How long do I have to file a Notice of Objection during the Coronavirus pandemic?
Most common tax issues allow the taxpayer ninety days to file a notice of objection, which initiates the CRA’s formal dispute resolution mechanism. In most (but not all) cases, the CRA provides an additional one-year within which to request an extension of time to file an objection may be filed. Taxpayers must meet some conditions for the CRA to grant these requests, although the CRA is generally quite generous in allowing these extensions.
However, beyond this one-year period, CRA does not have discretion to allow extensions, virus or no virus. After that point, it can be possible for the CRA to address some tax issues through filing an amended return or requesting an adjustment. A lapsed objection deadline makes obtaining adjustments much more difficult.
Over the next few months, it may significant additional time for the CRA to confirm receipt of any objection and/or allow extension requests. In light of this, taxpayers should be particularly careful about maintaining records of the date they submit objections.
I already have a tax debt, will CRA stop collecting?
If the CRA has already instituted collections action (e.g., frozen accounts or garnished wages), they have not announced a blanket policy of leniency. However, they have already sent releases to many banks and institutions. Further requests will be handled on a cases-by-cases basis. It may be difficult for you to find an agent who can assist you with this—while CRA has provided a number to access collections agents, this line has proved extremely busy in recent days.
If the CRA has not instituted collections action yet, you likely have some breathing room, given a stated policy of leniency and the fact that most collections officers have presently been laid off. Taxpayers in this position should watch the CRA’s news closely, as it is not clear yet what will happen in the long term.
Will the CRA Charge interest during the COVID-19 pandemic?
CRA has announced that they will waive interest on balances paid prior to the extended filing deadlines for individuals and businesses. However, they have not made the same policy explicit for reassessments of prior years.
Where the CRA pauses or an audit or defers reassessment of a prior year due to COVID-related delays, taxpayers have a very strong cases for a waiver of interest. Under CRA’s relief policy, COVID is likely an extraordinary circumstance in-and-of itself, and will result in CRA delays, both of which can justify relief. Some auditors and appeals agents will consider requests to waive interest in the course of audits or objections, and particularly given the circumstances, it would be sensible to do so as a matter of course.
How will COVID-19 affect Voluntary Disclosures?
As it takes the CRA some time to process voluntary disclosures in most circumstances, the program has almost certainly stopped processing applications. However, particularly given the delay in audit activity, this is likely an opportune time for taxpayers considering making a disclosure to come forward. CRA’s electronic filing system still works, and taxpayers may be able to leverage the pause in audit activity to ensure to wrap up the returns necessary for a valid disclosure.
