Legal action coming to recover COVID benefit overpayments: CRA

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The Canada Revenue Agency is ramping up efforts to recover overpayments of pandemic-related benefits to individuals as more than $9 billion remains owed. 

The agency said Thursday that starting in July, it will begin using legal warnings and means to recover overpayments, actions that could include taking payments out of wages or bank accounts. 

The agency said it will only be taking legal action against those who have not responded or co-operated and who have been determined to have the financial capacity to pay.

Our primary goal is to encourage individuals to contact us so we can work together to find the best way to resolve their debt, ensuring a fair and manageable process for everyone,” spokeswoman Sylvie Branch said in an email. 

The agency said it remains committed to supporting Canadians who are not able to repay their debt and encouraged those individuals to contact them to figure out a plan.

The rollout of pandemic relief payments saw more than $200 billion doled out to individuals and businesses on a pay-now-ask-questions-later basis.

The CRA said it’s still trying to get about $9.53 billion paid back from individuals who were ineligible including $5.41 billion from the Canada Emergency Response Benefit, $2.67 billion from the Canada Recovery Benefit and $1.25 billion from the Canada Recovery Caregiving Benefit. 

The agency began efforts in May 2022 to recover payments deemed ineligible by sending out letters encouraging voluntary payments.

Last year, it sent out collection letters and made efforts to reach people by phone. It also started using a process it calls “offsetting,” which means that it automatically uses money from tax refunds and some benefits to settle a person’s debt with the government.

Those who are told they owe can ask for two reviews of the conclusion, where they’re given the opportunity to try and prove they qualified, said Dale Barrett, founder and managing lawyer of Barrett Tax Law.