Maxwell’s Plumbing & Heating Ltd. is committed to exposing the unethical, unfair, and persecutive Provincial Sales Tax (PST) practices of the Ministry of Finance in the Province of British Columbia.
In a 3 year long ongoing battle for justice and fair treatment, the BC Ministry of Finance refuses to be accountable and take responsibility for their negligence in providing correct tax information to us. The Ministry of Finance justifies their actions with legislation that bullies and intimidates the individual and business taxpayer, and protects only the interests of the government, which is then upheld by the judges and the Courts. A broken and corrupt system, at best.
To date, the Ministry’s incompetence continues to result in great financial losses to our honest, compliant small business. The lack of duty of care, air of entitlement and unreasonable, punitive measures that our business continues to endure at their hands is startling and seems unbelievable to an onlooker but it is real and damaging.
Our case is not an isolated one. In Langley alone, for only plumbing and heating companies, at least 11 other additional business are locked in legal battles with the Ministry of Finance over PST tax unfairness.
Since incorporating our little mom and pop business in 2006, Maxwell’s Plumbing and Heating Ltd. has always been a compliant, law-abiding business. Whatever the BC Ministry of Finance instructed us to do, we did, without question. However, for the last three and a half years, our business has been the target of unjust actions by the Liberal-lead Ministry of Finance.
Here is what happened….
- In December 2012, the Ministry of Finance of the Province of British Columbia, erroneously instructed our business (in writing) to register for the returning PST (effective April 1, 2013). We complied and registered.
- In March 2013, the Director of the PST Act in the Ministry of Finance accepted our PST registration and issued our business a PST exemption number, to be used when purchasing goods for re-sale to customers. We complied and used this exemption number.
- From April 2013 to September 2014, the Ministry of Finance requested PST be charged to and collected from customers, and requested this PST be remitted to the Ministry of Finance. We complied and this process continued, without issue, until September 2014.
In September 2014, the Ministry of Finance, without prior notice and contrary to everything they had previously instructed us (in writing) to do, surprisingly informed us that our business should:
- not to be registered for PST
- not charge, collect or remit PST collected from customers to the Ministry
- not use the PST exemption given to us by the Director of PST
- pay the PST upfront instead
Bewildered but ever compliant, our small business de-registered from PST as instructed and changed its business practices to again comply with these ‘new and conflicting’ directives now given by the Ministry of Finance, regarding the PST.
We thought that was the end of it as the Ministry of Finance already had more than $15,000 of PST in its coffers that was remitted to them on behalf of customers. (In fact, this amounts to more than the Ministry is legally entitled to as PST charged to customers was charged based on the price of ‘marked-up’ goods/material, and not the ‘cost’ of goods/material.)
But, no, no… now the Ministry of Finance is retroactively (April 1, 2013 to September 30, 2014) trying to collect the PST again (plus interest) , this time from our business. It is called ‘double taxation’….a term introduced to us by Liberal MLA Rich Coleman.
Confused? Here is an example:
In April 2013, it used to look like this:
Maxwell’s Plumbing & Heating Ltd. buys a sink to install for a customer.
$ 100.00 sink
$ 5.00 gst 5%
Total cost of sink to us $105.00 (no pst paid by us as we were issued a pst exemption number.)
$ 126.00 sink (our costs marked up 1.2%)
$ 6.30 gst 5%
$ 8.82 pst 7%
Total cost of sink to customer $141.12 (customer pays pst as per Ministry of Finance instructions)
Ministry of Finance collects $8.82 in PST on the sink, from customer.
Now, per new instructions from Ministry of Finance, it should have looked like this in April 2013:
$ 100.00 sink
$ 5.00 gst
$ 7.00 pst (pst is now to be paid by us retroactively April 1, 2013 to Sept. 30, 2014)
Total cost of sink to us $112.00
Ministry of Finance collects $7.00 in PST on the sink, retroactively, from us.
So, on one sink, the Ministry collects PST twice; once already from customers for $8.82 and now from our company $7.00 for a total of $15.82. The Ministry of Finance already has the PST paid by customers in their coffers, they are trying to retroactively collect PST from us a second time, on the same set of goods/material. Hence, the double taxation.
