Philippe DioGuardi Guilty of Professional Misconduct

On November 21st, 2015, the Law Society of Upper Canada found Philippe DioGuardi, of DioGuardi Tax Law guilty of professional misconduct.  As a result, Dioguardi has been given a six-week suspension, a $5,000 fine and an order to pay $75,000 in legal costs.

The law society’s application to the tribunal included allegations that DioGuardi took money from six clients before performing “any or very little legal service,” and in some cases “failed to perform legal services to the standard of a competent lawyer.”

DioGuardi also failed to file income tax returns for a client in a timely manner, the law society alleged in its application.

As part of the agreed-upon penalty, DioGuardi must submit to a review of his practice by the law society.
In its submissions, the law society charged that DioGuardi “failed to act with integrity” by having eight clients sign retainer agreements that benefited his law firm, DioGuardi Tax Law, to the “potential detriment” of those clients when he would deposit client retainer money into the firm’s general account, as opposed to a trust account, which gave DioGuardi ownership over client money prior to any work actually being done.

A law society bylaw states that client funds must be deposited in a trust account and can only be drawn once work is completed.

Earlier this year, DioGuardi was investigated by the Toronto Star relating to his personal and business practice stemming from a messy divorce and to address allegations that he overdrew his firm’s account by $2 million, and at one point owed the CRA more than $140,000 in arrears.

 

Canada Revenue Agency (CRA) Auditor Convicted of Corruption

CRA LogoI came across a news article this morning that a Canada Revenue Agency (CRA) auditor from Montreal was convicted on Friday June 12th on charges of corruption for attempting to extort $90,000 from a restaurant owner in lieu of a $600,000 audit assessment.

Upon seeing the article, I went to see if I knew any of the people involved, which I did not, and it brought back my memory of the only time I was offered a bribe while working at the CRA, which I obviously declined.

I was the Resource and Complex Case Officer in a Collections unit here in Toronto and one of my accounts involved a gentleman who had a habit of opening and closing companies over a 27-year period.

He would never file, the auditors would assess his balance, he would bankrupt the company and the next day he would open a new one. He even used the same bank, but would open and close accounts over-and-over again.

It was quite funny given that he denied everything, even his $1 / year income but with a $5-million dollar house all paid off, it took me one phone call to put everything together.

He was a nice guy… Honestly. His house was built by him and his kids, on land his father bought 45-years ago, and the assessments the CRA were charging him with – prompting him to bankrupt the companies – was not even related to the business he was in.

He didn’t know why they were assessing him. He was afraid the CRA was going to put him in jail.

The CRA thought he was a criminal and kept on top of him.

One giant misunderstanding, which was quickly resolved after I taught him how to file HST returns.

But when I first met him and presented him with a list of companies that he had opened and closed year-after-year, he said this to me;

“I’m connected to the mob.”

I said to him, “Okay. That’s not my business. What is my business is finding out why you keep doing this and what the CRA can do to help you.”

He said, “If you can make this balance go away, I’ll give you Toronto Maple Leaf tickets.”

After I stopped laughing, I said to him, “Are you kidding me? I’m a huge hockey fan, and I love the Leafs, but if I were to even consider a bribe that would result in me losing my job, going to jail, and not being able to see my children, it would have to be for a hell of a lot more than Leafs tickets, and to be honest, if you have THAT much cash, you’re better off paying your debts and never falling behind on filing or paying again.”

He replied; “I was just kidding.”

I said, “Of course you were.”

I mentioned it to my Manager who, after reviewing the file, suggested I run this by the Special Investigations unit. I spoke to SI and they knew of this gentleman and that he has been suggesting his ties over the years in hopes of having the CRA back off, and only when I explained the reasoning behind the debt did the SI manager mention that he was told this many years ago but didn’t believe it to be true.

I wonder what happened to that guy…

I hope he stayed compliant!

Back to this case.

This case relates to an auditor named Francesco Fazio who, in 2005, was auditing a restaurant named “La Belle Place.” and after completing the audit, told owner Stamatis Argiroudis that he would owe $600,000 in taxes based on Fazio’s estimate of unreported revenue, according to a Montreal Gazette report.

