I have this client that is a product rep for Finning. Does a lot of driving.
He had a PAR for 2021 and 2022, which are both hanging in Appeals. He has spruced up his mileage logs twice to bring in extra details as to exact addresses of his calls, etc.
Now, dated June 12, 2024, we got a PAR letter for 2023.
I was on the ball, and responded to it on June 12,2024.
This was my client’s email this morning:
“This is getting ridiculous. You can see my frustration. For three (3) straight years I am getting audited, i believe that your team is missing something that triggers an audit. I am paying you and your firm a ridiculous amount of money to do my taxes and every year i get audited which in turn costs me more. I want this to go away. I have provided these idiots at CRA my drivers log for 2021, 2022 and had to re-do them several times…no word if they were accepted.
Now they are auditing me for 2023. ENOUGH. I will drop off my 2023 taxes again and I want these audits to stop. I have attached my Mileage report. You and your team have until end of July to fix this.”
Well, decided to check on the appeals this morning. Nothing is happening, last submission we did on that was in April 2024.
However, there was new mail. CRA has posted a 2023 reassessment, with a date of June 25, 2024, disallowing all the expenses in the 2023 PAR dated June 10, 2024…
Sounds to me like he’s splurging and trying to use your efforts as a scapegoat for his obvious ignorance.
A lot of people don’t know this, but the #1 thing CRA audits for is automobile expense claims.
I would call the agent on file (I’m sure you have already), and get a detailed explanation. If you absolutely cannot resolve this matter, engage a tax lawyer for a consultation.
Most likely he will walk on this matter. But if I were you, I wouldn’t be putting up with such a rant from a client (unless I knew for sure there was some negligence). CRA’s assessment times are not in your control… either the client understands this, or kindly tell him to go pound sand somewhere else.
@Deepinthemoneycall, you are completely misunderstanding the situation. I have been doing this client’s returns since 2010. It is CRA that is completely out to lunch here, and I understand and share my client’s frustration. I have been preparing tax returns since 1980, and have never seen CRA this bad!
Furthermore, as I told my client also, why line a lawyer’s pocket with this situation?
You tell the client you have no control over what the CRA does. They are welcome to take their business elsewhere but will likely run into the same problem because the CRA likes to audit milage amounts and since his milage logs didn’t pass muster the first time he probably now has a flag on his file to check it more frequently. I would perhaps call the CRA to see why the submission was not accepted. If they sent a letter June 12th, you responded to it June 12th and they finalized the return with a notice of assessment date of June 25th then they saw your submission and rejected it for some reason. Once you hear why it was rejected you will be able to respond to your client. I also agree with Deep in the Money - when clients talk to me like that they get fired.
Perhaps I am, but he does sound quite aggressive… excuse me if I’m mistaken. However, if a client of 14 years talks to me like that, I’m showing up at his door and talking with him in person.
I have had a few clients like that as well. Usually they are upset because our invoices have been more than they expected, and they figure that should cover any and all audit work. But, they don’t realize the amount of time we have to spend when they just drop off their shoebox and expect us to do all their bookkeeping first - and maybe we misunderstood what some of those receipts were for, because the client won’t sit down with us for 4-6 hours to explain each and every transaction. And, when we have to compile a response to CRA, with all appropriate supporting documents, that costs us even more time.
Anyway. The first thing I do is consider what, if any, of the problem is MY fault. Did I do the bookkeeping? Did I promise the client that CRA would not question anything? Did I forget to warn the client about some of his/her claims that I knew might be questionable? I find that such irate clients often calm down when I apologize and acknowledge that some (minor) part might be my fault. Maybe even give them a credit or a discount on the re-work - particularly if they have been a good client for a long time and you don’t want to lose them.
I’ve seen ads for Audit Shield (or similar products), but never looked into it myself. I suppose this is the kind of situation that that insurance would cover. If I had it, I could tell the client, “Don’t worry - we won’t charge you for anything we do to help you respond to CRA.”
I hate to say it, but…what worked in 1980 doesn’t work anymore. If CRA had today’s technology back in 1980 they probably would have been flagging and auditing more of these. If your client had such automobile expenses for the last 14 years and was never audited until 2021, they should consider themself lucky.
On the other hand, CRA has been more aggressive in the last few years - my guess is they are doing as much as they can to tighten the purse strings and recover funds since the government’s huge (stupid) hemorrhaging during the pandemic.
But, re: the reassessment date - it’s been the norm for the last few years that they post a NOA or NORA with a date in the future. I think that’s the date they expect the paper notice to be delivered to the recipient.
The one thing that is a bit surprising is that they issued the PAR on June 12 and either:
ignored it, and issued a reassessment immediately, or
someone got your response and READ it immediately (then decided it was insufficient for whatever reason)
In either case, that’s moving at lightning speed for CRA!
I had a client with a similar situation a few years ago. He had super clean records for his mileage, and got audited a first year as it happens. CRA accepted everything and it all got processed relatively promptly.
The next year’s tax return comes along and it got picked for an audit again. Client a bit peeved from the get go, similar to yours, and us too for that matter.
At some point in the submission process, I ended up having a call with the the CRA auditor and pointed out this was the second year with a clean audit result and I said something to the effect that it would be great to not have an audit of this client’s mileage again, as he clearly knows and abide by the rules, and thus it’s a waste of our time and public fund.
The CRA rep commiserated, but did not represent that he could do anything about it. Nevertheless, there’s been no audits since.
