While an unresolved tax debt can wreak financial havoc on an individual and their family, what can be worse is the potential medical implications. Many Canadians who have left a tax problem (undeclared income or past due tax returns ) unresolved for many years, begin to feel mounting anxiety, stress and often have physical side effects.

In 2008 the Associated Press reported on an AOL Health poll. According to the Associated presses report on the AOL poll, people dealing with mountains of debt are much more likely to report health issues like ulcers, anxiety, panic attacks, severe depression and even heart attacks. According to the AP/AOL poll and among the people reporting high debt stress:

27 percent had ulcers or digestive tract problems, compared with 8 percent of those with low levels of debt stress.
44 percent had migraines or other headaches, compared with 15 percent.
29 percent suffered severe anxiety, compared with 4 percent.
23 percent had severe depression, compared with 4 percent.
6 percent reported heart attacks, double the rate for those with low debt stress.
More than half, 51 percent, had muscle tension, including pain in the lower back. That compared with 31 percent of those with low levels of debt stress.
People who reported high stress also were much more likely to have trouble concentrating and sleeping and were more prone to getting upset for no good reason.

In our business we primarily work with taxpayers, resolving tax problems that have existed for many years.

Here is one example of a common cycle we see:
1.A tax payer doesnt file one or two years of returns. They dont worry about it, usually because they may not have been contacted by the CRA and they think its only a year or two.

2.Another year passes and they realize maybe it is time to get the tax returns filed. Some will even go to an accountant, review their records, try to go backwards and estimate income, expenses and what they will end up owing. At this point, they think uh oh, this is quite a bill, not even considering how much it will be once the CRA assesses interest and penalties and applies it to balance.

3.One more year passes and along comes a demand to file from the CRA. Now the problem has quickly become serious. The CRA is after them and after all, whats easier filing the tax returns and facing the payment of the large tax debt that has been accumulated, or just ignore it a little bit longer? Some hope that, maybe in another year they will be in a better financial position to pay the debt.

4.Year five rolls around. They cant sleep at night. They are getting demand after demand from the CRA. It is too embarrassing to ask family or friends for help. The CRA and the stress and anxiety associated to the tax debt becomes too much to bear.

5.Year 6 arrives and the CRA wants their file closed! The CRA proceeds to assess what they believe the taxpayer owes and demands payment of their estimate of the debt. Even worse, the CRA will freeze the tax payers bank account or place a lien on their home in an effort to force the tax payer to file their later returns.

This is a vicious and personally destructive cycle. A tax debt can be brought under control and it is important that an individual who has this type of problem, seek a professional to handle it. Our tax management practice places great emphasis on not only assisting the taxpayer to become compliant with the taxing authority but also to deal with the financial debt that will be left over once all income has been declared and past due returns are filed.

We see the physical consequences of avoiding and allowing a tax debt to get out of control every day.
If you are in this situation you dont have to hide anymore and you should make a commitment to yourself to stop avoiding your tax problem. In the case of a tax problem, time is your enemy.