The Canada Revenue Agency spent nearly $80,000 studying why Canadians are reluctant to open its letters, discovering many taxpayers fear they are in trouble with the federal tax collector.Blacklock's Reporter says the $79,760 research project found Canadians frequently experience anxiety, confusion and intimidation when receiving CRA correspondence, with some delaying opening letters for weeks and others never reading them at all.The findings were detailed in a federal report titled Low Open And Read Rates Of Initial Contact Letters Related To Individual Tax Compliance, prepared by Ottawa-based polling firm Environics Research."Data indicate Initial Contact Letters have low open and response rates," the report stated.The letters are routinely sent to taxpayers requesting additional information to support deductions, expenses or other claims made on their tax returns. They are separate from formal tax audits.Researchers discovered that Canadians receiving electronic letters through their CRA MyAccount frequently waited weeks before opening them.In 13% of cases, recipients never viewed the correspondence.The study did not determine how many taxpayers failed to open letters delivered through Canada Post."Revenue Agency notifications often prompted worry before taxpayers knew what the message was about with some assuming it would bring bad news or extra work," researchers wrote."Some opened messages immediately to reduce uncertainty while others delayed because they did not feel ready to deal with something stressful or time-consuming."Tax preparers interviewed for the study said CRA correspondence often leaves clients feeling overwhelmed or fearful of potential penalties.They described the letters as "confusing, intimidating or difficult for taxpayers to navigate."Some taxpayers worried they were "in trouble" simply because the agency had contacted them."Emotional responses can therefore affect whether taxpayers open or action the letter promptly," the report said..The findings were based on eight federal focus groups involving Canadian tax filers.Researchers found taxpayers generally understood that the CRA wanted additional documentation to verify information submitted on their returns.However, many struggled to understand why they had been singled out for review, particularly after believing their tax filings had already been accepted."Taxpayers understand broadly what the Initial Contact Letters ask for but need more context about why the Revenue Agency is asking," the report stated."Taxpayers generally understood the letters as a request to prove or verify a claim, deduction or expense."Without a clear explanation, some recipients believed the requests were arbitrary or suggested they had made a mistake."However without more context about why the review was happening, some interpreted the request as arbitrary, personally targeted or a sign they had done something wrong," researchers wrote.The report found those concerns were especially common when letters arrived long after taxpayers considered the filing process complete.The CRA did not disclose how many Initial Contact Letters it sends annually.A total of 33,687,280 tax returns were filed last year, according to the figures cited in the report.The agency's treatment of individual taxpayers has previously faced criticism from parliamentarians who questioned whether federal tax collectors were concentrating enforcement efforts on relatively minor claims.During a 2018 Senate national finance committee hearing, former Newfoundland and Labrador auditor Elizabeth Marshall criticized the CRA's approach to reviewing ordinary taxpayers."The impression that's being left with many taxpayers is you're picking the low-hanging fruit, the student who's moving out to Calgary to get a job and is claiming their moving expenses," Marshall said.The latest research suggests the CRA's correspondence practices may themselves contribute to delayed responses, with taxpayers uncertain about why they are being contacted and fearful of the consequences.Despite spending $79,760 to examine the problem, the study did not establish how many mailed compliance letters go unopened across Canada.
