Filing a Taxpayer Relief Application with RC4288
Have you been charged penalties or interest on an outstanding debt owing to the Canada Revenue Agency (CRA)? Many people find that themselves in this situation and they may apply to the Taxpayer Relief Program to request relief in the form of waiving interest and penalties.
What is Taxpayer Relief?
The Income Tax Act, through a taxpayer relief request, empowers the Minister of National Revenue to waive a taxpayer’s penalties and interest, accept late-filed, amended or revoked income tax elections. Importantly, subsection 220(3.1) states that the taxpayer request for relief must be requested within 10 years. The CRA is unable to waive an amount that arose more than 10 years before the request is made.
According to the CRA’s Information Circular IC07-1, which contain the Guidelines for the Cancelation or Waiver of Penalties and Interest (“Guidelines“), the Minister is given broad, open ended discretion to grant penalties and interest relief as per the Income Tax Act. However, the CRA is careful to state that “these are only guidelines. They are not intended to be exhaustive and are not meant to restrict the spirit or intent of the legislation.” These Guidelines are meant to enhance the CRA’s consistency and accountability to the public and are not binding law.
While the program may reduce the penalties and interest charged, it is important to note that it is unable to reduce the original amount of tax debt owed to the CRA.
What Qualifies for Taxpayer Relief?
The taxpayer relief provisions are set up to allow the Minister to grant relief from penalty or interest in the following types of situations:
- Extraordinary circumstances beyond the applicant’s control;
- Actions of the Canada Revenue Agency (CRA); or
- Inability to pay or financial hardship.
Penalties and interest may be waived or cancelled in whole or in part where they result from circumstances beyond a taxpayer’s control.
The Minister may also take into consideration the following factors:
- Whether or not the taxpayer has a history of compliance with tax obligations;
- Whether or not the taxpayer has knowingly allowed a balance to exist on which arrears interest has accrued;
- Whether or not the taxpayer has exercised a reasonable amount of care and has not been negligent or careless in conducting their affairs under the self-assessment system; and
- Whether or not the Taxpayer has acted quickly to remedy any delay or omission.
The CRA may also grant relief if a taxpayer’s circumstances do not fall within the situations described above.
To make application under the taxpayer relief provisions, taxpayers can complete form RC4288 – Request for Taxpayer Relief and submit it to their local tax services office.
While the CRA does provide this avenue for relief, relief is often denied to uniformed applicants who fail to meet the confusing CRA policies for relief. Therefore, it may be useful to contact a professional who is familiar with the CRA’s administrative policies and procedures to give you the best chance for relief.
Each taxpayer relief application is considered on a case by case basis, by different individuals working out of different offices, and as such, there is often a lack of transparency and consistency by the CRA when considering taxpayer relief applications. Therefore, it can be difficult to predict the result of an application.
Details are significant for this kind of application. A generic taxpayer relief application is unlikely to yield the relief requested. At Rosen Kirshen Tax Law, each taxpayer relief application is prepared to cater to the unique circumstances and facts of the specific client. Call us now for a free consultation!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.