According to testimony from the trial, Fazio told the owner that a more favourable estimate could be made for $90,000.

The owner refused to pay the money and probably words were spoken and the file was transferred to another CRA auditor. The auditor said the owner mentioned connections to organized crime, however the judge presiding over the case did not believe this to be true and ruled against the auditor.

In this day and again of recording devices in our phones and the CRA snitch line, it’s important to be careful what you say, and to whom you say it. Same goes for using social media. Be careful what you say about people and businesses when it’s not true.

I hope the CRA conducts an investigation into all the companies that this audit has audited to see if there is a recurring pattern or if this was a once-off situation.

Are There Really “Red Flags” At the Canada Revenue Agency (CRA)?

Are there “Red Flags” at the Canada Revenue Agency (CRA)?

How not to get noticed for the wrong things, this Tax Season.

One of the most commonly asked questions of me is about being “flagged” by the Canada Revenue Agency (CRA) and how to avoid getting flagged, or, what gets your flagged.

I hate to break everyone’s bubble, however, there are no red flags!

For the majority of Canadians who file their taxes year-in, year-out, and who make remittances, make their payments, open businesses, close businesses, make money, lose money, and everything in between, your tax account is just a record of transactions, conversations and payments received and made.  Even for those Canadians who should be doing the above and don’t or who fall behind and catch-up on one mass filing, their accounts have a bit more information due to CRA research, however, No flags.

For those engaged in criminal behaviour, however, there are no “flags”, because you are being investigated criminally and whether you know it or not, the CRA knows you and is watching your activities and comparing that to what you file.  Your tax account is known because it is being actively worked by someone.  There are words or phrases placed in your permanent diary which tell anyone who reviews your account what you are up to, but it certainly doesn’t mean you’ve been red flagged.

So why do people talk about flags?

They’re actually talking about stuations like some described below which catch the attention of the screeners on a case-by-case basis, and could result in them being audited outside of their normal audit review period.

1) When you get your tax returns completed and filed for the year, and there are issues, possibly mistakes, which the CRA catches and in anticipation of getting the solution, have a hard time getting a hold of you.

2) You are suddenly self-employed and you are not sure what to claim, or how much you are entitled to, or you claim things or amounts different from your industry standard.   The CRA compiles industry profiles which they use to assign you a “SIC Code” and they compare your returns with the Industry Standard to ensure you fall in line.

3) The dreaded “Net Worth Assessment”.  If you appear to the CRA to be unable to afford the lifestyle that you are currently living in, then the CRA can, and will, issue a Net Worth Assessment and force you to prove that you are not hiding income.  Yes, this can be a challenge, especially in light of the assessments being done from tax centres outside of the Greater Toronto Area who cannot fathom a million dollar house and a $75,000 income.  They don’t take too kindly to the concept of being being helped by family or personal wealth.  Just be warned that a tax return showing $1.00 of income for the year and an address in a wealthy neighbourhood is cause for further questioning.

4) Big changes from year-to-year.  If there are major changes in your income or expenses whether personal or business-related, are going to draw the attention of the CRA.  The CRA wants to make sure that you have not made a mistake, or worse, that you have bought into a tax scheme.  Expect questions, so get proof ready!

There are some tax situations that are just automatically looked at closer – each the year the CRA with the help of the Department of Finance choose a sector of industry to look at in closer depth usually because something has been detected in previous years or because there is a lot of cash floating around these business, such as construction, or dentists, doctors, IT consultants…

Home office deductions for example are frequently looked into as this is often a common problem for taxpayers claiming the home office in order to use deductions without actually utilizing their home as their office.

Even if you honestly never ever use your company vehicle for personal use, it will take some hard doing to prove to the CRA that this is true. Just driving back and forth to work in the business vehicle is classed as personal use. Your best protection here is to keep very detailed records concerning the business vehicles.

6) Renting for income:  Do not assume that rental losses are going to be accepted at face value by the CRA.  While the CRA will give you some grace time to start generating a profit from your rental business, it will still be watched with a close eye based on your industry, location and address(es).

