How the Canada Revenue Agency (CRA) Views Detaxers / Natural Citizens / Freemen

I recently had the “opportunity” to watch a video from a “Freemen” or “Detaxer” as they would be referred to by the Canada Revenue Agency (CRA).

I’m not going to lie… It made me cringe.

I was immediately brought back to my time spent working for the CRA, and more specifically, to the time spent working with these folks.  You see, the CRA knows there are corporations and individuals who evade and avoid taxes, and a lot of time and effort is spent to find and prosecute these entities. 

They CRA is also very aware of a large groups of individuals who see themselves as “natural individuals” and thus free from “illegal taxation”. They consider themselves to be free on the land, and make some story about being “corporations” and that they have 2 names, one legal and one given to them and they conveniently use the one that doesn’t require them to pay taxes.

To make a long story short, these groups use Canadian infrastructure – buildings, roads, power, etc., yet see themselves as sovereign and thus free from taxation.  They have been known to hold info-sessions and sell “tax-free” cards to the attendees – who try to use them only to find the RCMP at their door and their cards seized.

The problem with this view, is the fact that there have been MANY court cases dealing with this matter and in each and every case, the CRA has won. There is ZERO precedent for this view to have an ounce of legitimacy, no matter which “brilliant” person is trying to convince you or me otherwise.

I’m sorry to say, if you follow these views, you are just asking for trouble with the CRA, and that trouble comes in the form of late filing penalties, interest, gross negligence penalties (50% of the tax owing), assessments, prosecution, and potential jail time.

It’s a scam, so please, do yourself a favour and stay away. It’s in your best interests to avoid this type of theory.

Having worked in the CRA’s collections department for over 10-years, and having deal with these cases for many of those years, I can say with experience, and certainty that what ultimately happens is property seizures, frozen bank accounts, seized funds, wage garnishments and all that pressure applied together until there was no choice but to file and pay, often having to pay hundreds of thousands of dollars in penalties and interest.

Learning about these cases makes me sad, and wish that someone had taken the time to speak to the victims of this scam and answer questions so they know that it never ever ends well or in their favour.

It’s a lose-lose proposition.

Already in trouble?

File your returns, notify the CRA you’re coming clean. Make payment arrangements for your debts. Doing this now, before the CRA gets to you can help you with an application for Taxpayer Relief.

Two Canadians Sentenced to Prison for Bitcoin Fraud in the US

Oregon’s Attorney General has reported that 2 Canadians – Karanjit Singh Khatkar, 23, and Jagroop Singh Khatkar, 24, residents of Surrey, British Columbia – were sentenced to 24 months in federal prison and three years’ supervised release for conspiring to commit wire fraud and money laundering in a scheme to steal bitcoin from a resident of that state.

According to the indictment, beginning in October 2017 and continuing until August 2018, the defendants used a Twitter account with the name @HitBTCAssist to trick victims into thinking they were communicating with a customer service representative from HitBTC, a Hong Kong-based online platform used to exchange virtual currency. HitBTC provides its customers with web-based “wallets” to store virtual currency and make transactions.

Using the fraudulent Twitter account, the defendants responded to the Oregon victim’s questions about withdrawing virtual currency from her HitBTC account and they convinced her to send information they could use to log on and take over her email, HitBTC and Kraken accounts. (Kraken is a U.S.-based online platform that offers services similar to HitBTC).

The defendants initiated transfers of 23.2 bitcoins from the victim’s HitBTC account to Karanjit Khatkar’s Kraken account. Karanjit in turn transferred approximately half to Jagroop’s Kraken account.

Two days after illegally accessing the victim’s account, Karanjit Khatkar bought a Mercedes-Benz with $56,598 in Canadian dollars. The Khatkars also traveled to casinos. Karanjit Khatkar gambled with tens of thousands of dollars while staying at high-end casinos in Las Vegas, Nevada.

On July 18, 2019, Karanjit Khatkar was arrested upon arrival at the McCarran International Airport in Las Vegas and later ordered detained pending trial. Jagroop Khatkar appeared voluntarily for his arraignment and change of plea on December 16, 2019.

On December 16, 2019, the Khatkars pleaded guilty to conspiring to commit wire fraud and money laundering. As mandated by their plea agreements, the Khatkars delivered a check of $142,349 as a prepayment of restitution to their victim at their change of plea hearing.

At sentencing, the Khatkars were ordered to pay an additional $42,162 to their victim for a total restitution order of $184,511.

The moral of this story is two-fold. Firstly, the government doesn’t take too kindly to people stealing crypto-currency, and secondly, before giving out sensitive information, make sure you know who you are talking to.

This case is akin to the CRA scam where Canadians are threatened with jail from the “CRA” but it can be “resolved” if bitcoins are transferred into a “CRA” wallet. That scam has entrapped way too many Canadians. The CRA doesn’t even consider crypto currency to be legal tender, rather, they treat it like a commodity meaning once it’s sold, taxes are due on the Capital gain.

