Canada’s Tax Ombudsman – Making a Difference! :CRA SOTW

The Taxpayers' Ombudsman has reviewed several hundred service complaints to date. Here are a few examples:

A single mother who relied on the Canada Child Tax Benefit (CCTB) to make ends meet had her benefits suspended by the CRA. The CRA asked this taxpayer to provide documentary proof that her children were born in Canada. Letters from the family doctor who delivered the babies, as well as from other people who knew the family, were provided but deemed insufficient proof by the CRA. The dispute went on for months and the taxpayer was facing foreclosure on her mortgage and the potential loss of her home. A complaint was made to the Taxpayers' Ombudsman, who reviewed the matter. Following the Ombudsman's intervention, the taxpayer was issued a $38,000 CCTB payment and was able to keep her home.

The operator of a special care home for adults received a per diem allowance for each of her residents from the provincial government. This allowance is a form of subsidy to the residents and is not considered taxable income for the owner of the home. The CRA officials who reviewed the owner's file were not aware that this revenue was tax-exempt and proceeded with collection action that included freezing the taxpayer's bank account and garnisheeing $4,700. This resulted in considerable difficulties for the taxpayer. Once the Ombudsman got involved, the CRA ceased its collection activities and released the taxpayer's bank account.

A single father supporting a disabled daughter and caring for his elderly mother had worked out a payment arrangement for his tax debt with the CRA and provided the CRA with a series of post-dated cheques. Once the CRA had cashed all the cheques provided, there remained a balance owing on the taxpayer's account. But rather than contact the taxpayer to request additional cheques or make alternative arrangements, CRA collection officers seized the taxpayer's bank account. This caused hardship to the taxpayer and his household, which went without food for two days. Once the Ombudsman intervened in this matter, the taxpayer's bank account was released and he was issued a cheque from the CRA.

A retired taxpayer's pension was garnisheed as part of the CRA's efforts to collect taxes from him. The CRA did not respond to a payment arrangement proposed by the taxpayer and issued a Requirement to Pay, which is a form of demand letter. The CRA then garnisheed the account without informing the taxpayer, contrary to CRA collection policy. As a result of the Ombudsman's intervention, the Requirement to Pay was lifted and a payment arrangement was concluded to the taxpayer's satisfaction. The taxpayer also received a verbal apology from the CRA.

A taxpayer applied to the Minister of National Revenue for a remission order, which is an order from the Minister to the CRA to erase a taxpayer's debt. The request was denied because the taxpayer did not meet the eligibility requirements for a remission order. The taxpayer was not satisfied with the result and could not understand why he did not qualify for the relief requested. He filed a complaint with the Ombudsman. While the Ombudsman did not determine any unfair treatment on the part of the CRA, as a result of the Ombudsman's intervention, the CRA saw the opportunity to improve its communications and will be modifying its standard letter regarding remission orders. It is also in the process of producing a guide for public use.

A woman living on minimum wage and relying on tax credits such as the Canada Child Tax Benefit (CCTB), the Universal Child Care Benefit (UCCB), and the goods and services tax (GST) credit to make ends meet had separated from her common-law partner in March of 2006. She advised the CRA of her change in marital status in her application for increased CCTB and other family allowance supplements. In 2008, the CRA requested proof of her marital status. She provided the CRA with a copy of her new lease without the ex-spouse's name and utility bills in her name only, the phone number of her former spouse, as well as a letter from the mother of the former spouse stating that her son resided with her. The CRA did not accept this evidence of a change in marital status and claimed a repayment of $4,200 in tax credits. The CRA even asked her to obtain a copy of her ex-spouse's tax return. As a result of the Ombudsman's intervention, the CRA eventually recognized the change in marital status and issued a payment of $1,500 to the taxpayer.

A man suffering from an inoperable brain tumour had a house fire in 2005 in which many of his tax records were destroyed. As a result of not filing tax returns on time, he was subject to penalties and interest on his personal income tax account as well as his goods and services tax (GST) account. The taxpayer applied for taxpayer relief under the Income Tax Act, asking that he be absolved of these penalties and interest due to the exceptional circumstances and hardships that led to them. The applications for income tax and GST relief were processed in two different tax offices. One office granted relief and the other did not. The Ombudsman reviewed the case and commented on the apparent lack of fairness in the outcome of the taxpayer's request for relief. In the end the CRA granted the taxpayer's request and the penalties and interest were cancelled.

It is important to note that in the above cases, the Ombudsman was not required to make any recommendations. By getting involved in these case reviews, asking questions, and providing initial impressions on the apparent fairness or level of service received by the taxpayers, the Ombudsman caused the CRA to rethink its position on these files. The power of an Ombudsman comes not from being able to order an organization to do anything, but to cause that organization to see a problem from another perspective.

Report can be view at:
http://www.taxpayersrights.gc.ca/rprt-ntrm-eng.html

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Alan Baggett – Tax Collector’s Bible