So you’ve filed your tax return. Now comes nail-biting time.
Even if you are audited and are hit with additional taxes and penalties, your chances of getting those charges reduced – or even eliminated – may be better than you think. It’s been estimated that taxpayers who took their case to the CRA’s appeals division won at least some relief in between 35% to 40% of the cases.
Audits come in different forms. Some are handled entirely by mail, such as when the CRA asks for more documentation to support an item on your return. In other cases, the audit may take place in your home, office or your tax adviser’s office. If you disagree with the outcome, you can ask appeals officials to review your case.
Many taxpayers assume it isn’t worth the time, trouble and expense to challenge the CRA unless the amount of money at issue is large. But don’t automatically surrender if you feel you have a strong case, or believe the auditor made a mistake. You can get the form on line and file a Notice of Objection. This takes you to the Appeals Division. It frequently gives taxpayers some relief.
Unlike auditors, appeals officers are authorized to settle tax assessments based on their judgment of what could happen if the case goes to Tax Court.
Appeals officers typically are “more savvy” about tax law than auditors and collection staffers. Good deals are often made in the appeals section.
Filing a Notice of Objection to contest an unfavourable assessment and having Appeals consider itcould take roughly a year. If you’re not satisfied with the outcome, you can still slug it out in the Tax Court. If the amount in issue is not high, you can even plead your own case under the Informal Procedure. Under the Informal Procedure rules, even if you lose, there are usually no court costs and you at least have had your day in court. Also, the Justice lawyer handling the case for the CRA might agree to a settlement rather than fight out the case in front of a Tax Court judge. One very important thing that many taxpayers overlook is the need to pay the disputed taxes at once if possible. That is because the interest rate on overdue tax bills is very high. If you are successful,either with the negotiations or in court you will get a refund plus repayment of interest, albeit at a much lower rate.
Some people contend that the appeals division’s independence from audit has eroded in recent years and that appeals officers often are tougher to deal with than they once were, reflecting the CRA’s overall enforcement crackdown.
Appeals officials strongly defend their independence and say they’re trying to resolve as many cases as possible in a fair manner without giving away the store.
Rather than just complaining that you were unfairly treated by the taxman, consider taking a kick at the cat. It may just put money in your pocket!
© The foregoing provides only an overview and does not constitute legal advice. You are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained in the context of your own particular circumstances.