7) Who prepares your return matters!

The CRA is starting to follow the IRS and taking a long hard look at tax accountants and tax preparers to see if there is a pattern among certain firms / indivuduals who either claim deductions they are not allowed to claim on your behalf, or who are missing certain expenses or deductions.  The CRA’s hope here is to weed out the bad apples, and educate the current crop to ensure they take advantage of the deductions and tax credits available to each client.

Should be a valuable change to the Canadian tax filing scheme.

But at the end of the day, doing it right, and on time, is the best way to stay out of the CRA’s bad books.

If, however, you have any questions, concerns or comments, please feel free to reach out to me at any time, at worlans@intaxicating.ca.

 

Not All Tax Information Found on the Internet is true! Are you shocked?!?

Did you know that not all the tax information and suggestions you find on the Internet are true?

Of course you knew that!

I’ve joked with everyone from my children, to family, friends, employers, employees and even director’s and CEO’s of huge organizations that tax information “must be true!  It’s on the Internet”, no matter how absurd it might appear to be.

We all know, or should know to take everything we read with a grain of salt… and that fact-checking is critical when trying to decide if information is legitimate, completely made up, or aimed to scare you.

Sources

As we scroll through pages and pages of information, reading about situations and stories about how the Canada Revenue Agency (CRA) administers tax law here in Canada it is easy to lose sight of goal, which is to get a better understanding of what is acceptable and what is not regarding so many aspects of taxation.  The best indicator of how close to the truth an article is can be determined by the sources cited in that piece.

An article about the CRA with a link to the CRA website (which backs up the facts) is the best indicator that the author knows their stuff.

If, however, you come across an article which has no references, no supporting links to the originating source, or links from a website titled something like “I_want_to_stop_the_CRA.org” then you can be assured the information is not going to be accurate, it is not going to help you, and more likely it was written to scare you, or present a horror story to get you to contact them to help you.

Don’t waste your time on those… Ever!

When a prominent tax lawyer wanted everyone to stop looking for solutions on the Internet it was presented that the CRA could find out you have a tax problem by sneaking into your house, taking your computer, breaking in to it, and seeing that you have been looking for tax help online.

GASP.

Well, guess what?

If the CRA has to come and seize your computer, they already know you have a tax problem!  They cannot seize your computer unless it’s part of a criminal investigation.

The true intention of these ads is not to warn you about a new power that the CRA has secretly acquired, but rather this firm doesn’t want you seeing that there are options available for you online to fix the problem yourself.  So they scare you away from the Internet so you won’t find helpful tips and solutions at firms like this one, inTAXicating.

Better to hire them then get advice from a real former CRA Collection employee to help get you back on track.

In a capitalistic marketplace I don’t blame them, but I am concerned.  Tax is confusing, especially when a tax problem suddenly arises and the CRA is pressuring you to fix it quickly in one of their 3 ways:

1) Pay it

2) File up-to-date and watch the balance go away, or,

3) Go bankrupt.

How can you be expected to make that sudden choice which has significant short and long-term implications on you, your business, your family and your life, without having the facts, all the facts, and not just the facts the CRA wants you to have, or that you believe they are telling you.

That’s where I come in, specifically, this blog, this business and this business model.

I want you to know the truth.

I want you to be able to make an informed decision whether that decision is made via information found on this blog, or on my website, or through an email to me.  I want you to be able to understand the CRA and their collection, enforcement, audit, filing process and administrative process as well as I do.

I want you to understand the corporate culture there and that very infrequently is there an agent on the other side of the phone with your picture on a dart board in their cubicle.

I want you to know your options, your best next steps and that your long-term plan of action will not only help you resolve your tax situation but also keep you and the CRA happy.

I want you to know that in situations where I feel that you cannot do this alone, that I can help you, and will help you, make matters right, and I want you to know that a tax problem does not occur overnight and resolving them can take a long-time.

