Trying to fix a tax error, not sure who to trust anymore
January 22, 2019 11:09 AM   Subscribe

My mother and I made a very stupid, awful error and had an accountant w/o the CPA designation do her taxes (in Canada) for the 2017 tax year and long story short she had to pay a large five-figure amount in tax. In August we found a new CPA designated accountant to refile her taxes to fix this error. I'm still not sure if I can trust this CPA or if he's doing the process correctly and I am having massive anxiety about it. How do I know if this CPA is reliable?

This is what the tax error was: The RRSP my mother received from my father's estate counted as INCOME, the RRSP was directly transferred into a RIF.

A few months after my mother's adjusted taxes were sent in by the new CPA, we received a request from the Canada Revenue Agency (CRA) for documentation supporting the adjustment. Which I previously asked about.

So, it took us awhile to get the proper documentation together but eventually we did and the CPA sent a letter to the Canada Revenue Agency with the supporting documents. Now, this is where I'm not sure what to do or who to trust. He submitted these documents (apparently in person) on the DATE the documents were due (because the letter gave us 30 days to submit them), or so he says. I have a copy of the letter and it indeed has that date on it. The CPA told us that it takes should take about 8 weeks to hear back from the CRA about this, okay... fine.

This week my mother got a Tax Reassessment in the mail from the CRA, which says that she's getting some $100ish refunded, with no mention of the letter we sent with the documentation in it. Her "income" is still absurdly high, so the RRSP she received (which is a RIF now) is still being counted as income. Obviously, this is concerning. I sent an email to the CPA asking about the next steps (as the small print says we can register a formal dispute with the CRA 90 days from the letter).

The CPA gets back to me and says that the CRA is still processing the letter/documentation we submitted and that this reassessment is due to ANOTHER mistake the first accountant made because he did not calculate the proper "tax withholding" amount, and this reassessment is addressing that correction. He said that this has nothing to do with the RRSP dispute that that we should be patient as the CRA will take about 16 weeks (?) to deal with that (again, we sent the letter in mid-December).

I am honestly so worked up, anxious, and sooo fucking frustrated about this, how can I actually trust what the CPA is telling me regarding this? Because obviously the CRA did the adjustment without the letter, which was probably not received within the 30 day period they requested. Can we call the CRA and actually confirm that the letter/documentation IS waiting for processing? Can they do another reassessment after we have JUST be reassessed?

I feel like I just can't wait 16 weeks to see what happens, because that goes beyond the 90 days we have to file a dispute and I don't want to miss the opportunity to do that.

I was talking to a coworker about my situation and she mentioned that her CPA is quite good and has helped her with a few complicated CRA tax situations. Would it be out of line to go to ANOTHER CPA about this and see what they can do?

I feel so overwhelmed and I am just starting to think we should accept that we made a ridiculously stupid mistake by seeing an "accountant" with a non-CPA designation and that we should just kiss any hope of seeing the five-figures my mom paid in taxes for receiving the RRSP from my father (which, again, went directly into a RIF) goodbye and just move on and accept that that money is gone.
posted by VirginiaPlain to Work & Money (9 answers total)
Oops I made a typo "the new refund is about $1500 not $100ish" (not sure if it matters).
posted by VirginiaPlain at 11:13 AM on January 22, 2019

i don't know anything about canadian taxes, but just call the CRA. have any relevant account numbers/social security numbers at hand. they will tell you what documentation they've received, what they still need from you, etc.
posted by misanthropicsarah at 11:46 AM on January 22, 2019 [2 favorites]

Call the CRA. They're generally very helpful.
posted by jeather at 12:23 PM on January 22, 2019 [2 favorites]

Yep, call CRA. They will speak to you and your mother, as long as you have her there to be verified.

The rollover of a RRSP or RRIF from deceased spouse to surviving spouse as you have described it is pretty common. As long as your documentation is correct, this shouldget resolved correctly.

Can we call the CRA and actually confirm that the letter/documentation IS waiting for processing?

Yes. One possible answer from CRA is 'we have received documentation from your CPA and it is in a queue for processing.' Another answer they might give you is 'we're not sure if we have anything from you, it might be in a big pile , and we are still within the processing timeline for this request.' (i.e. there might be a queue of big unlogged, unopened piles of stuff, and haven't gotten to the pile your submission would be in if it was sent. If this is the case, you just have to wait.

Can they do another reassessment after we have JUST be reassessed?

Yes. If you refile and make multiple changes (as your CPA says they've done), CRA may process them separately (because different specialists may be involved for each change). This is normal.

Your mother can authorize you to be her representative to deal with CRA on her behalf. There's a form to fill out and send in.

At this point I would say that you should trust your original process of finding the CPA you've started working with. You have some reasoning as to why you went to this person, and you've paid them for their services, and they have described the problem to you and gotten started with a resolution.

Would it be out of line to go to ANOTHER CPA about this and see what they can do?

