The Canada Revenue Agency has gone to extraordinary lengths to deny legitimate claims for credits, say tax consultants. The Agency proposes to cap consultants’ fees in a move that would curb Tax Court challenges of its rulings, said advocates.
“People had nothing, they will get nothing,” said Mike Campagne, president of DTS Disability Tax Services Ltd. of Burnaby, B.C. “They will get nothing and cannot get help. The Agency with these regulations is saying, ‘Trust us – you don’t need anybody.’”
The Agency in a June 1 notice Disability Tax Credit Promoters Restrictions Regulations said it would mandate a maximum $100 fee for consultants who file Disability Tax Credit applications and appeals on behalf of clients. Consultants typically charge contingency fees.
“Why would the Canada Revenue Agency want to deny?” said Campagne. “Why would they be doing this? You’re talking about giant amounts of money here. That’s why the Agency wants to get rid of all the representatives.” Some 1.3 million Canadians qualify for the credits worth $1.4 billion a year, by official estimate.
The Agency does not disclose its rate of denial of claims by category. A federal Disability Advisory Committee in a May 24 Annual Report cited a suspicious 53 percent spike in rejection of claims on the basis of “mental functions”, from 14,199 to 21,795 denials last year. “We don’t know why,” said Dr. Karen Cohen, co-chair of the Advisory Committee.
Consultant Campagne said his practice specializes in claims by parents of children with disabilities in mental function: “In my experience the denial rate would be 60 to 80 percent if a person tries this on their own.” Campagne said he successfully challenged ninety percent of denials after lengthy negotiation with the Agency.
“How can we trust the Agency’s system when I am right 90 percent of the time?” said Campagne. “This really bothers me, what the Canada Revenue Agency is doing.”
Chicken Nugget Appeal
Revenue Minister Diane Lebouthillier has not commented on the fee cap. The Tax Court in a 2003 ruling Nesbitt v Attorney General said the Agency “ought to take a humane and compassionate approach” in reviewing claims for Disability Tax Credits.
Other consultants cited lengthy delays in legitimate appeals, includes cases of a claimant with post-traumatic stress disorder seeking $4,000 in benefits that was settled after three years; a three-year fibromyalgia claim settled for $7,000; and a $1,200 settlement with a diabetes patient that took two years to resolve from the date of application.
In another case, the Agency rejected a physician’s letter from a claimant with recurring dental infections so painful it took her an hour to each two chicken nuggets. “Can she cut up her food smaller?” asked an Agency appeals officer, according to a transcript of the exchange. “Chicken nuggets: If it’s a case where she could just bite into a chicken nugget and eat it, she could cut it up.”
The Disability Tax Fairness Alliance has said the $100 fee cap will eliminate consultants, leaving individuals to take the Agency to Tax Court on their own. “My record is fifteen wins out of fifteen appeals to the Tax Court,” John Adams, co-chair of the Alliance and a former Toronto councillor, said in an earlier interview.
“I do pro bono work for a community with intellectual disabilities, people who applied for the credit and were unjustly denied,” said Adams. “They were all unjust denials of claims. People do not know how to maneuver through the CRA bureaucracy. Their letters of refusal are deliberate and maliciously misleading to taxpayers.”
“There are consultants out there who do an incredible job of helping these people,” said Adams. “Most taxpayers don’t even know they have a right to file an objection. The CRA creates deliberate bureaucratic barriers to accessing the Disability Tax Credit that Parliament intended to provide.”
The Agency estimated a total 63,707 consultants, accountants and tax preparers nationwide will be impacted by the fee cap. The hundred-dollar fee was calculated on the premise a claim could be settled with a one-hour phone call, according to Restrictions Regulations.