What to do when you haven't filed your returns...

Its tax time again and I’m sure many people are frantically rushing to get everything ready and filed by the deadline next week. I just finished preparing a presentation about what to do if you have outstanding returns and it occurred to me that there must be people across the country who didn’t file last year and maybe even for a few years before and I wonder what they are thinking at this point. I know how easy it is to fall into the pattern of not filing and I think that many people who miss one year simply get scared into not filing again for the following years. Looking at the penalties and interest that you can have to pay upon filing again it is easy to understand why people get scared. The CRA charges interest on overdue taxes at a rate 4% higher than commercial rates and this can almost double your debt over a few years.

Taxes are a part of our lives and of course when one person doesn’t file, the burden is then placed on all taxpayers to make up their share. I know we need penalties and deterrents in place to make people file but I really think that the interest charges applied by the CRA are too high and act as an unfair barrier to those who are struggling to pay their tax debts.

I think that the CRA should have more programs to help people to deal with the large debts that they will inevitably face when coming forward to correct previous non-filing errors. The voluntary disclosure program is the main CRA initiative to have taxpayers come forward and start filing but this program has overly strict rules for qualification and really doesn’t help to significantly reduce the interest that taxpayers will face if they choose to start filing again this year.

If you have been surprised by the large interest charges on your account, drop me an email and tell me your story. For everyone out there who is scared to file a return this year, look at the CRA website and at least find out exactly what penalties and charges you will have to deal with before you make a decision. Unfortunately, the amounts will only get higher if you leave it another year. I am hoping to have the presentation about late filing on my website shortly at www.troublewithtaxes.com

Good Luck!