In March of 2013 the CRA reported on their website that a Brampton tax preparer who they had prosecuted was sentenced to house arrest for a tax fraud scheme.
From 2005 to 2010, Adegboyega Adenekanad Adebukunola (whom we will refer to in the rest of this blog as AAA) operated a business providing tax preparation services, financial planning and accounting services. AAA was discovered by the CRA because he had made over $858,000 in false charitable donation claims on 129 income tax returns. These fraudulent claims included fraudulent receipts and the false claims resulted in a collective tax debt to the taxpayers involved of over $245,000.
On March 1, 2013, AAA plead guilty to one count of fraud over $5,000.00. He was sentenced to 6 months of house arrest and three years of probation.
When you hire a tax preparer or accountant to prepare your tax returns and they suggest risky ideas to reduce your tax liability or increase your refund – tread lightly, especially where charitable claims are concerned. As always if it seems too good to be true it likely is.
If you have claimed false expenses (maybe having received credits or rebates from the government) you can be subject to serious consequences. Returns are frequently re-assessed resulting in a much higher tax debt because of interest and penalties. And it could get worse. If convicted of tax evasion the court may issue a fine of up to 200% of the amount of the tax evaded and you can also be sentenced for up to five years in jail.
Even if you went to a tax preparer like AAA who becomes a convicted criminal, you are still responsible for what has taken place and any tax debt that results. If the CRA thinks that in any way you knew or were a part of any tax scam they can are required to look into criminally charging you.
If you know or suspect that you have had returns that were prepared using “aggressive accounting tactics”, you can come clean with the CRA and avoid prosecution, penalties and interest. The Voluntary Disclosure Program is a program available through the CRA where you can disclose income you did not declare or expenses that you claimed that you should not have been entitled to, and if your application is accepted it will include the CRA’s promise not to prosecute you or charge penalties on the assessed tax debt.
If you want to make an application under the Voluntary Disclosure Program then it is important to consult a professional. To qualify under the Voluntary Disclosure Program your disclosure must be voluntary. You cannot qualify for this program if the CRA has already contacted you. Also, disclosure must be complete so you must be prepared to come clean about all non-disclosures you are aware of.
A tax professional with expertise in making applications under the Voluntary Disclosure Program can help you identify if you qualify. If you do, they can help complete the application, and if you don’t they can help you come up with another plan to deal with your tax problem.
If you are being pursued by the CRA because you had your tax returns prepared by a sketchy accountant, please contact Tax Solutions Canada by filling out the form or calling 1-888-868-1400.