More on Taxpayer Relief in Troubled Times

These days it is not unusual for Canadians to have to miss deadlines because of circumstances beyond their control, especially when extreme weather is involved. Manitoba is dealing with the worst flooding in 300 years, so it may be expected that some self-employed residents of that province may still be pumping out their basements or drying out documents on the June 15^th filing deadline. CRA provides taxpayer relief provisions for times like these ñ perhaps this is a good time to review them.

CRA may waive or cancel penalties and/or interest when the request is because of a natural or man-made disaster, a civil disturbance or disruption such as a strike, a serious illness or accident, or serious emotional or mental distress as in the loss of a loved one. As well, actions by the CRA such as publication errors, communication delays and processing errors may be grounds for taxpayer relief. If an amount owing to CRA cannot be paid due to loss of employment and the ensuing financial hardship, or because of a large interest charge, some, or all, of the interest portion of the bill may be waived. In this case a payment schedule must be agreed upon and all payments made on time.

For individuals there is usually a 3 year limitation period from the end of the tax year to file a tax return to claim a refund, and a 3 year limitation period from the date of the original Notice of Assessment to ask for an adjustment. However, section 152.2 of the Income Tax Act allows for a longer period of reassessment with the taxpayers consent. There is a rolling 10 year period for requests under the Taxpayer Relief Provisions that is reset on January 1^st of each year; therefore in 2011, requests can be made as far back as the 2001 tax year.

Form RC 4288 Request for Taxpayer Relief may used to submit information, although it is not mandatory. It should be completed in full, including a detailed explanation of the circumstances and documentation attached when required. CRA expects that, before requesting relief due to financial hardship, current year remittances have been made to date, a payment arrangement has been set up and all tax filing is current. The taxpayer's history with CRA will also be taken into account.

If a request for taxpayer relief is denied there will be two opportunities to have CRA review the file and, if these are unsuccessful, an application for judicial review may be made. For detailed information on taxpayer relief, consult the CRA publication IC07-1, Taxpayer Relief Provisions.