When you enlist the services of an accountant to work through and file your annual tax returns, the assumption that these returns are done correctly is usually the right one. However, it is becoming more and more common for tax accountants to make false claims (both with and without their clients’
knowledge) in an effort to decrease the amount owed or increase the tax rebate. Several reasons exist for this type of illegal and immoral behaviour, including hoping to look effective to you and gain more business, etc. But the end result is the same.
When an accountant makes false claims on a client’s behalf, there are serious consequences. For example, earlier this year, Brampton chartered accountant Mr. Imad Kutum was charged with one count of fraud brought about by his falsified claims. The trial resulted in a two year jail term and a fine of $100,000. Also this year, accountant Ms. Doreen Tennina was found guilty of two counts of fraud for a tax evasion scheme, resulting in a fine of almost $700,000 and a maximum 10 year jail sentence. These represent only two of a long list of tax accountants whose dubious activities have led to harsh prosecution.
But buyer beware, the accountants are not the only ones who are affected by these schemes. Once the Canada Revenue Agency commences an audit of a company or individual accountant, all of their documentation is fair game. This means that if they are being audited by the CRA, you will also inevitably become a target.
Now, if you deal with a bad accountant, don’t think that these examples mean that your accountant will be prosecuted and you will be off the hook. Often these accountants are not prosecuted and CRA may still come after you. If they think that you were complicit in a tax scheme (including aggressive accounting that was not completely honest), you could be prosecuted.
So what happens if you have dealt with an accountant who has cooked your books? At the worst you could be prosecuted for tax evasion, at best you could be subject to an exorbitant amount of penalties and compound interest, applied retroactively – this can easily double or triple the size of a tax debt.
Think ignoring the problem is your best bet? Often people in these situations feel as though CRA investigations won’t lead to them being hit with a tax debt – but it is all too common. It’s a chain reaction – it only takes one person getting audited to lead to a string of audits. If they find out about you before you go forward with respect to your issue the consequences are far worse than if you come clean under a program like the Voluntary Disclosure Program, which can offer you a shot at tax amnesty and protection from penalties and prosecution. If you find yourself loaded down with a tax debt, having been sent a revised letter of assessment – the CRA wants their money now – not when you can pay.
A tax problem this bad will most certainly necessitate guidance from a professional who knows how to deal with serious CRA tax problems. Every time you contact CRA they take the opportunity (even when seeming nice) to gather information from you that will be used against you in the future.
Whether you are worried that a future audit may lead to a CRA investigation or if you already know that you will/do owe the CRA, get in touch with someone who can walk you through the various options that exist to help you get rid of your tax debt.
If you are facing a tax debt, or want to become tax compliant before the CRA comes after you, please contact Tax Solutions Canada at 1-888-868-1400 or visit us online at www.taxsolutionscanada.com