Bankruptcy Story #22 Tax Return Problems
Kenny took a job as a self-employed courier driver. The income was great. He was able to make the payments on his new van, meet the household bills and share occasional extra expenses with his wife. He always intended to put aside money for the taxes and at the initial meeting with the new company they showed him how to set up HST so he could claim his expenses. He wasn’t quite sure when this was due, but he figured he would receive a notice and then find an accountant. Kenny saw an accountant in April of the following year, gave him everything, and got back a bill and details of how much he owed. He paid what he could weekly, but couldn’t afford the full amount. He kept working and he and his wife had a baby.
The following April he met with his accountant again. The bill had close to doubled because last year’s amount was not paid in full. The next August he got a great job offer, paid off what was left on the van loan and sold it. Kenny figured he did not need to see his accountant again. A few years later he got a letter from Canada Revenue Agency with default assessments on unfiled returns. They were assessed on the full year he had worked as a courier and the bill was over $200,000. The letter said the next step was court. He hired an accountant to file the unfiled returns and this reduced the debt to $60,000. However, soon after he had a heart attack and was unable to work for 4 months. He went back to work part time, but the tax payment was due in 3 months.
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