Also, since then, we’ve signed up for Audit Shield with Accountancy Insurance. If your clients sign up and pay the annual fee. The price varies on revenue size and complexity - starts at about $250 as I recall for simple T1 only, and goes from there; I got a client with a corporate group that generate about $20M+ of revenue and their fee is closer to $3,000. The Audit Shield will cover up to $10,000 of professional fees to cover CRA audit and review, WCB, provincial sales taxes, GST, payroll, etc. A pretty good deal for anyone with corporation, or particular risk exposure on their personal tax (e.g. mileage, high charitable or medical, high FTC, or such).
CRA doesn’t mind “clean” reviews…they push up the numbers because they’re “easy” and nobody is counting the dollars…not in the auto expense category. In Field or Business Audit maybe…but these are all Desk Reviews and they’re a complete pain in the butt, often done by officers who don’t have a clue.
Just got a review on a “Rental Loss” (the net was NIL on a $6K profit wiped by CCA). Go figure…18 questions that make absolutely no sense in the situation for the most part. Now the 2019 year…different story…but not for 2023. Just bizarre. They’re probably using ChatGPT.
File a service complaint, Bert. I have a client who has had his spousal support deduction either reviewed or arbitrarily changed by CRA 5 times in the past 10 years. His T1’s have always been changed back to the way we filed. His 2023 T1 was arbitrarily assessed with some lower figure. I filed a service complaint. CRA gave me some BS reply about how they choose clients to review and advised me that I should register the support agreement with CRA every year (since it has a COLA clause). I replied saying that this was an impractical solution.
Coincidentally, though, the return was reassessed back to the way it was filed a day after I talked to the officer assigned to the service complaint. They ended up saying that they put a note on the client’s file for next year. We’ll see what happens.
The timing of your client’s letter and the reassessment are likely enough to warrant the service complaint. That may also calm your client down if he see’s you’ve moved his case up the ladder.
Sounds like you tell your client that you replied to a letter the same day it was issued. What better service can he expect? Obviously this is a CRA issue; not your’s.
The problem with your answer is that a)the client is doing something wrong, and b) by extension the accountant is doing something wrong and c) the client cannot express frustration, furthermore d) CRA cannot do wrong.
This is a good, long term client. Clients like that I go to bat for. Furthermore, he has been paying his bills, which are not small. He pays me for my time.
Perhaps it is time for us…as tax professionals, accountants, lawyers…whatever…to start pushing back on CRA…HARD. They have gotten soft and lazy over the years and now, post-COVID are doing the work of their political masters to raise money. While in and of itself this is fine, the manner in which CRA is managed is approaching negligence and the hammer has to fall somehwere, starting with Bob WK Hamilton.
So, maybe we need to push our professional alliances, organizations, compatriots, colleagues…everyone in the tax universe to push back on CRA’s practices. They are simply making work for no good reason in may cases, and making the cost of tax services rise…again, for no good reason.
My personal approach, woule be a massive letter-writing campaing inundating both Finance and Revenue as well as to file Appeals to EVERYTHING, small. large, annoying…whatever. File service complaints to overdue responses, aggressive tactics, once again…everything.
I think Bert is trying to point out that CRA jumped the gun. A PAR request normally allows 30 days to respond, which can usually be extended on request. I am writing on June 14, 2024. Even if the PAR letter dated June 12 was post-dated a few days, as is usual, CRA has denied Bert and his client reasonable time to respond before issuing a NORA (obviously before 30 days have elapsed) denying the deduction CRA asked them to support. It is at best a left hand, right hand situation, and at worst gross unfairness.
no doubt - it is time for a change!
Over a year and 5 letters to resolve a simple dependant credit issue? and still dealing with a RRSP overpayment - sent in the bank info.twice - still not gone through - Ridiculous -and that Bare trust agreement fiasco has left me wondering if early retirement is not in my near future!
Compose a generic letter and I will do my part to circulate it.
I think I will file a couple of service complaints on Monday…
I concur with your frustration, but I’m not so sure it’s due to laziness. I mean, sure - it’s a government job, so they aren’t going to be nose-to-the-grindstone 80 hours/week like we are. But, I suspect they are often not meeting their “service standards” because most of CRA staff who knew what they were doing have retired over the last few years.
The majority of their current staff are young people with not much tax education/experience. Many have not grown up in Canada (i.e. immigrated from elsewhere), so they aren’t familiar with the historical issues, making them even less capable of recognizing what taxpayers and accountants are asking them. The “one or two” people at CRA that have been there for 20+ years are now supervisors or department managers or whatever, and thus have to deal with all the stuff that their subordinates can’t (i.e. everything is piling up on their desk).
So (IMHO), inundating CRA with letters and service complaints isn’t going to help, because it will all fall on those “one or two” people who actually DO THE WORK. Appeals and objections - same, but we NEED to file these, because they give our clients legal rights which can’t be ignored - even if it takes 10 years to get resolved. (maybe service complaints, too? not sure)
Department of Finance, on the other hand - ? If we inundate them with letters, are they even required to read them? Even if not, I would sure like to see them buried under a mountain of paper, because that’s what they’re doing to us…
I just had a convo with an accountant I know from a completeley different connection…same thing. Bizarro requests, often for the wrong year, some delivered by phone, and some highly intrusive in terms of the number of questions included. CRA can’t seem to get the reviews to US even when indicated, can’t get the year correct (doesn’t really matter unless they then change their minds) and expects answers in 30 days…then takes endless months to do anything with them. Frustrating accountants all over Canada I expect.
I’m old enough to remember the days when there were more or less permanent people in the tax office in the Ralston Bldg. on Hollis St. in Halifax. Everyone at our firm had a list of names & direct phone numbers taped to our desk under the phone (rotary dial). For a SRED question, you called Mr. A, for a medical expense question, you called Mr. B, and so on.