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Making a Proposal to the Canada Revenue Agency: Steps to Resolve Your Tax Debt

Mounting tax debt can become a financial burden that can seem insurmountable. If you owe taxes to the Canada Revenue Agency (CRA), you may be able to negotiate a payment arrangement or make a proposal to settle the debt through the CRA's collections department. Here’s what you need to do.

a senior couple meeting with a licensed insolvency trustee to discuss proposal options for the CRA in Ottawa

Step 1. Get your documents in order

Gather all tax-related documents to determine the total amount you owe. Having accurate information is crucial to avoid discrepancies during the proposal process. This can include your T4, income statements, balance sheets, and previous correspondence with the CRA.

Step 2. Determine your ability to pay

Evaluate your financial situation to determine how much you can afford to pay. Consider your income, expenses, assets, and liabilities. Your proposal could involve making a lump-sum payment or setting up a payment plan to pay off the debt over time. The CRA wants to see a reasonable plan to repay the debt. Speak with a licensed insolvency trustee if this feels too overwhelming.

Step 3. Contact the CRA

Reach out to the CRA to discuss your situation and express your intention to make a proposal. Provide your social insurance number and details about your tax debt. The CRA will ask you to complete Form RC 4288: Request for Taxpayer Relief. This form outlines your financial circumstances, reasons for the tax debt and proposed payment plan. Provide accurate and comprehensive information.

Step 4. Submit your proposal

Send the completed Form RC 4288 via registered mail or through the CRA's secure online portal. Include supporting documents that show your financial situation. This may include bank statements, income statements, expense records and proof of assets. The more evidence you provide, the better your chances of reaching a favourable agreement. It may take time for the CRA to assess your proposal and make a decision.

Don’t forget that the CRA also has a Voluntary Disclosures Program that allows you to disclose previously unreported income or other information, which can help reduce penalties and interest charges.

Step 5. Seek professional help

Submitting a proposal to the CRA can be complicated and time-consuming. Seek the help of a licensed insolvency trustee (LIT) who has experience negotiating with the CRA and can help guide you through the process. Additionally, if your tax debt is part of a larger debt problem, one of our trustees can help you file a consumer proposal. With a consumer proposal, you pay only a portion of the total amount you owe creditors, such as credit card companies, banks and the CRA.

Get Debt Help Today – We Provide Tax Debt Services in Ottawa and Across Ontario

At D. & A. MacLeod Company Ltd., we can help you tackle your tax debt. Our licensed insolvency trustees can negotiate payment terms with the CRA or help you file a consumer proposal. We also offer virtual appointments for clients anywhere in Canada.

Contact us today to book a free consultation.

1 Comment

Adam Wandler
Adam Wandler
Nov 11, 2023

The attention to detail in these steps is commendable. The Tax Consultant Prince George has provided a comprehensive guide that covers everything from assessing the debt to negotiating with tax authorities. The inclusion of real-life examples adds a practical touch, making it easier for individuals to relate to the process.

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