PAYROLL TAX LIABILITY
PAYROLL TAX LIABILITY
Have you received notices from the CRA informing you that they have not received your payroll tax remittance?
Have you been unable to pay your payroll taxes or are you making payments on old taxes?
Did you forget to file your payroll returns?
Didn’t file your payroll returns because you couldn’t afford to pay the taxes due?
Is the CRA threatening to levy your bank account or do a trust examination?
Has the CRA recently proposed a “Director’s Liability” assessment against you as the responsible person?
If you are making payments to the CRA on previous payroll taxes, are you making the right type of payment?
Did CRA refuse to give you an installment agreement or payment plan?
We can help. If you continue to ignore the problem, it will only get worse; much worse. If you wait too long, you can lose your rights to challenge the tax assessment.
The CRA continues to use Enforced Collection when it comes to unpaid payroll taxes and unfilled payroll returns. Enforced Collection can include a levy on the assets of the business, including the accounts receivable, equipment, automobiles and the bank account. If the business is closed or files for bankruptcy protection, the CRA will look to the owner of the business for collection of the penalties, interest, taxes and trust funds. In the case of a corporation or partnership, the CRA will look to the person responsible for paying the payroll taxes to collect the trust funds. This is known as the Director’s Liability.
According to the CRA, a responsible person is a person or group of people who have the duty to perform and the power to direct the collecting, accounting and paying of trust funds, typically the director of the corporation.
The CRA may assess the penalty against any corporation director who is responsible for the collecting or paying withheld income and employment taxes, and who willfully fails to collect or pay them, According to the CRA, for willfulness to exist, the responsible person must have known about the unpaid taxes, and have used the funds to keep the business going or allowed available funds to be paid to other creditors.
Other standards regarding willfulness include intentional, deliberate, voluntary, reckless disregard, knowing or accidental, free will or choice.
The issues presented in determining who the responsible person is, and whether or not willfulness exists, depends upon the facts and circumstances in each case. If the taxes are not paid, the CRA will be looking for someone to penalize. It may be you.
For many businesses, when they start to have financial problems one of the first things to happen is the payroll taxes are not paid on time and the payroll returns are not filed on time. Both of these are among the worst things to do when business has fallen upon hard times.
Failure to Pay Payroll Taxes On Time
When a business fails to pay the payroll taxes on time, penalties and interest start to accrue. This causes additional cash flow problems of the business when cash is such an important commodity.
Late Filing of Payroll Returns
If the payroll returns are not filed on time the penalties are substantially increased. Failure to file a return on time can incur penalties. Add that to other penalties, along with the compounded interest and you can have a very serious tax problem.
Director’s Liabilities
Director’s Liability is assessed for the Trust Funds not paid by any corporation. Trust Funds are the money you withhold from your employee’s paycheck, which includes HST and the employee’s share of payroll tax. This money is held in trust until you pay it to the Canada Revenue Agency.
If the CRA is planning to assess the Director’s Liability against you, or if they have already assessed the tax liability against you?
Do you know what your rights are?
Are you the person who should be assessed, or is it someone else?
Do you know if you have been assessed the proper amount of “Trust Funds”?
Will you lose your home, your bank account, your car or your life savings?
Will you qualify for a Tax Relief or an Installment Agreement?
Don’t wait. Contact Us! We can help you with the answers to these questions. Don’t ignore the problem, time is of the essence. Waiting only causes you to lose sleep and makes the problem worse, much worse. Let us help you today!