Because the Ministry of Finance provided wrong tax information to our company, we were not able to initially and properly charge and collect from customers the full cost of goods/material bought specifically for their job. This situation has created a loss for our company and a double profit for the Ministry. (In our case, we have been ordered to pay almost $17,000.00, with interest accruing daily, to the Ministry of Finance. This amount we are unable to re-coop because it should have been charged to customers and included on customer invoices initially, had we been instructed correctly.)
According to MLA Rich Coleman, in a meeting we had in person, the Ministry of Finance is engaged in ‘double taxation’. (On a side note, Liberal MLA Mary Polak was a no-show at the meeting; no phone call, nothing. So still waiting for her to get back to us despite going to her office in person and leaving several messages.) Mr. Coleman said that many businesses have contacted him with this same problem. In fact, Minister Coleman said to us, “The PST legislation sucks. It should have been changed 20 years ago.” It is apparently a common, yet unethical, practice by the Province, much to the chagrin of many small businesses. We have tried to contact Ministry of Finance Minister Mike de Jong for over a year, and now Carole James, but to date, have not received any responses.
The Province’s Vendetta
So, to present, how does the Ministry of Finance proceed to treat our compliant little business since our voluntary de-registration from PST in September 2014?
- The Ministry of Finance immediately audited our business in October 2014. (When calling us, the auditor never identified himself and began requesting financial information from us over the phone…we thought it was a scam.) Only when we asked for an official letter to be sent to us, to verify this person’s identity, did we receive written notice of a pending audit.
- The Ministry of Finance assessed our business for unpaid PST, claiming we owed the PST (despite previously issuing us a PST exemption number).
- The Ministry of Finance demanded payment of PST, almost $17,000 plus interest (despite already receiving the entire PST on goods/material in question).
- We appealed this decision and the Deputy Ministry of Finance (aka Liberal crony) denied our appeal. Why? Get this… Because the audit department makes a recommendation to the Deputy Finance Minister on how to rule on an appeal! Yes, the Ministry even admits this biased procedure in its explanation of our appeal denial. Partisan and not impartial.
- The Ministry of Finance seized our business bank accounts. Twice. (We had to go to court to have them released…more expense to us. Of course, the two Ministry lawyers flew over from Victoria despite being allowed to appear before the judge via telephone).
- Though MLA Rich Coleman clearly understood our plight and offered to help us, in the end, he bided his time, did nothing and eventually washed his hands of our situation.
- We petitioned to the Supreme Court, self-represented, as we did not have the means to hire a lawyer (minimum $20,000) and no legal aid is available to corporations, no matter how small. (The stress on our business and family was enormous…so much so that 2 days after filing the petition at the courthouse, Krista had a stress- induced heart attack and was hospitalized for several days, and unable to return to work.
- In an attempt to further intimidate us and two days after challenging the Ministry of Finance head to head in court, they filed a writ of seizure and sale against our business, in order to seize our vehicles and assets, and collect their second helping of PST (and back to court we went again).
- The Ministry of Finance unleashed their team of collectors and lawyers on us, emailing us and serving us repeatedly at home (often serving the same document personally 3 times; once to Maxwell’s Plumbing & Heating Ltd., once to Max and once to Krista). A great use of taxpayer money.
The Ministry of Finance does not like opposition. Its mission is to ‘shut you up and take you down’, a tactic common used by bullies. We have since had to hire legal counsel, at considerable expense, to deal with the Ministry of Finance and their relentless pursuit against us. Our lawyers estimate that the Ministry has spent way over and above the amount they are trying to collect from us, all in the name of precedent and ‘winning’ at any cost.
The Fix (sort of, but not really)
To rectify the negligent error made by the Ministry of Finance, customers are eligible for a PST refund from the Ministry of Finance, within four years from the date it was paid. But, here’s the kicker, the Ministry of Finance refuses to issue PST refunds for amounts less than $10, even if it was collected and remitted in error, and is not theirs to keep.
