# I Was Garnished by the CRA *After* Paying All My Taxes!



## Currency (May 21, 2013)

I paid all my taxes by April 30, 2012 and filed my return by June 15.

In September I got sick and my health kept getting worse. Doctors didn't know what to do. I had to take time off work and spent all my time doing medical research online, trying to figure out the problem.

In December I went on the internet to do online banking. I found all my money was gone.

Chequing Account: Empty.
Savings Account: Empty. 
US Dollar Account: Empty.

The account info said there was some kind of government action.

I called the CRA. I told them I'd already paid in April. They said the payments went to the wrong account ("Installments").

I said, Why didn't you just take that money and use it to pay the taxes?

They said, We can't do that. It's not legal. They added, It's legal for us to garnish all the money in your bank accounts, but it's illegal for us to take any money out of an Installment account.

I asked them to take the money from Installments and put it towards my taxes, and return the money they had just garnished immediately back to my bank accounts.

They transferred the money from Installments, but said, Sorry, we can't reverse the charges.

They waited a month and wired it.

I couldn't see anything on the CRA website to back up what they said is the law on garnishing. I don't have a history of late payments, etc. Why couldn't they just freeze the Installment account?!

Does anyone here know the law? If what they did is illegal, what kind of action can I take? Although I got the money back, it looks as if my 700+ credit rating is in the tank for seven years. That could end up costing me a lot of money. I also didn't want my US dollars exchanged when they drained my account. (I was planning on a forex deal because it was a lot of money.) The money they returned was all Canadian dollars.


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## kcowan (Jul 1, 2010)

You need to supply the details regarding how you paid all your taxes. Did you include a cheque?

If you paid online, did you specify the wrong account, or did your bank or CRA screw up?

If it is your error, there is no recourse. If it is someone else's error, you have recourse.

Good luck.

(BTW this happened to me and it was CRAs error so they eventually returned all the penalties. I just had to prove that I had paid it to the arrears account.)


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## MoneyGal (Apr 24, 2009)

By default the payments you make go to installments, not past year taxes. There are distinct accounts with CRA and your bank will have distinct ways of coding the payment. Either you didn't know to specify, and/or your bank didn't know to direct the payment to the correct account (if you worked with a bank rep). In either case, you would have had to specifically select AT SOME POINT "installments" on the payment account - but you may not have known what that meant. (There isn't just a "tax" account with CRA, there are multiple options.)

What the CRA rep told you is accurate. They cannot move money around between accounts unless, as kcowan has just noted, it is THEIR error and not yours. 

It is also legal for them to garnish as they did HOWEVER I have *never* heard of them garnishing this quickly for a one-time late filer...they will move to garnishment quickly for a filer who is late many times over many years, but they will send (in my experience) multiple warning letters before moving to garnishment - this means a lot of unopened envelopes on your part (or some other reason, but they would have attempted to contact you at least monthly over several months, including by phone if they had your phone number. They don't email though). 

What you can appeal is any late filing charges and/or penalties. More info: http://www.taxtips.ca/filing/taxpayerrelief.htm

However, "I was sick but could still google things on the Internet" won't qualify. Note that the 'normal' circumstances which warrant taxpayer relief are things like "my house burned down." 

Good luck but I don't think we're getting the whole story.


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## Charlie (May 20, 2011)

I have had success in transferring money effective the date of original payment when it was paid to the wrong account -- regardless of whose error it was.

I don't know how that plays now....if they consider the installments refunded or if they can redo the transfer after it has been done. But you should be able to get this resolved. Talk to an agent. Or two. Be clear that you want the original payment transferred on the date of original payment. This is important. If they apply it to a past balance or transfer on date of request, you're on the hook for the penalties and interest. They can do this. And then reassess minus the penalties and interest. But be nice. They can just as easily defer you to tax payer relief noted by MG.

If you have to go through the formal process note the details of your filing and payment (if the payment is exactly what you owed then it's pretty clear what your intent was) and just note the health issues as a reason you did not respond to their requests for payment. Before they garnishee they should have tried to contact you...by phone...by letter...by more letters...by demand letters. Plus the statements showing a balance owing. For some reason you did not respond. Perhaps you moved?

Good luck. You should be able to resolve this if the facts are as you've noted them.


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## MoneyGal (Apr 24, 2009)

Charlie's advice is excellent. You should follow it! 

I too have had payments transferred and penalties/interest charges reversed - but that was within weeks of filing and the tax due date, not after a garnishment.


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## kcowan (Jul 1, 2010)

My wife's cousin worked for the CRA. So I know how they think. The advice you have received here by me, MG and Charlie are all good. Humility is the key. 

(They have been conditioned through training to assume that the taxpayer is out to screw them. Your job is to convince them that you are just trying to make ends meet and obey the rules. Good luck.)

(I currently have a Notice of Objection underway. Wish me luck. I will need it!)


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## Eclectic12 (Oct 20, 2010)

kcowan said:


> The advice you have received here by me, MG and Charlie are all good. Humility is the key.


+1.




kcowan said:


> (They have been conditioned through training to assume that the taxpayer is out to screw them. Your job is to convince them that you are just trying to make ends meet and obey the rules. Good luck.)


Really?

Maybe I'm lucky ... but so far (knock on wood) I've run into this type of attitude once (it took twenty minutes of get the clerk off of "you owe, you should pay" to "I will check the numbers" - twenty seconds later it was "it's our keying mistake, please file three or so tax return adjustments to fix the mistake".

The next closest was when I called to find out about the big assessed tax bill when my late return had been send in two months earlier. The collections guy was sympathetic but was pushing that "if you did your tax return wrong so there is no refund, there will be extra penalties so paying now is safer".


With those two exceptions - the rest have been professional with the only attitude being wanting to help. That despite when I was young & silly, one of the calls was after I'd ignored requests to file returns for two years.




kcowan said:


> (I currently have a Notice of Objection underway. Wish me luck. I will need it!)


Good luck ... & Cheers


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