I have the knowledge and understanding that no-one else can claim to possess about the CRA collections policies and process and I don’t say that to boast, but rather to inform.  I don’t profess to have an “army” of “real” CRA staff with me, nor do I pretend that background is in any area other than where it shows on my web-site, blog, and on my LinkedIn profile.  Collections, collection, collections.

I’m also not going top pretend that a background in Appeals or Audit is going to help you better than a back ground in Collections.  To each their own.

I write my blog posts myself and where possible I cite everything I can to the CRA website so that you can be comfortable knowing that information you read on my social media platforms are sourced from the people who want you to pay your taxes and question your deductions and filing deadlines.

I don’t write my posts in order to scare anyone or to force them to use my services, because quite frankly, I want everyone to be able to navigate the Canadian tax system without ever having problems and running afoul of the CRA and in a perfect world, one day I’ll be able to provide a users guide to the CRA to allow people to file, re-file and pay without incurring penalties and / or interest and where the CRA understands why people can’t, won’t or are unable to do so and then have the CRA deal with them in an understanding manner.

But for now, we have to take it one day at a time, and one situation at a time.

The best day to start fixing tax problems is today.  There are always solutions and there are always options.  In deciding what you want to do, you need to make sure you are getting the right information and from the right sources.  Be wary of what you read on the Internet because it can make you want to close your blinds, change you name and hide from the CRA when all they want you to do is to close an account or file a nil return.

Get the facts!

inTAXicating Tax Services offers a free 15-minute consultation to determine how to best proceed with a tax situation.

From there if’s decided that a written plan of action is needed, I can produce one for you.

If from that, a decision is made to engage inTAXicating to represent you in your dealings with the CRA, then we determine if the hourly or fixed plan works best for you.

You don’t have to worry about opening those brown envelopes.  Help is here!

http://www.intaxicating.ca

http://www.intaxicating.wordpress.com

info@intaxicating.ca

Your Questions Answered About The CRA’s Informant Leads (Snitch) Line

The Canada Revenue Agency (CRA) has employed the Informant Leads Line, or “Snitch Line” for a very long time, and with incredible results.Snitch line

The snitch line has been so successful that the CRA (Canada Revenue Agency) have constantly reduced their investigations workforce because they get more detailed information through tipsters than they would if they had employees trying to locate this information on their own.

Who uses this line?

The majority of calls to the Snitch line still come from ex-wives (and some ex-husbands), former business partners and neighbours who have been confided in and either felt compelled to notify the government of the fraud being committed or who were hurt, harmed or cheated by the person who has been committing the fraud.

The line is used to ”get even”, or have someone “pay their fair share”.

How private is the line?

It is important to know should you decide to call the Canada Revenue Agency’s Informant Leads Line that the CRA takes your privacy VERY seriously and they will never notify the person(s) / organization(s) that you call on that it was you who called their line.

The CRA will cite their “Privacy Notice”, meaning that they regularly collect personal information under the authority of the Income Tax Act (ITA) and the Excise Tax Act (ETA) and they will use that information as the justification for following up on information provided by callers to the Informant Leads Line to determine if there is an element of non-compliance with tax legislation, and if applicable provided to the corresponding compliance program for appropriate enforcement action.

Does this just go to the CRA?

Information provided on this line may also be referred to the Canada Border Service Agency (CBSA) or Human Resources and Skills Development Canada (HRSDC), in the event that the lead relates to one of the programs they administer.

Does it impact me?

The information provided is voluntary and will not affect any dealings you may have with the Government of Canada / Revenue Canada.

 

Here are some answers to the most common questions asked of me, relating to the Canada Revenue Agency’s (CRA) Informant Leads / Snitch Line, starting with:

1) When should I call the CRA’s Informant Leads Line:

When there is “Tax Evasion”, which is an illegal practice where a person or business avoids paying taxes or reduces their taxes by misrepresenting their activities.

2) How can I report tax evasion?

Over the Internet (I have linked the CRA page and provided it here in case you’re nervous about clicking the link)

Link: http://www.cra-arc.gc.ca/gncy/nvstgtns/lds/menu-eng.html#ntrnt

By phone, mail or fax

Phone: 1-866-809-6841 (toll free)

Fax: 1-888-724-4829 (toll free)

Office hours: 8:15 am. to 5:45 pm. (Eastern Time).

