My_question_is: Applicable to both US and Canada
Subject: Canada USA tax treaty enforcement
Expert: [email protected]
Date: Tuesday January 15, 2008
Time: 01:42 PM -0000
QUESTION:
I am a canadian Citizen living in USA,
CRA claims back taxes. Let's suppose that CRA will win in the Tax Court
the battle. Could CRA enforce the payment using IRS or USA- Canada Tax treateay? If you need more details please let me know and I will call you. Thanks-----------------------------------------------------------------------------------------------
1. The Contracting
States undertake to lend assistance to each other in the collection of
taxes referred to in paragraph 9, together with interest, costs,
additions to such taxes and civil penalties, referred to in this
Article as a "revenue claim".
2. An application
for assistance in the collection of a revenue claim shall include a
certification by the competent authority of the applicant State that,
under the laws of that State, the revenue claim has been finally
determined. For the purposes of this Article, a revenue claim is
finally determined when the applicant State has the right under its
internal law to collect the revenue claim and all administrative and
judicial rights of the taxpayer to restrain collection in the applicant
State have lapsed or been exhausted.
3. A revenue claim
of the applicant State that has been finally determined may be accepted
for collection by the competent authority of the requested State and,
subject to the provisions of paragraph 7, if accepted shall be
collected by the requested State as though such revenue claim were the
requested State's own revenue claim finally determined in accordance
with the laws applicable to the collection of the requested State's own
taxes.
4. Where an
application for collection of a revenue claim in respect of a taxpayer
is accepted
(a) By the United
States, the revenue claim shall be treated by the United States as an
assessment under United States laws against the taxpayer as of the time
the application is received; and
(b) By Canada, the
revenue claim shall be treated by Canada as an amount payable under the
Income Tax Act, the collection of which is not subject to any
restriction.
5. Nothing in this
Article shall be construed as creating or providing any rights of
administrative or judicial review of the applicant State's finally
determined revenue claim by the requested State, based on any such
rights that may be available under the laws of either Contracting
State. If, at any time pending execution of a request for assistance
under this Article, the applicant State loses the right under its
internal law to collect the revenue claim, the competent authority of
the applicant State shall promptly withdraw the request for assistance
in collection.
6. Subject to this
paragraph, amounts collected by the requested State pursuant to this
Article shall be forwarded to the competent authority of the applicant
State. Unless the competent authorities of the Contracting States
otherwise agree, the ordinary costs incurred in providing collection
assistance shall be borne by the requested State and any extraordinary
costs so incurred shall be borne by the applicant State.
7. A revenue claim
of an applicant State accepted for collection shall not have in the
requested State any priority accorded to the revenue claims of the
requested State.
8. No assistance
shall be provided under this Article for a revenue claim in respect of
a taxpayer to the extent that the taxpayer can demonstrate that
(a) Where the
taxpayer is an individual, the revenue claim relates to a taxable
period in which the taxpayer was a citizen of the requested State, and
(b) Where the
taxpayer is an entity that is a company, estate or trust, the revenue
claim relates to a taxable period in which the taxpayer derived its
status as such an entity from the laws in force in the requested State.
9. Notwithstanding
the provisions of Article II (Taxes Covered), the provisions of this
Article shall apply to all categories of taxes collected by or on
behalf of the Government of a Contracting State.
10. Nothing in this
Article shall be construed as:
(a) Limiting the
assistance provided for in paragraph 4 of Article XXVI (Mutual
Agreement Procedure); or
(b) Imposing on
either Contracting State the obligation to carry out administrative
measures of a different nature from those used in the collection of its
own taxes or that would be contrary to its public policy (ordre public).
11. The competent
authorities of the Contracting States shall agree upon the mode of
application of this Article, including agreement to ensure comparable
levels of assistance to each of the Contracting States."
