRA to:
- horten the validity period of the legal warning from 365 days to 180 days;
- update its policies to ensure all relevant information is given to taxpayers when they are issued a legal warning;
- update information available to taxpayers on the collection process;
- update its internal and external messaging to ensure all debt payment and collections related terminology is clearly and consistently defined and used;
- ensure sufficient training is provided to all staff in the collection process;
- conduct a fulsome review of processes, policies, and information regarding payment arrangements;
- make information available to taxpayers on the requirements for a binding payment arrangement;
- send confirmation letters to taxpayers who make payment arrangements; and
- regularly review its payment and collection policies and procedures to ensure they align with a service approach consistent with the Taxpayer Bill of Rights.
"It is important the CRA ensures its legal warnings in debt collection are clear. The consequences need to be explained in a way that is understood by the taxpayer,” added Ms. Profit.
Criticism of the tax system has also been made this week by the CCPA which says that the system unfairly favours men.
Today, we release a new systemic examination report, Fair Warning: An examination into service issues related to legal warnings issued by the Canada Revenue Agency during debt collection procedures: https://t.co/CAxPDiH165 #TaxRightsCAN #CdnTax pic.twitter.com/D9bAxZA5SL
— TaxpayerOmbudsman (@OTO_Canada) March 6, 2019