Mailing address:

National Leads Centre
Business Intelligence & Quality Assurance Division
Canada Revenue Agency
200 Town Centre Court Scarborough ON M1P 4Y3

3) Some examples of tax evasion are:

  • Not reporting all income
  • Claiming deductions for expenses that were not incurred or are not legally deductible
  • Claiming false GST/HST tax credits
  • Failing to remit source deductions
  • Providing false information on marital status or children to obtain benefits and credits

4) What happens to the information provided to the CRA?

The CRA diarizes everything and determines if they need to take immediate enforcement action or if they need additional information before moving forward. Either way, you will never be notified as to whether or whether not the CRA took action as they are prohibited from doing so under section 241 of the ITA and section 295 of the ETA.

5) Does the CRA pay for the information I provide?

No. The CRA does not pay for information received from informants who call the Snitch line.

The CRA does now have the Offshore Tax Informant Program (OTIP) which offers financial awards to individuals with information about major cases of international tax non-compliance resulting in more than $100,000 of additional federal tax being assessed and collected.

For more information, please visit the OTIP website, including how to make a submission.

6) What do I get for reporting tax fraud?

Well, besides feeling great, you are helping to ensure that all Canadian taxpayers are paying their fair share of taxes and this benefits all Canadians. The CRA will tell you that if everyone pays what they owe taxes might go down… I’m not holding my breath, but you never know.

7) Will the CRA ever reveal who provided the information to them?

Never!  However, you can provide them with consent to release your identity, should you want that person(s) / organization(s) to know. The CRA has a legal obligation not to disclose the identity of informants, any information that might disclose an informant’s identity or even information that might reveal the existence of an informant is removed, even in the case where an Access to Information request is made.

8) How can you send information by email?

You can submit general informant information to the CRA using their secure Internet portal. If you want to provide supporting documentation you are best to mail or fax it.

9) Does the CRA really look at EVERY lead, and take them seriously?

YES.

10) If I submit a lead, then want to revoke it, is there a way to do that?

NO.

11) What stops someone from phoning in a fake lead?

Well, before the CRA is able to take any action, they require more information that just “My ex has a job working for cash.” The CRA would need some or all of the information listed below to help them prioritize the severity of the tax evasion and let them know if they need to get more information or if they can get working on it right away.

Helpful information includes:

  • Names and contact information for the person(s) / organization(s) you suspect
  • Address of business / Taxpayer, phone numbers, email, etc.
  • Social insurance number (SIN) / business number (BN)
  • Date of birth
  • Spouse’s name
  • Business name – the registered name and / or the operating as name
  • Names of shareholders if a corporation is involved
  • Any related companies
  • Type of fraud you suspect:

     

    • Income tax (personal – T1 or corporate – T2)
    • Provincial tax (PST)
    • GST/HST
    • Non-filing
    • Fraudulent refunds
    • Canada Child Tax Benefit (CCTB)
    • Universal Child Care Benefit (UCCB)
  • Details of your observations
  • Documents: have you seen these documents? Do you know where they’re kept?
  • Does the person deal in cash only? Do you know what they do with the cash?
  • Net worth information, such as assets, including those outside Canada (cash, name and address of banks, house, land, cottage, vehicles, boats, etc.)
  • Liabilities (loans, mortgages, credit cards, etc.)
  • Personal expenditures (food, housing, trips, restaurants, hobbies, etc.)
  • Your name and phone number (this is optional)

The CRA will ask you if they can contact you if they require more information. That is up to you.

If at any point, the CRA determines this information is incorrect, fabricated or provided to them for the purposes of committing fraud, not only will they indicate the details on your permanent diary record, but they will also take actions against you.

Once you have submitted a lead to the CRA, it’s good to have an understanding of the fines and/or penalties which can be levied upon the individual / organization, as they can be as high as 200% of the taxes which were attempted to have been evaded.