ARTICLE
16 - ARTICLE XXVII of Existing Convention (Exchange of Information)
1. Paragraph 1 of
Article XXVII (Exchange of Information) of the Convention shall be
deleted and replaced by the following:
1. The competent
authorities of the Contracting States shall exchange such information
as is relevant for carrying out the provisions of this Convention or of
the domestic laws of the Contracting States concerning taxes to which
the Convention applies insofar as the taxation thereunder is not
contrary to the Convention. The exchange of information is not
restricted by Article I (Personal Scope). Any information received by a
Contracting State shall be treated as secret in the same manner as
information obtained under the taxation laws of that State and shall be
disclosed only to persons or authorities (including courts and
administrative bodies) involved in the assessment or collection of, the
administration and enforcement in respect of, or the determination of
appeals in relation to the taxes to which the Convention applies or,
notwithstanding paragraph 4, in relation to taxes imposed by a
political subdivision or local authority of a Contracting State that
are substantially similar to the taxes covered by the Convention under
Article II (Taxes Covered). Such persons or authorities shall use the
information only for such purposes. They may disclose the information
in public court proceedings or in judicial decisions. The competent
authorities may release to an arbitration board established pursuant to
paragraph 6 of Article XXVI (Mutual Agreement Procedure) such
information as is necessary for carrying out the arbitration procedure;
the members of the arbitration board shall be subject to the
limitations on disclosure described in this Article,"
2. Paragraph 4 of
Article XXVII (Exchange of Information) of the Convention shall be
deleted and replaced by the following:
4. For the purposes
of this Article, the Convention shall apply, notwithstanding the
provisions of Article II (Taxes Covered):
(a) To all taxes
imposed by a Contracting State; and
(b) To other taxes
to which any other provision of the Convention applies, but only to the
extent that the information, is relevant for the purposes of the
application of that provision.
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---------------------------------------------Hello David, I am trying to find someone who can advise me on getting out of an oppressive $60,000 debt to CRA. It resulted from an audit and ½ of it is interest and penalties. Is there not some way to negotiate down to a lower amount to be paid on a lump sum basis?
I spoke to a lawyer or interne at DiGuardio & Assoc and they basically wanted money to review my records so they could then ‘possibly’ work a deal with CRA. It sounded like they were collection agents for CRA frankly.
Any ideas?
[email protected] and cc to: [email protected]--
And thanks
Frank O'brien
March 2004 Western Investor
Column: Bankruptcy David Ingram 12 blocks
Pullquote: "Pull the plug if you are fighting a losing battle"
HEAD = BANKRUPTCY
LEAD = Last year in B.C. 9,527 consumers and more than 1,100 businesses filed for bankruptcy.
MONEY AFFAIRS
( Photo)
DAVID INGRAM
Editor¹s note: In 2003 David Ingram lost a near $5 million tax battle with Canada Customs and Revenue Agency, one of the largest personal tax judgements in Canadian history. In this, the second of two parts, he offers a first-person account on dealing bankruptcy, what you are allowed to keep and what you have to lose.
I have just received my discharge from bankruptcy. It isn¹t completely over. I have to pay $800 a month for 36 months starting on February 7th, but that is a lot better than the $4,853,000 income tax bill that started it with no assets.
Well there were family assets. But over a period of 21 years I went from a positive paper net worth of $4,800,000 to a negative $4,800,000 because of an income tax bill that I fought in court and lost and then got stubborn.
If I had to do it again, I would have walked into a bankruptcy trustee¹s office 15 years ago and got on with my life. Instead I decided to fight.
So the house was put in my wife¹s name, the cars were in my wife¹s name, the motorhome was in my wife¹s name and the business was in my wife¹s name. How could I get hurt?
Then my wife left me and took all the assets with her.
Thankfully, the CCRA finally gave up on collecting and hired a trustee to put me into bankruptcy. I understand that I might be the first person that the CCRA put into receivership in Canada. Oh sure, there are thousands of instances where a taxpayer has declared bankruptcy because of a tax bill. But apparently no one knows of an individual put into bankruptcy by the CCRA.
Now you have to know that I have advised a couple of hundred people to go bankrupt over the years. Their situation was hopeless and bankruptcy was the only solution. I had had an appointment to see a bankruptcy trustee myself on July 22, 1999 but broke my arm and leg in a motorcycle accident and never made the appointment. But I should have rescheduled and got on with my life three years earlier because it took the CCRA three more years to put me into bankruptcy.
Subhead = Ask for help
This article is meant to encourage you to see a trustee and pull the plug if you are fighting a losing battle, particularly if the major creditor is the CCRA.
If you have money problems for any reason that could include divorce, separation, unexpected tax penalty, leaky condo, company downsizing, illness, an accident or any combination of the above, you will need help.
That help may be as simple as taking an adult education course in family finances at your local high school. Most adult education courses include such a course and even though I taught them for years, it did not keep me out of that $5,000,000 bankruptcy after three of the above events occurred.
If you need more immediate help and you happen to live in Greater Vancouver, contact a credit counselor. There are lots around. If you want a referral, send me a request to [email protected].
