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So, you have filed your 2007 tax return and have received your Notice of Assessment and the tax bill and you are broke. Now you are wondering when the Canada Revenue Agency carts away your house.

You can relax because by law, the CRA cannot take legal action to collect until 90 days after they've issued your Notice of Assessment.

Not being able to take legal action to collect simply means the CRA cannot force you to pay up. It doesn't mean the CRA doesn't want your money. Generally, the CRA will ask you to pay up 30 days after they mailed your Notice of Assessment. If you don't respond, you can expect an ominously worded "pay up or else" letter. That's when the 90-day grace period is up and the gloves come off.

The CRA can be quite persuasive. One option: they get a court order to seize your assets - house, car, and valuables - then cash those in to settle your taxes. It's a scary prospect but it's an unlikely event. Seizing your assets is time-consuming and it's a very heavy-handed approach. It's a last-ditch effort reserved for big-time serial deadbeats when all else fails. Unless you fall in that category, your house is safe.

More likely the CRA will send a few more collection letters over the next few months. You might receive a phone call. If these reminders fail to get your attention, their next move won't. The CRA will send a garnishee order to your employer. That means your employer must submit a portion (about 35 per cent) of your paycheques directly to the CRA until your tax debt is settled. This is an administrative pain your employer doesn't want and an embarrassment you don't need.

The garnishee order goes to your bank and to your customers if you are self-employed. It's a move that's guaranteed to strangle your cash flow and credibility.

You are going to have to pay up if you owe and hiding under a rock won't make your taxes go away. Here are two options for tackling your tax debt.

Work out a repayment schedule if the tax collector has already contacted you. Tax collectors are on a fixed salary and making them sweat for their paycheques by being evasive will not make them friendlier. Most of these folks are reasonable; they prefer to co-operate with you to get you paid up and your file off their desk. It's always in your interest to contact the tax collector before you are contacted. Ask for a 12-24 month repayment schedule if that's what your cash flow realistically permits. You can expect objection if you propose a lengthy repayment schedule but tax collectors know they can't get blood from a stone. The bottom line is the tax collector needs to see regular repayments on your account, no matter how little.

A better alternative, and one which avoids contact with the tax collector, is to send 12 monthly post-dated cheques to pay off your taxes as soon as you receive your tax bill. If you can do exactly that, the tax collectors will be too busy turning up other rocks to notice your account.

Andy Wong is a tax consultant at MacKay LLP, Chartered Accountants in Yellowknife. He can be reached at andrew-wong@yel.mackayllp.ca.