Opposing the tax authorities is possible | Dollars and cents

The author is a tax lawyer. He notably worked at Revenu Québec and now defends taxpayers within the law firm Evolex Legal Services Inc.

The Quebec Revenue Agency (ARQ) or the Canada Revenue Agency (CRA) has just sent you a notice of assessment and you disagree with it. How can you dispute it? Because whatever the amount, it is important to follow up on this sending.

If you don’t do this, the tax authorities will take unstoppable measures to recover their dues. And he has a long arm! When you owe him money, he can use different collection methods. First, a seizure in escrow: of your salary, your bank account, your customer accounts, your rental income, etc. The tax authorities can also register legal hypothecs on your property, in particular your real estate assets (your house, your chalet, etc.) or movable assets (your automobile). He can also apply compensation (he owes you $10,000 but you already owe him $6,000, so he only gives you $4,000).

90 days to object

The usual deadline for objecting (except in certain very specific cases) is 90 days from the day after the date indicated on the notice. On its website, the ARQ gives the following example : « […] for a notice of assessment dated November 19, you have until February 17 at the latest to send us your notice of opposition, and not until February 19. » Of course, it’s best never to wait until the last minute.

You could request a delay under certain conditions provided for by law, in particular if you were unable to act (for example, you were hospitalized) and you presented your request as soon as the circumstances allowed you to do so. This request must, however, be made less than one year after the expiration of the 90-day period after sending the notice of assessment. Beyond that, you lose any possibility of appeal.

How to object?

Forms for objecting to a contribution are provided on the websites of theARQ and theARC). Specify the reasons for your objection and all relevant facts. For example, you can establish a chronology of facts and support it with supporting documents (invoices, contracts, exchanges, etc.) to demolish the tax authorities’ claims. Make sure you have all the information in your possession.

If, at the time of sending your notice of opposition, you do not have all the relevant facts in hand (for example, you are missing certain supporting documents held by a third party), indicate in the notice that you reserve the right to complete your reasons for opposition when you have obtained all the relevant information.

How’s it going

The process essentially takes place on file. An opposition agent (usually with legal or accounting training) reviews your notice of opposition, your supporting documents, and allows you to be heard (by telephone, virtual meeting or in person) before making a decision.

Three decisions are possible. Your requests are accepted in full (a new assessment notice is then sent to you), they are accepted in part (a new assessment notice is also sent to you) or they are refused (a letter confirming the assessment is sent to you).

If the decision on the opposition is unfavorable to you, you could contact the Court of Quebec or the Tax Court of Canada, as the case may be. To do this, a lawyer can assist you by filing a legal challenge before the competent court.

Can the tax authorities claim amounts during the 90 days?

As a general rule, during the 90-day objection period and during the opposition, the tax authorities can only exercise certain very limited recovery measures against a taxpayer. However, this rule has exceptions. Among other things, if the contribution concerns the QST/GST or source deductions from an employee’s salary, the tax authorities may demand the amounts. However, it may suspend recovery measures if you request it.

The common error

When the taxpayer notices that he has made an error in the return he has filed, he often has the reflex – his accountant too – to file an amended return or a request for adjustment to correct the error, rather than filing an opposition to the contribution.

However, in practice, this type of adjustment is likely to make the taxpayer’s tax file stand out and attract a tax audit, which risks adding a layer of complexity to the file. Additionally, there is no obligation for the IRS to accept an amended return or request for adjustment.

It is therefore preferable to present an opposition to an assessment and an amended declaration, even if the assessment reflects your own declaration! The ARQ or CRA oppositions department will then be able to examine the contribution and correct the error when supporting documents and explanations are provided to it.

The possibility of an agreement with the tax authorities

In certain circumstances, the opposition agent may offer to enter into a settlement agreement to end the dispute. This type of agreement constitutes a transaction, within the meaning of civil law.

When signing such an agreement, you must be very vigilant since it involves reciprocal concessions. For example, agreements almost always include a clause that makes you waive your right to contest the disputed contribution in court. The objective of the agreement is to put a definitive end to the dispute. When the latter is concluded, a new contribution replacing the one that was contested will be established.

Therefore, you must make sure you understand all the nuances, subtleties and consequences to avoid surprises when receiving the possible new contribution, since this cannot be the subject of a dispute, unless it does not comply with the agreement.

At all times, it is recommended to consult a lawyer before entering into a settlement agreement. He will be able to analyze it, explain it to you, guide you, ensure that you understand what you are giving up and even negotiate the agreement to your advantage, if necessary.

Moreover, given the many administrative and legal subtleties and nuances, and each case being unique, it is always preferable to call on a lawyer in order to receive good advice.

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