J D Buote

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Tax related proposals or bankruptcies:

Settlement by Consumer Proposal or Voluntary Assignment in Bankruptcy.

Sometimes, even the best payment terms will not resolve your tax debt simply because the debt is too large and you simply do not have the capacity to pay.

Although our focus is on resolving tax disputes, we often assist our clients in preparing Consumer Proposals under the Bankruptcy and Insolvency Act ("BIA") and thereby settle all of their debts, including tax debts and all other debts, for a reasonable, all inclusive, settlement amount.

A settlement amount is most attractive to your creditors if all or a significant part of it can be paid at once with funds borrowed from financial institutions, friends, family or relatives. It may be acceptable to your creditors for you to propose payment over time from future earnings or a combination of both methods.

A Consumer Proposal must be accepted by the majority of your creditors (with certain statutory conditions) and, in any event, cannot exceed a 60 month payment plan.

We can also represent you with a Voluntary Assignment in Bankruptcy if that option makes economic sense to you.

There are many misconceptions about a Consumer Proposal and about an Assignment in Bankruptcy under the BIA and we can help you understand the process and your rights and obligations. If there are significant tax debts involved, there are special statutory considerations under the BIA and the Income Tax Act, and the advice of a tax lawyer is highly recommended, before you see a Trustee in Bankruptcy. This is because the Trustee, no matter how sympathetic, does not actually represent your interests; the Trustee is a neutral party and cannot give you advice to protect your interests.

Discussions about a Consumer Proposal or a Voluntary Assignment in Bankruptcy are best suited to the protection of Solicitor/Client Privilege.

Tax Payment Arrangements

When the final amount payable becomes certain in amount, and it is no longer possible to obtain a better result, it is then necessary to arrange payment, if possible. Of course, the full amount is due and payable immediately and that is what the CRA prefers.

If payment in full is not possible, payment terms may be negotiated with the CRA collection officers within established guidelines. We can help you prepare your best proposal and negotiate a suitable payment arrangement.

Remember that the CRA views taxes, penalties and interest as equally payable and there is no difference between them in their mind, regardless of whether there is a difference in your mind. Furthermore, the CRA has the upper hand in most negotiations because they have extraordinary powers to collect and are subject only to public policy concerns, internal guidelines and any restrictions which might be applicable under the Bankruptcy and Insolvency Act ("BIA").

To obtain a suitable payment arrangement, you must be viewed as co-operating fully with the CRA collectors and usually you must agree to submit financial information which establishes that the payment terms you have proposed is the most you could afford. You can expect that the CRA will double check every one of your financial facts.