Fighting a Pandemic Benefit Repayment Demand in Sudbury

The situation

Rivka worked part-time at a retail store in Sudbury, and Tesfay worked as an early childhood educator at a licensed daycare. When public health restrictions closed both workplaces for stretches in 2020, they each applied for the federal emergency income benefit that was available to workers who had lost income because of the pandemic. Neither had applied for anything like it before, and both assumed that once the payments arrived and the crisis passed, that was the end of it. Money was tight enough that the benefit had covered rent and groceries for several months while both of them were between shifts, and by the time things stabilized they had stopped thinking about it entirely.

It was not the end of it. Almost three years later, each of them received a letter from the federal tax authority. A retroactive review of their benefit periods had found that, for a number of specific weeks, they had not met the eligibility requirements after all. The letters set out a combined repayment demand of just under $13,000, payable in full, with a short window to respond or set up a payment arrangement. Neither letter explained why the specific weeks had been chosen, only that they had been flagged in a wider review of claims from that period.

They came to Treadstone Law not sure whether to fight the letters or simply pay them off as fast as they could, worried that ignoring the deadline would make things worse, and equally worried that a household on two modest incomes could not absorb a five-figure bill all at once.

What the review found

The emergency benefit was built around a simple rule: a claimant had to have stopped working, or had their income drop below a set threshold, for the specific week being claimed. It was a week-by-week test, not a one-time application. Someone who picked up a few shifts partway through a claim period, or returned to reduced hours before their full return to work, could end up ineligible for some of the weeks they had claimed even though they had been genuinely out of work for others.

That is exactly what had happened here, but the tax authority's own review had not gotten it entirely right. Our review of Rivka's pay records against the specific weeks flagged in her letter showed the assessor had used the wrong pay period cutoffs for two of the disputed weeks, attributing income from a following pay period to the wrong benefit week. Once shifted to the correct week, Rivka had in fact met the income-drop test for those two weeks. For a third week, the flag was accurate: she had picked up enough hours that week to put her above the threshold, and she had claimed the benefit anyway without realizing it disqualified her.

Tesfay's situation was more straightforward and less favourable. The daycare had reopened earlier than he remembered, and payroll records confirmed he had been back on the schedule, earning above the threshold, for three of the four weeks under dispute. He had kept claiming the benefit out of habit after his employer called him back, not out of any intent to misrepresent his situation, but the eligibility rule does not turn on intent. For one of his four disputed weeks, though, his hours had genuinely been cancelled on short notice, and the assessor appeared to have missed that his employer's own records showed the shift as cancelled rather than worked.

Put together, the review showed the original demand was overstated for both of them, but not eliminated. Some of what the tax authority was asking for was genuinely owed.

What we did

1. Requested the full assessment file before responding. Rather than accepting the letters' figures at face value, we asked the tax authority for the detailed breakdown behind each disputed week, including the income figures it had relied on. That breakdown is what let us line up the assessor's numbers against Rivka and Tesfay's actual pay stubs and rosters, week by week.
2. Assembled a documentary record for each disputed week. We worked with the couple to pull pay stubs, employer-issued statements of hours, and in Tesfay's case a note from his employer confirming the cancelled shift. Loose recollection is not persuasive to a reviewer; a pay stub with a date on it is.
3. Filed a formal dispute of the assessment on the weeks the evidence supported. For the two weeks where Rivka's income had been misattributed to the wrong pay period, and the one week where Tesfay's shift had been cancelled rather than worked, we submitted a written challenge with the supporting records attached, asking the tax authority to correct its calculation rather than simply reduce the amount as a courtesy.
4. Conceded the weeks the evidence did not support. For Rivka's one over-threshold week and Tesfay's three weeks back on payroll, we did not contest the assessment. Disputing every line of a benefit review, including the ones a client is clearly not going to win, tends to slow down resolution on the lines that do have merit and can affect how a reviewer treats the file as a whole.
5. Negotiated a payment arrangement for the remaining balance. Once the corrected weeks were removed from the demand, we worked with the tax authority's collections area to set up a monthly repayment plan sized to the couple's actual income, rather than the lump sum the original letters had called for, and asked that any late-payment penalties be held off so long as the plan was kept current.

The outcome

The tax authority accepted the correction on Rivka's two misattributed weeks, cutting her share of the demand by roughly $1,600. It accepted the correction on Tesfay's cancelled shift as well, cutting his share by a further $650. The combined demand fell from just under $13,000 to about $10,300.

That remaining $10,300 was genuinely owed. Both of them had, in good faith, kept collecting a benefit meant for weeks without income during weeks when they had returned to paid work. There was no argument left to make against that portion, and pursuing one further would only have delayed a manageable resolution in exchange for a result that was not going to change.

What did change was how the balance was paid. Instead of the lump sum the original letters demanded, the tax authority agreed to a repayment plan split over roughly eighteen months, calibrated to what the household could actually absorb alongside its regular expenses, with no additional penalty charges added so long as the payments stayed on schedule. Interest continued to accrue on the outstanding balance in the meantime, as it does on any unpaid tax debt, but the couple avoided both the immediate cash-flow shock of a lump-sum demand and the risk of default that a plan they could not sustain would have created.

It was not the outcome either of them had hoped for when they first opened the letters. It was, however, a demand cut by roughly a fifth and turned from a due-now bill into a plan that fit their budget — a compromise both the household and the tax authority could live with.

What you can learn from this