Poll Results: Delays in Refund Processing has a Negative Impact

CRA started processing refunds later than in the past this year, on February 26.  We asked Knowledge Bureau Report readers what they thought of that, given that refunds would now be delayed into March.  The good news is that the CRA does seem to be abiding by the ten-business-day turnaround promised.

According to Alan Rowell, Knowledge Bureau alumnus (DFA – Tax Services Specialist) and owner of The Accounting Place, “From when E-File opened on February 26, our first client received their refund on March 8 by direct deposit.”

Eighty percent of the 227 participants in Knowledge Bureau’s February poll disagreed with the postponement, and, in light of the service issues reported last fall by the Auditor General, went further to say that the decision has many financial professionals concerned. Tax preparers believe delaying the processing of refunds impacts their efficiency negatively, in an already too-short tax season.

In addition, criticism of the introduction of the revamped “File My Return” program for low-income Canadians, continues, and the issue is about fairness.   Many professionals fear that the program will cause Canadians to miss important provisions, like reporting principal residence dispositions under new reporting requirements in 2018.  That could lead to very expensive penalties.

The poll garnered lots of comments – here are a few of them:

Eric makes a good point for investors.  “Many people use their refund to buy RRSPs. This option is taken away by the government.”

Stephen’s view was this: “I would agree that it is unfair generally. In many cases, the government has had taxpayers’ withholding money for many months and they should not delay in returning it. However, it makes sense from an administrative viewpoint. As an accountant preparing T1 tax returns, I have seen far too many re-assessments caused by income T-slips either not having been received by the taxpayer on time, or simply having been filed later with CRA. This is especially the case with T3s and T5 slips.”

Jodi finds communication challenges.  “It makes sense to me to wait to process a return, but not all clients agree and it’s just another thing we are left to take the brunt of from clients. The real issue of CRA being in conversion until February 26th—I was told that a review that was sent in can’t be touched until conversion is complete, meaning a three-week delay when processing times are already way beyond acceptable.”

Alice wants to see the tax season extended. “I have long thought the tax filing deadline should be extended to the end of May or even into June as many of my clients receive slips from their investments after the filing deadline.”

Brian is in favor of the postponement:  “Too many people want to file early and then end up coming back two weeks later with additional information/slips and we have to file amendments. Busy enough in March and April so we do not need the extra work.”

Sybille worries about increased errors due to the rush. “If we have to cram all of our Personal T1s into a much shorter time frame, CRA best not expect a reduction in errors. Not only will we have less time to complete the work, we’ll have more distractions from, and have to make time to pacify, clients who have come to count on their refunds. “

Michele’s take is similar:  “Many tax preparers are downloading T4s etc. from CRA’s site. The deadline for filing these forms on the site is February 28. The information required to file returns, even if CRA was ready for us to file, will not reliably be available until after March 1. It makes very little sense to rush into preparing taxes with incomplete information.”

Katherine worries about service levels:  “I don’t think it’s a question of fairness. It’s simply not efficient on their part to be this far behind with both assessments and adjustments.”

Martin is concerned about fairness.  “The 2017 overpayment is already owing to the taxpayer by January 1, 2018. Just another way CRA can earn a little more interest on your money.”

Eva agrees:  “I voted for no. It’s not fair to hold money from most employees, who already paid their taxes during 2017 and are entitled for refund.”

Joanne has a solution.   “Both CRA and software companies, and issuers, scramble at the turn of the year to report or convert. I certainly want to accurately prepare and seamlessly file returns for the new year. From the taxpayers’ point of view, I think the date from which interest is payable on a refund should be set either as of January 1 or February 15. I coach my clients who use income tax as forced savings (usually without success); now I’m going to get serious about the promoting of Form 1213 so the government doesn’t receive the money in the first place. . .the overpayment on account should earn interest. That’s not a change in the Income Tax Act I see coming.”

Doris is upset about service delays at the CRA, in general, and the February 26 delay in particular:  “Absolutely not. It hurts the people who have the least. I have a client I filed multiple-year adjustments for in October 2016 (that’s not a typo) that still has not been processed. This is for a disability claim that they approved! What possible rationale can they have for keeping someone waiting 15 months?”

So is Doug:  “Taxes are becoming very difficult because of the long delays we are experiencing with the processing of adjustments and tax; some tax returns are taking over six months to be processed. CRA will be holding refunds on people who have sent in the information months ago that would clear their accounts if CRA would get them processed. It would help if they would at least acknowledge that they have the information to process instead of telling the clients they have no record of it.”

So does Ken:  “They haven’t assessed some of our clients for 2016 yet! How can you expect them to process 2017 before 2016 is complete?”

Last word goes to Jim, who summarizes the concerns with a fairness comment: “CRA is fast on charging late-payment interest for taxes due, so would it not be fair to pay interest to the taxpayer for delayed processing?”

Weigh in on this month’s poll question: “Do you believe the February  27, 2018 federal budget achieves the ideals of fairness, equity, simplicity and certainty for our tax system?”

Additional educational resources: Spring CE Summits, Introduction to Personal Tax Preparation

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