Interest Clock Number 1
Participants in the Pharma tax shelters programs obtained their large tax credits by leveraging a large donation through debt. As with most debt or loans, the agreements you signed required interest to be paid. You prepaid some of the interest, likely enough for 4 years or more at the time or your participation, however interest continues to accrue and at a very high rate compared to todays rates. The Tax Shelter companies have hired a collections company called Integrated RM Inc (IRMI) to collect that interest and principal. PGC recommends against giving money to Integrated RM Inc as it will cause serious problems with keeping your tax credits. But the debt is real and IRMI has the right to collect based on the documents you signed. For those of you who participated in COIP 2006 or RLG 2008, you have an additional important deadline. The term or your loan is coming up very soon and it will be too late to do anything about it if you ignore the deadline!
Interest Clock Number 2.
When you received your large tax refund, the CRA kept notes! After they finished their audit, they reassessed you and asked for the money back. You filed a Notice of Objection (NOO) and that stopped them collecting. However, the tax amount was just reclassified as "In Dispute" Money that the CRA classifies as "In Dispute" continues to accrue interest at their prescribed rate. Today's rate is 5% and it is compounded daily, which makes it terribly excessive. Over time, this Interest Clock can really add up and often mean the money owing will be double or triple the original tax refund. When CRA eventually confirms their reassessment, they will come collecting for the full amount. The only way to stop them then is to Appeal to Tax Court.
SO HOW CAN I STOP THESE INTEREST CLOCKS??
Clock Number 1 can be stopped by settling the donation debt according to the terms of your contract with them. You can pay the full amount (not a discounted amount) or return the items you purchased with the loan. The only way we know of to do this is through the Justice Pharma Program.
Clock Number 2 can be stopped in two ways. First, you can pay the amount owing back to CRA and then the Interest Clock will start clicking in your favour. Secondly, if you win in Tax Court, all the accrued interest will vanish, except for any interest CRA may owe to you. This process again takes a long time and the Clock will be ticking all along. So it's important to have confidence in your tax position when you make your decision. PGC offers the best solution we can possibly find for our Members. You can see more details of this solution on our recently announced Class Defence. We hope you will join our cause.
But Never Forget About the Interest Clocks......