Be Careful Who You Use for Tax Preparation: Ontario tax preparer sentenced to 4-years in jail

George Nkoke Nnane of Richmond Hill, Ontario, was sentenced in the Superior Court of Justice in Toronto to 4-years in jail for filing fraudulent tax returns, the CRA has reported.

A CRA investigation found that Nnane, the chief executive officer of Golden Capital Management Inc., a tax preparation business, prepared individual tax returns for the firm’s clients with false charitable donations credits, as well as fictitious business and rental losses.
The false claims enabled the firm’s clients to evade nearly $2 million in federal tax for the years 2009 to 2013, the release said.
The investigation also revealed that Golden Capital Management failed to report net income totaling about $500,000 on its corporate income tax returns for the same taxation years.
The firm failed to remit Goods and Services Tax (GST) / Harmonized Sales Tax (HST) totaling about $53,000 for the quarterly filing periods from 2009 to 2013.
Unfortunately, the view from the CRA is that each and every client of this tax preparer knew that their returns were being faked and thus are a willful accomplice to this fraud and thus will be re-assessed as a result.
Those re-assessments are likely (if not certainly) to include a 50% Gross Negligence penalty which is equal to 50% of the tax evaded, plus be accountable for the tax evaded. That is just the tip of the iceberg.
In its release, the CRA noted that taxpayers convicted of tax evasion face fines ranging from 50% to 200% of the evaded taxes and up to five years’ imprisonment.
If a taxpayer is convicted of fraud under Section 380 of the Criminal Code, an individual can face up to 14 years in jail, the release said.
For the five-year period from April 1, 2014, to March 31, 2019, the courts have convicted 25 tax preparers/promoters for tax evasion, resulting in a total of $2.5 million in fines and 38 years of jail time, the CRA said.

Gifting Scheme Conviction. Be Careful With Your Hard Earned Money!

A Coaldale, Alberta man has been arrested for fraud after allegedly being one of the central figures in a so-called “gifting” scheme which has taken in about 500 individuals across the province of Alberta.

Gifting schemes have been under the microscope at the Canada Revenue Agency for over a decade, and in all cases, the CRA have rejected these schemes, and denied the donation receipts of the contributors.

While these cases play out in Tax Court, the participants are left to fend for themselves, often accruing penalties and interest which far exceed the amount of their contribution or their tax benefit.

In this specific scheme, Steele Cameron Tolman, 57, was charged with fraud over $5,000 and possession of the proceeds of crime over $5,000. He is scheduled to appear in court in Lethbridge on May 17 to answer LPS charges he is a “main presenter” or “promoter” of a gifting circle fraud which began in September 2018.

These schemes – and this scheme specifically – operate under false pretences, whereby people are recruited by telling them that if they contribute $5,000 they will eventually receive $40,000 with no risk.

The fraud occurs when that $5,000 is used to payout the $40,000 to one of the earlier members which means new members must be recruited in order to continue paying out members.

If this scheme was promoted out of a parking lot, and some guy’s back of their van, they are going to say this scheme was completely ridiculous, however, this was promoted by friends and family who received the $40,000 payout which added additional legitimacy to the scheme.

The fraud is criminal in nature because the recruitment of new members occurs under the false pretense of “no risk. Those who participated and received their $40,000, are in receipt of the proceeds of crime, which is illegal, and those who received their payouts must declare that income to the Canada Revenue Agency.

What is truly amazing is that people who participate in schemes and scams like these can claim that they did so thinking it was legal, and have used that argument in conversations with the police and the CRA.

If you give someone $5,000 and they give you back $40,000 – which seems too good to be true… Means it is too good to be true.

Much in the same way that someone donating $1,000 to a “charity” and receives a tax receipt for a donation of $2500.  It’s illegal, and you’re going to get caught and the penalties and interest will far exceed the amount of benefit received.

Be careful with your hard earned money. There are no fast and easy ways to make a buck. Don’t fall for scams and schemes and get left with a tax debt, or worse.

Former Calgary man sentenced to 11 years in jail and fined $550,892 for tax evasion and fraud

The Canada Revenue Agency (CRA) announced that James Harvey Cameron, a former resident of Calgary, has been sentenced to 11 years in jail and fined $550,892 after defrauding investors of over $2.5 million through a deceptive investment scheme. The judge also ordered Cameron, 66, to pay restitution of $1,831,700 to his victims.

If Mr. Cameron fails to pay his fine in six months he will have to serve an additional four years in jail for default.

From 2002-2006, Cameron operated a fraudulent RRSP scheme which promised a 2% monthly return to individual investors. The scheme raised just under $8 million, but only paid out a total of $882,000 to investors.  Cameron misappropriated the funds to support his luxurious lifestyle, including buying property, cars, a horse, and a $75,000 cruise in the Bahamas. He also transferred funds offshore to Barbados.

