Companies such as “Disability Benefit Group” or “The National Benefit Authority” (there are many others) are offering (for a fee) help with Disability Tax Credit applications to the Canada Revenue Agency (CRA). They promise up to $40,000 in returns. You have may seen or heard from such companies on the radio or on television, and they are also very active on social media with Facebook banners, Twitter promotions, and other advertising.
Organizations like this are called “Tax Credit Promoters” and they will be subject to new regulations (announced November 4, 2014) to ensure that they do not unfairly charge for filling out forms that are done for free by local tax clinics and social services agencies, or as part of the routine work completed by a person or agency that normally assists individuals with tax preparations at a much lower cost.
Typically, a Disability Tax Credit promoter makes their money by filling out the forms on your behalf, with the proviso that if you receive funds back from the Disability Tax Credit, they will take a portion of the refund. This can be as much as 25%-30% of the refund. Thus, if your refund were actually $40,000 (very unlikely unless you have paid taxes for many years, qualify for the credit, but never claimed it) the promoters would be taking as much $12,000 for having helped you fill out a relatively simple set of forms. Help with completing these forms is available at much more affordable flat rates or even for FREE at community tax clinics, from community agencies, or from other resources.
Additionally, some tax credit promoters have been known to make false medical claims, using the services of doctors who do not know the claimant to fill in the medical portion of the forms. If the CRA reviews the file and finds the medical statements to be false, the individual is liable for having made a false claim to the Canada Revenue Agency, and must repay all of the money, and may have to pay a penalty. The Tax Credit Promoter has already collected their fee or commission and it can be difficult or impossible to recover these funds.
As the new government regulations have not yet taken effect, it appears that Tax Credit Promoters have stepped up their advertising efforts in an attempt to recruit new clients prior to the deadline, after which time substantial protections will be available to consumers. If you or someone you know is already working with a Disability Tax Credit promoter and you were unaware of these issues and would like to discontinue the relationship, please consider the procedure below:
- Call the Canada Revenue Agency at 1-800-959-8281, and tell them that you wish to remove a third party’s authorization on your account. It doesn’t matter if the promoter hasn’t contacted the CRA yet, the agent will just put a note on your file preventing the Disability Tax Credit promoter from gaining access to your account.
- To cancel your contract with any Disability Tax Credit promoter, call and tell them that under Ontario law, you have 10 days to cancel any contract. Follow up by writing a letter to the promoter, re-stating the date and time of your cancellation phone call and confirming your cancellation. Some constituents have reported that there is a clause in some contracts stating that a multi-thousand dollar fee is due if the client cancels. Do not be afraid. Cancel the contract.
- Please call the Canadian Anti-Fraud Center at 1-888-495-8501, and tell the agent about your experience. Before you call, please gather all the details of your experiences (email addresses/websites/instructions/copies of contracts) there is about a 15-20 minute wait to speak to an agent, as they are receiving plenty of reports.