What Are Unfiled Tax Returns or Back Taxes?
Being accused of having unfiled tax returns or owing back taxes is enough to give anyone heart wrenching anxiety. You might assume that this is just a miscommunication or that you can sort it out on your own.
However, one of the most unfortunate things you can do for your unfiled tax case is to make the assumption that it will simply go away or try to handle the situation on your own. Filling out necessary forms and providing documentation can be challenging without extensive awareness of typical CRA procedures and requirements. This makes it all the more important that you retain an unfiled tax returns lawyer in Canada to assist you with correcting any mistakes and getting current with the CRA. You can be found still liable for the taxes on the balance of your overdue returns or unreported income. But in addition to this, you could be facing severe penalties.
Back taxes are those taxes that are owed from another reporting period. If you owe taxes but did not pay them at the time they were due, back taxes have been assessed and can be entirely liable for underpayment of money due whether this occurred by accident or intentionally. This means it is essential to have an attorney in your corner.
Penalties
You must recognize the penalties associated with back taxes. The Canada Revenue Agency is usually only able to review your tax returns within three years beyond the date they were originally filed or due.
Other attempts by the CRA to adjust the total of taxes owed after this period will typically not be approved or could be barred by statutes. However, if the taxpayer misrepresented something in filing that return and supplying the information, there are exceptions to this rule.
Penalties can cover a broad range of responsibilities such as a back tax repayments with penalties and interest but can also include criminal prosecution. Furthermore, the CRA can add charges of compounded interest on a daily basis with any balance owed from a prior year beginning from the date that it was owed. This means even just one small reporting mistake can have catastrophic consequences for your taxes and the amount owed.
Why You Need a Tax Lawyer?
You can find yourself in over your head with unfiled or back taxes very quickly. You need to gather appropriate evidence and be able to respond to the CRA as soon as possible.
You can avoid this situation by hiring the right tax professional to assist with your returns, but if you are already facing challenges surrounding taxes owed, you may be able to make use of Revenue Canada's voluntary disclosure program in which you report incorrect, incomplete or inaccurate data or disclose details that were not reported before. You can avoid prosecution or penalties, but this requires official documentation and the support of an attorney is necessary to assist you.
A comprehensive review of your case by a knowledgeable unfiled or back taxes lawyer is critical for helping you to avoid the most serious of penalties. Our knowledgeable attorneys have been working in this field for many years and can help advise you about what to do.
FAQ's
What happens if you have unfiled tax returns?
If you failed to file your tax returns CRA can demand that file them and if you refuse to do so can prosecute you. You can avoid penalties and prosecutions by filing a voluntary disclosure.
Is not filing taxes a crime?
Not filing your tax returns is not a crime unless CRA issues a demand to file tax returns and you do not comply. However filing false tax returns which do not declare all of your income or claim expenses or deductions to which you are not entitled is tax fraud and will result in prosecution and on conviction there will be a fine and possible jail term
Why should i choose candiantaxamnesty?
We have over 30 years of experience as tax lawyers and our team of Canadian tax lawyers includes a Certified Specialist in tax to ensure that your case has the highest level of expertise.
How far back can the CRA probe for unfiled taxes?
There are limits as to how far back the CRA can audit with respect to probing someone’s tax returns. However, there are also times where the CRA can audit as far back as they would like. Normally, the CRA will audit the most recent two or three tax years. However, if the CRA discovers huge errors, it is possible that they will go back even further and audit other years. If the CRA sees fraud or serious issues with your tax returns, there are no limits as to how far they can audit.
Is it possible to sue my CPA for failing to file my taxes?
The failure of your accountant to file your business' tax returns could result in your recourse as a taxpayer. You legally can seek compensation from the CPA for money you lost due to their negligence and you can possess the legal right to sue your CPA for malpractice in order to obtain compensation for your losses.
What can I do to avoid being penalized for my unfiled taxes?
If you have to file late or if you have already filed late in previous years, you can request to have both your interest and penalties waived. To do so, complete Form RC4288 and submit it to the CRA. You can also apply for the Voluntary Disclosure Program (VDP).
Disclaimer:
"These articles provide information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. 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 the articles. If you have specific legal questions you should consult a lawyer."