When CRA makes a settlement offer and wants you to sign a waiver. What should you do?
When you receive a settlement offer from CRA it means that they know you are right and they know it is in their best interest to settle.
They may or may not ask you to sign a waiver. The waiver is for them, not you and does not need to be part of the deal.
You need to see it from their point, their best position is to get you to settle for less than what you could win in court and to get you to waive your rights to any further objection.
They will quote Subsection 165(1.2) and 169(2.2) it limits your right to object to the issue in dispute.
Once you waive your rights to dispute the named issues, it is over for you and the numbers are what you agree to.
However, CRA has a new technique where they quote the correct section but add in the words in the waiver… as follows…
“I waive my rights of objection or appeal in respect of: Business Income and Expenses.”
If the proposed numbers are acceptable to you then it is OK to sign that waiver so long as you add the words. “This waiver is restricted to the business income and expenses as to the income and expenses as agreed to herein and does not include other issues that may or may not arise independently of the issues at hand.”
or…
Being that the waiver should not be part of the deal, just don’t sign the waiver and write a letter stating what you are agreeing to. Such as “I agree to only the proposed changes as outlined in the adjustment for settlement proposal offered by Mr. Ron Tammer in his offer dated May 10, 2011.
How I see it, CRA never offers more than you are entitled to get, so depending on factors such as your stress and the costs involved in fighting, the deal offered can only get better, so make sure you weigh all factors.
A factor that is often forgotten, if you are going to be unable to pay the amount CRA wants to settle for, you are best to fight it all the way. The concept here is there is no difference between $1,000.00 tax debt and a $1,000,000.00 tax debt if you can’t pay either.
You have to fight it all the way until you get the numbers down to what you can afford to pay. Naturally subject to you being right about the income and expense amounts you are fighting over.
You have to take your battle into the numbers and reasons your income and expense is being challenged. Being an auditor does not make you right, just as being a taxpayer does not make you right.
The devil is in the details, so… make sure you know how to take the complex and express it is simple terms. Summaries are critical. Start off with conclusions and work your way down to proving the numbers that support each conclusion.
You can fight it at this level and remember you are the one who knows the truth, so it is up to you to prove it with corroborating evidence.