A Canada Revenue Agency (CRA) investigation proved that Cameron diverted $3.9 million of the investors’ funds for his own use and failed to report this as income on his tax returns, evading $1,132,882 in taxes.

“I have no doubt whatsoever that [Cameron] executed a deceptive investment scheme with subjective knowledge of the prohibited act and consequences,” said presiding judge, Justice P.R. Jeffrey, in his written reasons for convicting Cameron. “The CRA acted towards him with considerable patience, forbearance and fairness.  He was given ample opportunity to provide to CRA any plausible alternate explanation for what occurred, yet did not.”

Justice Jeffrey commented in his sentencing report: “The $1,831,700 I have ordered payable in restitution should be subtracted from his [Cameron] total taxable income… therefore I find his taxable income to have been $2,118,817.”

Cameron was convicted of tax evasion under the Income Tax Act and fraud under the Criminal Code.

Sentencing took place today at the Court of Queen’s Bench in Calgary.

You can report suspected tax evasion to the CRA by visiting https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/informant-leads-program.html or by calling the National Leads Centre at 1-866-809-6841.

All case-specific information in this news release was obtained from the court records.

Did you know that between April 1, 2012, and March 31, 2017, total domestic and offshore related criminal investigations have resulted in 408 convictions involving $122 million in federal tax evaded and court sentences totaling approximately $44 million in court fines and 3,103 months in jail?

inTAXicating is now a Certified Profitable Giving Specialist! What That Means For You…

Warren Orlans, the Director of inTAXicating Tax Services has completed his Profitable Giving Specialist accreditation which certifies that he is able to demonstrate understanding and proficiency in each of the following 4 areas;

  • The Tax Shelter Industry in Canada
  • The Regulations: Promoter Liability and Penalties, Third Party, and Civil Liability
  • Registered Profitable Gifting Arrangements and the Law
  • The Role of the Canada Revenue Agency in Regulating RPGAs

In addition to assisting Canadian Taxpayers who have fallen victim to Tax Shelter scams like the Global Learning and Gifting Initiative (GLGI), the Canadian Organization for International Philanthropy (COIP), the Relief Lending Group (RLG), Mission Life Financial Inc (MLF), Pharma Gifts International (PGI) and Integrated Receivables Management Inc / Integrated RM Inc (IRM).

inTAXicating provides Canada’s only full tax solution to assist Canadians solve all of their tax problems, including ones brought on by participating in tax shelters.
Below is only a snapshot of how to view a CRA debt related to a Tax Shelter / Gifting Arrangement and some of the options to start resolving the issue(s).
In order to reach a solution for Canadian Taxpayers the following things must be considered;
  1. Ability to Pay according to you and,
  2. Ability to Pay according to the CRA.

From there, you have only a few options;

  1. Do nothing
  2. Resolve the balance outstanding
  3. Fight the CRA

Should you choose to resolve the balance outstanding, you again have only a few options;

  1. Pay the balance in full
  2. Ask the CRA for a payment arrangement, and prove you need one
  3. Wait for the CRA to take it from you.
  4. File a Consumer Proposal
  5. File for Bankruptcy.

Keep in mind that the CRA does not “settle” debts like the IRS does.  The only way to “settle” or pay less than the full amount of tax, penalties and interest, is through bankruptcy or a proposal.

While all of the Collections matters are in process, you are entitled to file for Taxpayer Relief and ask the CRA to return some or all of the penalties and / or interest which it has charged you.  This application should be devoted time and effort to complete.  It should never be a cookie-cutter application written by someone else because the CRA sees those and mass-denies them.  Anyone trying to sell you a cookie-cutter application knows this and is “helping” you for the money and not because it’s the right thing to do.

Taxpayer Relief does not hold back Collections for doing what Collections does – trying to collect a balance owing – nor do CRA Collections care that a Taxpayer Relief application has been submitted.

A CRA review of a Taxpayer Relief Application can take upwards of a year.  Be prepared for that delay and the interest that accumulates on your tax account should you wait to pay it later.

Having a trained set of eyes look over and edit a Taxpayer Relief application is a great idea because if you’re taking the time to submit an application, you want to make sure that you are putting your best work forward.

But ultimately, when looking at your options… All of your options, you want to make sure that your interests are being looked after first.  You need an expert in CRA Collections, in Tax Shelters, and who can assist you with accounting, refinancing, insolvency and proposals and who can give you the best advice, the most cost effective advice and the advice that they would take if they were in your shoes.

inTAXicating Tax Services is that organization and we’re here to help you with all of that, and so much more.  We associate ourselves with like-minded professionals who also understand that you are the client and that you need assistance and service.

If you have any questions about any tax shelter that you may have been involved in, and you need to know your specific options, contact us at info@intaxicating.ca

 

Tax Scam Alert: CRA Does Not Issue Refunds Through Interac.

No, the CRA does not send tax refunds through Interac

via Does the CRA owe you money? Beware of this tax refund scam — Global News