The Canada Revenue Agency (CRA) needs go do a better job of ensuring that tax payments are applied to the proper account, concludes a report released Thursday by Canada’s Taxpayers’ Ombudsman.
Ombudsman J. Paul Dube issued the report examining complaints from taxpayers who say that their payments to the CRA are not allocated to the proper account.
In some cases, misallocation results in interest and penalty charges against the taxpayer, and in others, they have faced payment demands from collection officers, the report notes. And, taxpayers also complain about the time and effort it takes to correct such errors.
Many taxpayers have multiple accounts with the CRA, it notes, including personal income tax accounts spanning several years, as well as corporate accounts, and GST/HST accounts. And, the report finds that the taxman can do a better job of ensuring that payments are made to the correct account.
“Our investigation revealed that payment misallocations do indeed occur,” it says. In some cases, these are due to errors by the CRA, while others can be attributed to taxpayers, it reports.
And, while the CRA has quality control measures in place to detect and correct its own errors, these are less effective when an error or omission by a taxpayer causes the problem. The report also found that a large proportion of misallocations occur when payments are made by cheque, rather than electronically.
As a result, the ombudsman recommends that the CRA review its standards and procedures for processing payments, “to ensure that CRA employees are afforded sufficient time to accurately and thoroughly perform their duties.” It also recommends that the CRA determine the optimal size for remittance batches to make the detection of processing errors most efficient — processing smaller batches of payments improves accuracy, it notes, as errors can be caught and corrected more easily. And, it calls on the CRA to educate taxpayers on how to avoid making remittance errors, and on how to correct them when they do occur.