That means that 540+ customers of ours are ineligible for a PST refunds and that the Ministry of Finance, to date, has THOUSANDS of DOLLARS of taxpayer money that doesn’t belong to them and that they refuse to return. Basically, they profit from their own negligence and incompetence which is, essentially, fraud and theft.
We have offered several times to provide customer names and addresses to de Jong’s Ministry of Finance so they can do the ethical and legal thing and return all amounts owing to customers, over $10. They repeatedly refused. (In the example provided earlier, that would mean the Ministry keeps both PST amounts, as they would refuse to refund the $8.82 to the customer.) The Ministry also refused to send our customers a simple letter, informing them of their eligibility for a PST refund.
If customers with amounts over $10 (in PST paid) wish to apply for a refund, first they must be notified by us of their eligibility (which the Ministry of Finance is not willing to do on its own.) We would have to contact and explain to over 2000 customers this complex situation. (requiring with a huge amount of time, effort, stress and expense to us)
If customers choose (and most do not, unless it is a substantial amount), they must fill out a complicated two page form and submit copies of their receipts (if they still have them) to apply for a refund over $10.
Many customers have moved, died or just don’t comprehend, understandably, the entire situation. And thus, MORE taxpayer money, fraudulently collected and stolen, stays in the Ministry of Finance’s coffers that doesn’t belong to them. No wonder de Jong can claim a ‘surplus’ or ‘balanced budget’.
After the Ministry of Finance receives customer applications for a PST refund and before they receive their refund cheque, customers receive a complex, unsolicited letter from the Ministry, wrought with legislative jargon. Our customers just want their money back without hassle, but that is not the way of the Ministry. (Of course, the Ministry of Finance does not inform us of this letter sent to customers which concerns our own business. But it came to our attention because our many loyal and supportive customers informed us and forwarded us copies of the Ministry of Finance letter. Thank you!) According to our lawyers, it is a desperate and vindictive attempt to further confuse customers and deter them from forwarding any funds onto us.
In the end, some customers receive their refund; some get denied by the Ministry of Finance, for whatever reason the Ministry happens to deem acceptable.
We have challenged the Ministry of Finance repeatedly on their negligence and are committed to exposing their unethical practice, absurd policy and basic lack of common sense. Clearly, this entire situation is a cumbersome, frustrating and expensive process for us, considering that the Ministry of Finance:
- repeatedly provided wrong tax information and validated incorrect business practices to us,
- repeatedly violated many obligations set out in its own Taxpayer Fairness and Service Code (below) and,
- has already collected PST on the goods question The Ministry of Finance continues to act unethically, hiding behind the guise of the Provincial Sales Tax Act (PST Act) and current one-sided legislation, and behind the rhetoric of ‘It’s the law’. They refuse to take responsibility for the chaos, stress and financial damage they have caused us by their incompetence and look at how this mess happened in the first place. If anyone should get tax issues right, shouldn’t it be the Ministry of Finance?
