15 April 2016

HOW TO GET YOUR MONEY BACK THAT WAS SEIZED BY THE GOVERNMENT

Property rights likely come a close second behind physical liberty rights in the pantheon of fundamental human rights classes that the law is sworn to uphold. Neither property nor liberty in Canada are absolutes: the state can take away either after complying with procedural fairness and natural justice. For seized property, the state (or the courts) must offer seized property owners some kind of mechanism to contest the validity of seizure, detention or forfeiture of property. The key takeaway here is that any time the government seizes your property, you have rights to contest that seizure!

The reason you might unfortunately need to get a lawyer involved in contesting any seizure is that the best means through which to contest the seizure are often not readily apparent. Those means depend on which part of the government seized the property, the statutory or other authority the government relied upon for the seizure, what kind of property was seized, and what the government ultimately plans to do with the property.

The byzantine legal road network for recovering seized property can be much more complicated than the well understood procedures involved in contesting a criminal charge (plead not guilty, then go to trial) or making a civil damages claim against someone (start a civil action, and then proceed towards trial). Contesting property seizures could involve applying to the government department who made the seizure, applying to an independent tribunal established by government, applying to the Superior Court of your province, or applying to the Federal Court. You'll also need to clarify under what statutory or other authority the (1) seizure, (2) detention, or (3) forfeiture is being justified by the government (believe it or not, different authorities might be claimed for each of the them).

Your best remedies to pursue in response to government asset seizure will largely depend on the reasons for the seizure.

1. Seized Due to Unpaid Taxes. Tax seizures are amongst the easiest to remedy. Contrary to popular opinion, the Canada Revenue Agency can be very open to negotiating the return of seized property upon taxpayers complying with the tax rules. Sometimes, the CRA might even return more money to you than it originally seized!

For some of my clients, the problem might not be actual taxes owing, but just that for one reason or another they haven't filed tax returns in a few years. The CRA might have thus issued "arbitrary" assessments where they guessed at the tax owing, heaped on some interest and penalties, and then proceeded to seize banks accounts or real estate in order to pay those arbitrary tax debts. The fix is to bring your tax return filing up to date, which might show you owe far less than the CRA seized. You can then follow that with a "Fairness Application" to the CRA requesting that interest and penalties be reduced or eliminated if you have an explanation as to why your returns weren't filed on time.

For other clients, they really do owe some taxes, but need to avoid ongoing CRA seizures of all funds deposited into their bank accounts, and ongoing liens continuing on their real property. The fix is to pay a reasonable portion of the balance owing to the CRA, establish and adhere to a payment schedule for the remainder of the balance owing, and bring your other tax filings into compliance with the law. This will make the CRA happier than you might think. You don't need to fix 100% of your tax problems overnight for the CRA to back off.

The CRA's goal is not to punish (that's the goal of the criminal law), but rather to encourage people to come into compliance. Thus they use both a carrot and stick approach. Much can be accomplished through an ongoing dialogue with the CRA. Harsh treatment is usually only meted out to those who ignore all CRA communications, and stick their heads in the sand. If you're intimidated in dealing with the CRA, hire a lawyer or accountant to do your talking for you - it might not even take much legal or accounting work to sort out your tax situation to the CRA's satisfaction.

2. Seized Due to a Third-Party Debt. Generally the government isn't in the habit of using its resources to assist in the collection of private debts. However, there are exceptions for existing for family law debts. But even then, large scale property seizures are usually not facilitated (this is left to the creditor party to privately enforce). Garnishment of employment wages and government benefit payments like pensions are the most common form of government seizure due to a family law debt. The remedy here may be to retain counsel to bring a change of circumstances motion before the appropriate court, which might be able to retroactively cancel all or much of the accumulated debt, or at least reduce or eliminate future debt liability.

3. Seized Due to Allegations of Proceeds or Instruments of Crime. Alleged proceeds or instruments of crime seizures are the most complex of the getting your money back from the government situations to deal with because government authorities for the seizure, detention and forfeiture for your property can be murky at best, and courts have been inconsistent in they ways they have permitted property owners to challenge these seizures.

Back when I started working as a federal drug prosecutor, the days of proceeds of crime seizures and forfeitures were still in their infancy, and generally only the "biggest of fish" and clearest of cases were being pursued. But it appears federal government success on those early days cases encouraged the movement of provincial governments into the seizure and forfeiture realm, and also encouraged a variety of federal and provincial regulatory bodies to increasingly seek "no conviction" asset forfeiture.

For example, Ontario's Civil Remedies Act, 2001 is being increasingly used to seek the seizure, detention and forfeiture of private property, without any charges ever having been laid against anyone. Ontario sets out laudable goals for its civil remedies initiatives:https://www.attorneygeneral.jus.gov.on.ca/english/about/pubs/20070824_CRIA_Update.pdf . However, there has been increasing criticism of such initiatives as being essentially punitive in nature: http://news.nationalpost.com/full-comment/marni-soupcoff-ontarios-civil-forfeiture-racket. Academic concern has also been raised that civil forfeiture pursuit may divert resources away from productive private economic activity and more meritorious public resource expenditure on the pursuit of true criminal misconduct: http://ir.lib.uwo.ca/cgi/viewcontent.cgi?article=1125&context=uwojls.

You can no longer assume that the government department that seized your property is the one who is detaining it. And you can't assume that the department which is detaining your property is even the one which will seek its forfeiture. It can be like a shell game. You need to be prepared to go to court to stop the moving around of the shells, and to flip over the shell under which your property is being kept so that you can secure its return.

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