Alan Baggett
2012-11-20 12:30:09 UTC
CRA seizes funds from woman over late mother’s tax debt : CRA SOTW
By Hugh Adami, Ottawa Citizen
Not satisfied after raiding the investments of an old and sick woman facing a huge tax debt with the federal government, Canada Revenue Agency then turned on her daughter to improve its take.
It was late 2009, and Joy MacKinlay’s mother, Mildred Williamson, was suffering from dementia and living in a retirement home in Victoria, which was costing her dearly. So when Williamson received an insurance settlement of $25,000 for injuries she suffered after being hit by a car, she asked her daughter, who acted as her power of attorney, to invest it. Both wanted to be certain that money would be available as Williamson’s needs for personal care became greater.
MacKinlay, a federal public servant in Ottawa, sent a cheque for $25,000 to her brother, Mark Crapelle, who lived out west. As he had done with $75,000 — left over from the sale of his mother’s condominium after he paid off a number of her bank and credit card debts — Crapelle put the $25,000 in an investment to which she had access.
Months later, Canada Revenue Agency came calling.
CRA had been monitoring Williamson’s bank account. Her debt to CRA was closing in on $400,000. She had claimed tax deductions in the late 1990s, some for offshore investments that turned out to be scams and robbed her of great deal of money.
MacKinlay says she was aware of her mother’s tax problems when she took over as power of attorney in 2008, but couldn’t get much information out of her, perhaps because of the dementia. MacKinlay says that what her mother owed included a fine and compound interest.
MacKinlay says her mother had little left as a result of the investment scams, so there was little money for Canada Revenue. McKinlay says she informed the agency that it would have to wait until her mother died to get anything because whatever she had was required for accommodation and care-giving. Williamson eventually moved to a nursing home and died in March 2011, at age 84.
MacKinlay says her “intention had always been to allow (my mother) to live with dignity” and worry about the tax debt afterward. When Williamson passed away, there was little left in terms of money, says her daughter. She had $4,000 in the bank and that went toward funeral expenses.
After CRA found out about the $25,000 and $75,000 investments made on behalf of Williamson, MacKinlay says, the CRA went after Crapelle to recover the money, using a provision under the Income Tax Act. Section 160 of the act allows the CRA to intervene when a tax debtor transfers money or other property to a person with whom the debtor does not deal at arm’s length. CRA has the power to recover the money or property, and even assess the recipient for all of debtor’s taxes.
So Crapelle pulled the money from the $25,000 and $75,000 investments and gave it to the agency, then, the agency turned its attention to MacKinlay. Using another provision, CRA assessed her $25,000 for the amount she had given her brother to invest for their mother. Under Section 159, someone who has power of attorney for a tax debtor and control of their funds is responsible for having the debt repaid. Canada Revenue decided MacKinlay had violated the act by not giving it the $25,000 to pay down the tax debt.
MacKinlay argued she didn’t owe the money as it was now in federal government coffers, and that if she paid the agency $25,000, it would be doubling its entitlement. But that didn’t matter. MacKinlay’s involvement was considered under a separate provision.
MacKinlay paid up to avoid the compound interest, and then appealed the assessment. She got nowhere. So MacKinlay hired lawyer Adam Aptowitzer, a tax litigator, who is trying to get the money returned through a remission order from Treasury Board.
Aptowitzer says he has come across many “bizarre” and “crazy” stories “dealing with (CRA) people who refused to be sensible.”
Though CRA was simply upholding the law, Aptowitzer says, “You also want them to be reasonable and say, ‘Look this is clearly not how the law was intended to be applied.’ ”
He says he doesn’t believe sections 159 and 160 of the Income Tax Act were written “to deal with this specific situation. I think that much is clear. It’s only by putting the two together that you get this kind of situation, and it was probably something that was overlooked.”
Last March, Aptowitzer spoke with Justice Department lawyers representing Canada Revenue to see if “saner heads would prevail.”
One of the lawyers, he says, felt the government was entitled to $50,000, while the other didn’t seem so sure. But, in the end, they told Aptowitzer he could fight the government in court. A Federal Court challenge would have cost MacKinlay another $25,000 on top of what she had already paid Aptowitzer, so she decided against it. “I thought: All you need is a judge on a bad day and I’m screwed.”
Considering how far Aptowitzer got with the federal lawyers, seeking a remission order to get MacKinlay’s money back would appear to be a very tough task. Canada Revenue refused to comment on the case, but said in an email that “remission orders are issued only on a very exceptional basis.”
Wrote spokeswoman Rebecca Merrett: “Highly trained and objective CRA officials review all requests for remission, and then either deny the remission request or make a recommendation to the Commissioner of the CRA and the Minister of National Revenue.”
From there, Merrett said, a ministerial recommendation for remission is sent for consideration to the Governor in Council, who is empowered by Treasury Board.
© Copyright (c) The Ottawa Citizen
-----------------------------------------------------------
Miss a Tax Tale Miss a lot!
Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com
------------------------------------------------------------
Alan Baggett – Tax Collector’s Bible - http://taxcollectorsbible.com/
By Hugh Adami, Ottawa Citizen
Not satisfied after raiding the investments of an old and sick woman facing a huge tax debt with the federal government, Canada Revenue Agency then turned on her daughter to improve its take.
It was late 2009, and Joy MacKinlay’s mother, Mildred Williamson, was suffering from dementia and living in a retirement home in Victoria, which was costing her dearly. So when Williamson received an insurance settlement of $25,000 for injuries she suffered after being hit by a car, she asked her daughter, who acted as her power of attorney, to invest it. Both wanted to be certain that money would be available as Williamson’s needs for personal care became greater.
MacKinlay, a federal public servant in Ottawa, sent a cheque for $25,000 to her brother, Mark Crapelle, who lived out west. As he had done with $75,000 — left over from the sale of his mother’s condominium after he paid off a number of her bank and credit card debts — Crapelle put the $25,000 in an investment to which she had access.
Months later, Canada Revenue Agency came calling.
CRA had been monitoring Williamson’s bank account. Her debt to CRA was closing in on $400,000. She had claimed tax deductions in the late 1990s, some for offshore investments that turned out to be scams and robbed her of great deal of money.
MacKinlay says she was aware of her mother’s tax problems when she took over as power of attorney in 2008, but couldn’t get much information out of her, perhaps because of the dementia. MacKinlay says that what her mother owed included a fine and compound interest.
MacKinlay says her mother had little left as a result of the investment scams, so there was little money for Canada Revenue. McKinlay says she informed the agency that it would have to wait until her mother died to get anything because whatever she had was required for accommodation and care-giving. Williamson eventually moved to a nursing home and died in March 2011, at age 84.
MacKinlay says her “intention had always been to allow (my mother) to live with dignity” and worry about the tax debt afterward. When Williamson passed away, there was little left in terms of money, says her daughter. She had $4,000 in the bank and that went toward funeral expenses.
After CRA found out about the $25,000 and $75,000 investments made on behalf of Williamson, MacKinlay says, the CRA went after Crapelle to recover the money, using a provision under the Income Tax Act. Section 160 of the act allows the CRA to intervene when a tax debtor transfers money or other property to a person with whom the debtor does not deal at arm’s length. CRA has the power to recover the money or property, and even assess the recipient for all of debtor’s taxes.
So Crapelle pulled the money from the $25,000 and $75,000 investments and gave it to the agency, then, the agency turned its attention to MacKinlay. Using another provision, CRA assessed her $25,000 for the amount she had given her brother to invest for their mother. Under Section 159, someone who has power of attorney for a tax debtor and control of their funds is responsible for having the debt repaid. Canada Revenue decided MacKinlay had violated the act by not giving it the $25,000 to pay down the tax debt.
MacKinlay argued she didn’t owe the money as it was now in federal government coffers, and that if she paid the agency $25,000, it would be doubling its entitlement. But that didn’t matter. MacKinlay’s involvement was considered under a separate provision.
MacKinlay paid up to avoid the compound interest, and then appealed the assessment. She got nowhere. So MacKinlay hired lawyer Adam Aptowitzer, a tax litigator, who is trying to get the money returned through a remission order from Treasury Board.
Aptowitzer says he has come across many “bizarre” and “crazy” stories “dealing with (CRA) people who refused to be sensible.”
Though CRA was simply upholding the law, Aptowitzer says, “You also want them to be reasonable and say, ‘Look this is clearly not how the law was intended to be applied.’ ”
He says he doesn’t believe sections 159 and 160 of the Income Tax Act were written “to deal with this specific situation. I think that much is clear. It’s only by putting the two together that you get this kind of situation, and it was probably something that was overlooked.”
Last March, Aptowitzer spoke with Justice Department lawyers representing Canada Revenue to see if “saner heads would prevail.”
One of the lawyers, he says, felt the government was entitled to $50,000, while the other didn’t seem so sure. But, in the end, they told Aptowitzer he could fight the government in court. A Federal Court challenge would have cost MacKinlay another $25,000 on top of what she had already paid Aptowitzer, so she decided against it. “I thought: All you need is a judge on a bad day and I’m screwed.”
Considering how far Aptowitzer got with the federal lawyers, seeking a remission order to get MacKinlay’s money back would appear to be a very tough task. Canada Revenue refused to comment on the case, but said in an email that “remission orders are issued only on a very exceptional basis.”
Wrote spokeswoman Rebecca Merrett: “Highly trained and objective CRA officials review all requests for remission, and then either deny the remission request or make a recommendation to the Commissioner of the CRA and the Minister of National Revenue.”
From there, Merrett said, a ministerial recommendation for remission is sent for consideration to the Governor in Council, who is empowered by Treasury Board.
© Copyright (c) The Ottawa Citizen
-----------------------------------------------------------
Miss a Tax Tale Miss a lot!
Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com
------------------------------------------------------------
Alan Baggett – Tax Collector’s Bible - http://taxcollectorsbible.com/