Here are the many Ministry of Finance violations (specific, direct excerpts) of the BC Taxpayer Fairness and Service Code, which are applicable to our business (not to mention the various legislative breaches and legal violations which I will discuss next time:
Taxpayer Fairness and Service Code
Working Together in Partnership
7th Edition, May 2012
Taxpayer Fairness and Service Code
Ministry of Finance, Province of British Columbia
The Ministry of Finance’s role includes delivering fair, efficient, and effective tax administration and revenue management to provide revenues that fund essential services, such as healthcare, education, social services and transportation. X VIOLATION
We believe you will voluntarily comply with the law if you are treated fairly and have the information and services you need to meet your obligations and understand your entitlements. X VIOLATION
The purpose of this code is to ensure that you are aware of your rights in your interactions with the ministry and its staff. X VIOLATION
The seventh edition of the Taxpayer Fairness and Service Code strengthens our relationship with British Columbians – a relationship based on mutual respect, fairness and cooperation: working together in partnership. X VIOLATION
The right to courtesy and respect. X VIOLATION
You have the right to professional and courteous treatment, such as:
- properly identifying ourselves; X VIOLATION
- identifying the reason we are contacting you; X VIOLATION
- being respectful in our interactions with you; X VIOLATION
- responding to your requests in a timely manner; X VIOLATION
- making sure you are able to contact the person who will give you the assistance you need. X VIOLATION
When amounts due to government are not paid, we will take steps to collect amounts owed. This deters customers who might otherwise avoid paying, and increases voluntary compliance. We act quickly when amounts are not paid on time to ensure that government has the money required to fund public services. X VIOLATION
You can request a delay in collection if an amount you owe is under appeal to the minister and security has been provided in respect of the amount under dispute. X VIOLATION
The right to dispute resolution
You have the right to expect that your concerns, disagreements or complaints will be resolved fairly, in a timely manner and in accordance with the law. X VIOLATION
If you disagree with an action we have taken, a decision we have made, feel you have been treated unfairly, or have received information which you believe is incorrect, we encourage you to discuss your concerns with the person you have been dealing with. X VIOLATION
The right to an appeal
An appeal to the minister may be available to formally resolve a situation where you disagree with an action we have taken or a decision that we have made…. if you disagree with an assessment or a disallowed refund claim, you can appeal the decision directly to the minister and if still dissatisfied, appeal to the courts. X BOTH TRIED, X BOTH DENIED
When you have requested an appeal, you can expect that your case will be reviewed in a timely and impartial manner. X VIOLATION
(end of document)
In short, The Taxpayer Fairness and Service Code is a bunch of hot air put out by the Ministry of Finance to exude a perception of fairness and ethics. It is a complete joke put out by politicians who know nothing about small business. Sadly, many people have the incorrect perception that the BC Liberals are supportive of small business. Let’s be clear. They are not. The BC Liberals are an active enemy of small business, as is the current government.
The Ministry of Finance continues to act in a way that is also strongly condemned in a decision of the British Columbia Supreme Court in Leroux v. Canada Revenue Agency. The court stated that tax authorities “must live up to their responsibilities to the Minister and to the Canadian public, nearly all of whom are taxpayers, by applying a little common sense when the result is so obviously devastating to the taxpayer. It is a poor response to say “we put together our position without regard to the law; leave it to the taxpayer to appeal to Tax Court because we are immune from accountability.”
Tax authorities like the Ministry of Finance owe a duty of care to taxpayers to provide proper, not wrong and misleading, information. Period. That is their job. And throw in a little common sense too.
Unarmed with the resources and funds that are available to the Ministry of Finance, businesses such as ours are bullied into submission with strategic litigation (legal moves initiated by the government intended to increase the legal expenses of their opponents) and collection and asset seizure action that put further financial pressure upon businesses that question, challenge, criticize, oppose and expose unjust PST tax practices led by the BC government.
Update March 28, 2017
Our case is not about what the ‘legislation says under the PST ACT’; this is about what is ethically and morally right…something the BC government refuse to acknowledge. No admission of wrong doing for their massive error, no apology and no remorse from them for basically running our business into the ground. (Speechless, astonished and completely disgusted is what many of our customers are, when they read this blog. We have heard it over and over from them; in letters, phone calls and in person.)
This is how our little business has deteriorated since becoming the target of de Jong’s ruthless Ministry of Finance:
- we had to lay off all of our journeymen, as we couldn’t maintain their health and benefit packages. So now they work elsewhere.
- we have had to sell 2 work vehicles (because we didn’t have the journeymen anymore), and downsize our personal vehicle to pay for mounting legal costs
- we were unable to renew any advertising & sponsorship (ie: google adwords, yellow pages, local youth sports organizations, community signage, etc…luckily, some associations have kept our signs up free of charge in support of our plight.)
- business has decreased and halted significantly as a result; a massive loss for the company financially and us personally.
- instead of advertising & sponsorship, we pay lawyers. And we seek to bring public awareness to this common issue by exposing rampant BC government corruption. Public needs to know how small biz is really treated.
- we are unable to keep hiring full-time apprentices and provide them with hands-on work experience, in the Trades training programs (run through local high schools and BCIT)
- seizure of our business account resulted in… many NSF fees and bounced cheques. We couldn’t pay suppliers and wholesalers and then were cut off by them for being ‘deliquent’ (we had NEVER bounced a cheque or been deliquent prior to the meddling of de Jong’s Ministry.)
