I’m with you. Returning a check to CRA is not the best procedure.
Checks have a very very long processing cycle. At the best of times you may be looking at 6 to 12 weeks. When I worked at CRA they were all handled by the Ottawa Technology Centre. I am not sure where they are processed now. At that time all checks received at the TSO and at the TC were forwarded to the Ottawa Technology Centre even though at that the cashiers still existed at the TSO (Tax Services Office) and the mail rooms were open and gave manual receipts.
Currently there is no workflow to handle returned checks to reapply them to a new balance outstanding. The processing centre which handles them operate similar to a bank’s backends processing unit. Unless there is a MICR scanable advice slip then the data entry person must decide where to post the check. Sometimes it goes to future installments. Even worse, sometimes it goes to a suspense account which is off-ledge and held in a sub-ledger so that the amount can be found if and only if there is an investigation. This department is not trained in tax.
So, the easiest solution is let the payments cross.
If and only if the amounts are significant, would it be worthwhile to return the check to the TC (Tax Centre), attention T1 Specialty Services, with clear instructions on both the check and the cover letter asking to have the check re-deposited as payment on filing for the tax year for which this transaction should be applied. Then the T1 Speciality Services processor would need to create and internal workflow and manually forward the check to the check processing department. This could take several months to be applied properly based on accrual dates rather than cash dates. This would be worth while if and only if the payment amounts were significantly large and the interest and penalties would be deemed to be significant.