In Canada, if you read the beginning of the book you get with your tax forms, it says that if you owe taxes (e.g. you haven’t filed when you should have, or have otherwise skipped on your taxes), there are both penalties for being late and punative penalties. If YOU contact them, the punative penalties will be waived. The key is that you have to contact them before they find out about it. If you wait until Revenue Canada finds out and starts after you, too late.

Personally, I would write the “I’m so sorry” letter, and I would say “I respectfully request that you waive the penalites”. I did this once when filing T4s (my husband and I are self employed and our company is incorporated). Our ex accountant had our books (she used to take MONTHS to get things done), so I couldn’t issue our T4s and file our summary. By the time we got our books back from her, it was almost 2 months past the deadline. When I looked up the penalties, it was something like $25 PER DAY PER T4!!! However, I did them up and sent them with a letter stating why they were late, pointing out that there were no other employees except the two of us, who were the owners, and asked that the penalties be waived. It worked. Another time we owed an amount that we couldn’t immediately pay, so I sent in my partial payment and proposed to pay the remaining amount over 3 months. I got called about it, and the guy said I owed money, when would we pay it. I said I was proposing such and such a schedule. He said, great, let’s put it as month X (one month later than the month I said I would have it paid off by), and although we paid interest on the money, we did not pay any penalties. I think they are really nice if it seems like you have made an honest mistake or you are genuinely trying to correct the error. I think they save their “mean” tactics for someone who is trying to not have to pay at all.