- we couldn’t pay our mortgage or personal bills because we were unable to pay ourselves. Massive bank penalties and fees resulted. Persoanl credit negatively affected.
- we wanted to sell our current home and buy a new home but we were denied a small mortgage because of the seizure (lien) on our business, despite having a large amount of equity in our home already. Why? Because as directors of our company, we are personally affected as well. And our perfect credit rating has been affected too (business and personal)
- Krista is unable to work part-time, losing all of her other income, benefits and pension contributions from her other job. Dealing with this situation is now her full-time job. A huge financial and emotional impact on our young family with 3 children.
- The stress level on us and our family? THROUGH THE ROOF.
In a last ditch attempt to seek justice, our lawyer appealed to BC Finance Minister Mike de Jong and later on to Carole James, directly with a remission order request to provide taxpayer relief to our business. This is a discretionary power of the Finance Minister to dismiss any outstanding debts under the Province’s Financial Administration Act, in extraordinary circumstances, as in our case. Our lawyer also asked both Ministers to provide reasons, should our remission order request be denied.
The response from de Jong and James? Request DENIED.
Did de Jong and James provide any reasons for his decision, as requested? NOPE.
The unimpartial decision of the Ministry of Finance speaks volumes. It means it is perfectly okay that the Ministry of Finance knowingly and actively engage in PST double taxation. It means it is okay with ripping off British Columbians, in order to claim a ‘surplus or ‘balanced budget’ using stolen tax dollars . It means there is a clear lack of small business advocacy, fairness and ethics among the BC government and their legislative policies.
Clearly, the Ministry of Finance is concerned about precedent. In fact, when we went head to head in court with the Ministry of Finance, opposing counsel (paid for and provided by the Ministry of Justice) begged Judge Skolrood and I quote, “Do not set this precedent.” I am fairly certain there was something going on behind closed doors with the Ministry of Finance and Ministry of Justice, as the Judge ruled blindly and absurdly in their favour. This little guy had no chance from the get go. Sad.
If our decision is overturned, what about all the other cases where double taxation has occurred? How much has the Provincial government pocketed in PST double taxation over the years? How rampant is this problem of PST theft across the province? How many other small businesses are the ‘victims turned targets’ of the provincial government’s reckless information, policies and punitive aggression?
I firmly believe that, when challenged, the goal of the Ministry of Finance is to pick off small business, one by one, knowing full well that we do not have the resources, time, money or legal teams (as they do) to lock heads with them. They want to render us speechless, bog us down with financial and legal paperwork and action so that we don’t have the fortitude to fight back and connect with other business in the same boat.
Exposure is the downfall of corruption. Luckily, as a business owner, drive and ambition in exposing corruption are our passions. It is time the public knew how small businesses are really treated behind closed doors.
Here’s what another local business, in the same situation as us, had to say about its treatment (and ours) by Mike de Jong’s Ministry of Finance:
“We got persecuted for not “correctly” remitting PST. (Had charged the customer on the invoice and not hidden it in the cost). Our business is in Mr. Coleman’s area & I live in Mr. De jong’s riding. These guys are getting screwed worse than we did. This really opens a raw wound with me. You know we still had to pay $54,000 in PST penalties after two years of battling (original assessment $300,000).
And I bet they still have all the PST that we charged our customers and remitted. (that they said we had to pay again because our customers could claim it back as repairs to real property)
We are agents of the government while collecting this tax, and the government has failed to train us properly & then they crucify us. You need to step in and stop this persecution and setup a peer group of business to keep this from happening. An appeal should go outside of the Ministry of Finance, they have only $$$$ in their eyes.
And when the inept bureaucrats at the Ministry of Finance refund the money, they pay us a fraction of the interest they charged us to start with. Not happy.”
I am so mad, my blood pressure is up 20 points since I started to write this. #&$(*&)@*&#).”
BM, February 2017, Fraser Valley Refrigeration Ltd.