I am now seeing financial disasters of others on a daily basis. I am talking about the $186,000 income tax reassessment for something that happened five years ago. I am talking about the leaky condominium where the debt is $100,000 and you would have to earn $190,000 and pay $90,000 income tax to have $100,000 left and that is not counting interest accruing while you are doing it.
In this case, you need to consult competent legal help, a lawyer who specializes in bankruptcy law and will work for you and give you and your family the advice it needs to preserve any assets possible and tell you what you can do and cannot do.
Why not save a couple of dollars and go directly to the trustee?
The simple fact is that the trustee does not work for you. The trustee is working for the creditors.
Subhead = What can you keep?
The trustees job is to get the most for the creditors following local federal, state or provincial guidelines that have different limits in each province and each state.
In British Columbia, the assets that a bankrupt can keep are:
Equity in a home in Greater Vancouver and Victoria = $ 12,000.
In the rest of the province = $ 9,000;
Equity in household items = $ 4,000;
Equity in a vehicle = $ 5,000; The vehicle exemption drops to $2,000 if the debtor is behind on child care payments (to facilitate the enforcement of Maintenance Orders)
Equity in work tools = $ 10,000;
Equity in essential clothing and medical aids is unlimited.
Alberta shows its agrarian roots with much larger exemptions as follows:
Food required by the debtor and dependants for next 12 months;
Necessary clothing of debtor and dependants to a value of $4,000;
Household furniture and appliances to a value of $4,000;
One motor vehicle not exceeding a value of $5000;
Medical and dental aids required by the debtor and dependants;
Where the debtor is a bona fide farmer and whose principal source of livelihood is farming, 160 acres, if the debtor's principal residence is located on that 160 acres and that the 160 acres is part of the debtor's farm;
The equity in the debtor's principal residence, including a mobile home, up to a value of $40,000;
If the debtor is a co-owner of the residence, the amount of the exemption is reduced to an amount that is proportionate to the debtor's ownership interest;
Personal property (i.e. tools, equipment, books) required by the debtor to earn income from the debtor's occupation up to a value of $10,000;
Where the debtor's primary income is from farming operations, personal property required by the debtor for the proper and efficient conduct of the debtor's farming operations for the next 12 months, plus some other specific exemptions.
Saskatchewan Exemptions and agrarian routes are even more generous:
For Non-Farmers:
Household furniture and personal effects to a value of $4,500 per person;
Tools of the trade to a value of $4,500;
A motor vehicle, if required for employment;
$32,000 equity in your home ($64,000 if jointly owned);
Certain life insurance policies;
RRSPs, RRIFs and DPSPs are exempt from seizure (effective March 4, 2003); Certain pensions.
For farmers, the exemptions are more generous and include equipment and machinery for one year of farming; living expenses to the next harvest, certain life insurance and pensions and other specific exemptions.
Manitoba Exemptions are different again and maybe a little light:
Furniture, household furnishings and appliances not exceeding total value of $4,500;
Necessary and ordinary clothing of the debtor and family;
Food and fuel necessary to the family for period of six months or cash equivalent;
Actual residence of the bankrupt, equity of $1,500 each if in joint tenancy, or $2,500 if not in joint tenancy.
If debtor is a farmer, exemptions include livestock, machinery and equipment necessary for farming operation for 12 months; enough seed all debtor land under cultivation, plus some other specific exemptions.
(For complete information on provincial farming exemptions see:
www.bankrutpcycanada.com )
Subhead = First step
Talk to a bankruptcy lawyer first. If you want a reference, email me at [email protected]. Get your law straight. Learn what you get to keep and what the limits are. In B.C.for instance you can have $5,000 equity in a car. However, The Bank of Nova Scotia (for one) will insist on seizing your car even if you have never missed a payment if the car loan is with them. Arranging for someone else to take over the loan before you go bankrupt could make the transition easier.
Hope this helps. Remember - see the lawyer first - before you see the trustee. And only talk to a lawyer who deals regularly with bankruptcy and appears in court for bankrupts protecting their rights. That means perhaps one in 100 lawyers. There is little chance that a lawyer you are already dealing with would be the one you would use because a bankruptcy lawyer is likely too busy today to do anything else.
At bottom:
- David Ingram is the CEO of david ingram's CEN-TA of West Vancouver. Ingram can be reached at (604) 980-0321 or email at [email protected].
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