Upon hearing that CPA #1 has made this filing for you, CPA #2 would likely tell you to wait for CRA's response, unless there's an obvious problem with the filing. Involving another CPA and another filing seems like it will make things more complicated and slow things down. You've asked a qualified professional to do something for you that is squarely in the middle of their field of expertise. The timelines they've quoted to you are reasonable. There are no obvious red flags in your description of the issue.

You may want a financial plan done for your mother from a fee based or fee only planner. They won't do your mother's taxes, but rather, they would look at the big picture of investments, retirement income, tax, insurance and estate issues, and let you know where your mother stands for her financial future. Looking ahead may be helpful, regardless of the result from the CRA.
posted by thenormshow at 12:38 PM on January 22, 2019 [1 favorite]

I work in the taxing realm with a lot of CPA's. While for the most part I find CPA's to very professional, I also have a ton of horror stories. In short, call the CRA. If it's too much to understand over the phone, ask them for an in person meeting / review of the documents. Ask them if everything was submitted on time, and if anything is missing.

Ime taxing authorities are not scary boogeymen; for the most part they genuinely want to help the taxpayer (remember they are taxpayers themselves, and they want to see the system be fair, especially to the little guy). If you run into a tax agent who is not helpful, don't be afraid to escalate, although with a kind attitude "I know agent Adams is trying to help me, I just want to make sure I understand, maybe an explanation from a different person will clear up my misunderstanding", that sort of thing. I once heard a colleague of mine use the phrase "I can see that you're trying to explain this to me but I'm not getting it. This is very important to me, so it's important that I feel like I completely understand the issue", that type of phrasing works well.

Better to get on this sooner rather than later so that you have time to gather any additional info they may require.
posted by vignettist at 1:54 PM on January 22, 2019 [1 favorite]

I work in taxes, and the CPA designation is really not a good marker for whether or not a person is adept at handling tax issues. You learn a lot of accounting, a tiny smidge of income taxes, and virtually nothing about actually dealing with tax authorities.

That doesn't mean your CPA is a bad tax professional. It's just not really relevant.

Not having proof of submission is a huge fail for a tax professional. If he submitted it in person, he should have some documentation supporting that. And if they didn't provide it, he should have sent some contemporaneous letter acknowledging the data was provided on X date.

Ask your CPA if they have that documentation. Ask the tax authority if their records show they've received the documentation, and whether it's still being reviewed.

If you don't get confirmation that the CRA has received the documentation AND hasn't sent out a revised letter responding to that documentation, I would resubmit the documentation within the 60 days. It might be duplicative. But lapse of statute of limitations is the easiest way to lose a refund.

(I work in US indirect taxes. So while I don't know the Canadian specifics, having to work with tons of weird local jurisdictions has given me good insight in working with tax bureaucracy to correct errors)
posted by politikitty at 2:13 PM on January 22, 2019 [1 favorite]

I think calling the CRA would be a good idea. If you do, make sure you have a clear story/narrative. Write it down. Practice it. Practice saying it in a neutral voice. Make sure you ask for help, and the help you ask for is help the CRA person can give you.

Second, always remember the CRA is not your friend. They are professional, but they are not in the business of untangling messes. That is what accountants are for (in Canada there is a move to unify Chartered Accountants and Certified Public Accountants).

Your current CPA *should* have internal relationships with the CRA; if they don't a partner at their accountancy firm will have them. One of the benefits of hiring an accountant is that they can sometimes pick up the phone and quickly and decisively solve problems.

I have been with my fathers' CPA for many years; my father owned a business, and I am self-employed. About a decade ago I was a salaried employee for several years. I can't remember what I did, but I misreported my income -- effectively doubling my income -- and I was served with a $20,000 tax bill beyond what I had already paid. I asked my accountant for help.

He contacted CRA and sorted everything out. The entire process took about 3 months, or 12 weeks. He included it as part of my annual tax preparation fee of $400 at the time. This is why I pay $400 to have my taxes done for me: so I can get some firepower when I make a mistake that can be fixed.

The best thing to do with your CPA is to just tell them you are really worried what might happen. However, the worst already has happened: as I read it, you paid CRA the five-figure tax sum you didn't need to. The CRA has your money, but your accountant will help you get it back.
posted by JamesBay at 3:43 PM on January 22, 2019

Thanks for all the advice.

We called the CRA and the letter/documentation that the CPA sent on my mother's behalf is still being reviewed, according to the agent we spoke with. I'm not sure what happened with the re-assessment. It sounded like the one we received was done before they got the documentation, for some reason... not because it was a separate process, but I'm not sure.

I can't say I feel less stressed out, but at least everything is in progress... regardless of what the final decision is.
posted by VirginiaPlain at 4:22 PM on January 22, 2019 [1 favorite]

I'm not sure what happened with the re-assessment. It sounded like the one we received was done before they got the documentation, for some reason... not because it was a separate process, but I'm not sure.

In my experience, yes, the CRA (eventually - since they receive all tax forms around the same time each year, it can take a while to work through) checks the math and stuff on the tax forms that you have submitted, and sends the occasional correction if you have made an error, without you having to request it or anything.
posted by eviemath at 4:21 AM on January 23, 2019

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