written on behalf of Feigenbaum Law

A 69-year-old man from Cape Breton, Nova Scotia is struggling to rectify what he calls a “mind-boggling” mistake by the Canada Revenue Agency: the CRA believes that he is dead. The man is concerned that due to this error, he will be cut off from Old Age Security and Canada Pension Plan income that he very much depends upon.

What Happened?

The man’s wife passed away in January 2017. When he contacted the CRA, he was told that he should apply for her death benefits and file her 2017 income tax, as well as his own. He did so in early 2018.

The man was stunned when he received a benefits cheque from the CRA several weeks later that was addressed to his estate, rather than that of his wife. He realized that the Agency had made an error and believed that it was the man who was deceased, and not his wife. The cheque came with a notice of assessment that also included incorrect income information.

The man told CBC News that he “was in a state of panic”. Shortly before he received the benefits cheque and assessment from the CRA he had suffered another personal loss, with the death of his son, and he did not know what to do when he received the information from the Agency.

The man called the CRA who told him they put “an override protection in the system”. He also notified Service Canada and believed that, at that point, the error had been fixed with both government agencies. However, in a subsequent phone call with Service Canada, that agency told him that he was still listed as deceased.

Potential Impact on Benefits

The man is “petrified” that his monthly Old Age Security and Canada Pension Plan payments will stop. He received his March payments but is concerned that subsequent ones will not be sent.

CRA has not explained how this error occurred but did confirm that they had no death certificate on file for the man. The man wonders whether he wrote down his own social insurance number on his wife’s death benefit application since he was so stressed following her death. Even if that was the case, the man is surprised that the CRA carried out no due diligence to ensure that he was really deceased and that they notified Service Canada and “put all this into motion” without checking whether they had his death certificate.

The man is asking the CRA to send him written confirmation that they have rectified the issue. He simply wants to know that his retirement income will continue.

While the CRA will not discuss individual cases with the media, the man is hoping he will hear from them. He wants the Agency to know: “[p]lease, if you declare somebody deceased make sure that person is really deceased,” he said. “Put the effort into it. Go that extra mile.”

The CRA’s Response

In an email to the CBC, a CRA spokesperson said that the CRA is “committed to providing the best possible service to Canadians”. The email further noted that “despite safeguards to ensure accuracy of our files, occasionally information we receive is incorrect or misinterpreted, or human error can occur during the processing of a taxpayer’s information”.

The CRA updates an individual taxpayers account when they receive confirmation of their death from lawyers, executors, beneficiaries, family members, other representatives, or government departments. If there is any indication the information received is incorrect “immediate steps” are taken to correct the error, which includes ensuring that the taxpayer affected continues to receive all benefits to which they are entitled.

Other Cases Where Taxpayers Were Erroneously Assumed to be Dead

In 2016, a 21-year old Winnipeg woman found herself in a similar situation. In January of that year, she received a letter from the CRA addressed to her estate. Confused, she called the Agency and was informed that they believed she was deceased.

The woman was not provided with an explanation as to why the Agency believed this but thought it might have been a processing error that had occurred when she had contacted the CRA several weeks prior about switching her GST cheques to direct deposit.

Following the receipt of the letter, the woman called the CRA repeatedly over the course of several weeks, only to continually hear that they still considered her deceased. The error quickly impacted the woman’s day to day life. Her student loan application was put on hold because her social insurance number was flagged as invalid because Service Canada also believed she was deceased

The CRA eventually contacted her to apologize, inform her that everything had been rectified, and that the two employees who made the errors would be spoken to, but not before the woman had to visit the Agency in series of stressful meetings.  Service Canada also eventually confirmed that her social insurance number had its “deceased” flag removed.

Taxpayers’ Ombudsman Recommendations

This is not the first time that such errors by the CRA have happened. Between 2007 and 2013 more than 5,400 Canadians were erroneously recorded as deceased by the CRA.

The issue became so prevalent that the Office of the Taxpayers’ Ombudsman (an independent and impartial officer who deals with complaints about the CRA) released a 2014 report on the problem. The report made eight recommendations on how the CRA can “continue to develop ways to minimize the number of taxpayers who are being declared deceased in error while making it a priority to reduce the impact on taxpayers.”

The recommendations were as follows:

• Ensure that the forms upon which the date of a death is to be entered are clear, easy to understand, and less likely to cause errors.
• Consider following up with the person or persons, who have reported a taxpayer’s date of death by telephone and are responsible for submitting documentation to substantiate the date of death, to ensure it is provided and matched to the deceased taxpayer’s account.
• Continue to gather statistics on the number of taxpayers coded deceased in error and analyze trends in causation, as well as increases or decreases in the number of errors made.
• Gather and analyze statistics on the length of time it takes to correct the coding errors and assess performance with respect to its internal program target of 48 hours.
• Continually review and update procedures to reduce the potential for human error by CRA employees and ensure that those procedures are communicated to relevant staff and management.
• Continue to work with partners in other government departments and provincial ministries to identify sources of errors and ways to minimize the transmission of incorrect information, and to ensure effective communication of corrective actions in those cases where errors do occur.
• Validate the findings from the analysis of trends in errors and implement further changes to procedures or provide further training where required, both for errors committed internally by the CRA and received from external sources.
• Put in place and monitor control measures to ensure that when errors do occur, they are detected and corrected as rapidly as possible.

Following the issuance of the Ombudsman’s report, the CRA told CBC News that it had accepted and acted on all eight of the recommendations.

If you have questions about personal tax planning, contact Mark Feigenbaum. Our goal is to create the best tax strategy possible for you. We work with you to create a personalized solution that will streamline your compliance requirements and set you up to take advantage of all possible current and future opportunities to reduce your tax burden. We offer services to clients across Canada.  Contact us to learn more about how we can help or call us at (416) 777-8433 or toll free at (877) 275-4792.