In addition, the CRA publishes the results of its prosecution activities on its Convictions Web page.

Concerned that someone will call the CRA on you?

If you have found yourself to be in violation of any of these requirements and are worried that the CRA will find out, or that someone will call the snitch line on you, you should contact us at inTAXicating, and we can begin to discuss the steps to help you which may or may not include the CRA’s Voluntary Disclosure Program.

info@intaxicating.ca

http://www.intaxicating.ca

Remember:

It is ALWAYS better to get to the CRA before they get to you!

The Elevator Pitch! How Important Is It?

The elevator pitch, otherwise known as your ability to tell someone what you do for a living in 15-20 seconds without leaving out any critical details.

Wikipedia calls it this; “An elevator pitchelevator speech, or elevator statement is a short summary used to quickly and simply define a person, profession, product, service, organization or event and its value proposition.”

The name “elevator pitch” reflects the idea that it should be possible to deliver the summary in the time span of an elevator ride of around 30 seconds.

The term originates from a scenario of an accidental meeting with someone important in the elevator where after the brief pitch, the other party is interested in learning more. thus continuing the conversation after the elevator ride or through en exchange of a business card or smart phone details.

As a tax consultant, I thought I had the perfect elevator pitch that went something like this; “I help people who have problems with the Canada Revenue Agency (CRA).  I worked in the CRA for over 10-years – pretty much out of university – and worked my way up through the collections division until leaving for the private sector.”

I found it to be too long, and open for interruption so much that I would add details, such as that I completed 3-years of my accounting (CGA) designation and a 3-year MBA before leaving, or that I spent a significant part of my time at the CRA training the staff, handling the most complex accounts in the office and helping improve processes.

Then it became an elevator pitch for a 65-story building ride… To the top and all the way back down to the bottom.

Then I found an article in Forbes magazine which provided 6 alternatives to the elevator pitch so I tried them out to see if they worked better for me.  The list is below:

1. The One-word pitch – for me, it is “TAX”.  Then I watch their eyes gloss over.

2. The Question pitch – “Have you ever had (or have clients who had) problems with the Canada Revenue Agency (or Revenu Quebec, or the IRS, or WSIB, or the CRTC?)

3. The Rhyming pitch – Could not even try this.

4. The Subject line pitch – like sending an email to someone – mine would read something like “Former CRA collections officer helping people with CRA problems.”

5. The Story form pitch – I have thousands of stories… Literally.  I usually break into one of these after my introduction.

6. The Twitter or 140 character or less pitch #WhatIAmAllAbout.   I like this because it’s like using Twitter except that you really cannot tell someone that you “hashtag” Help People.  But it does give you the opportunity to state your case in a brief number of words.

So practice your pitch – no matter which method you choose – and practice them out on people to see if it gets across the message you want it to.  If not, maybe you would benefit from a different pitch or by adding or removing information to your existing pitch.

As for me… “I’m a former CRA officer who knows the CRA collections process, policy and procedures better than they do.  I help people with a variety of tax issues including but not limited to negotiation, payment arrangements, liens, RTP’s assessments, and getting them current and out of debt.  If there is a CRA issue, I have already seen it, and I know how to fix the problem.”

#x-taxer

Others make promises.  I fix problems.

If the conversation continues I explain my services are for individuals, businesses, and professional organizations who cannot proceed further with a client due to their tax issues – ie/ getting a bank loan, renewing a mortgage, confirmation of actual amounts owing before filing for bankruptcy, wage garnishments on employees, or cleaning up past tax issues for separation agreements or divorce.

#inTAXicating

Free consultation.

info@intaxicating.ca

416.833.1581

 

 

 

The Biggest Taxation No-No’s. EVER!

Canada Revenue Agency
Canada Revenue Agency (Photo credit: John Bristowe)

Working in the Canada Revenue Agency for almost 11-years, I learned a thing or two about how the CRA operates as well as what is a red flag for them and what the CRA often let’s slide.  It helps when I negotiate with them that I know their policies, procedures and how to navigate their systems as well as they do, or even better.  I’ve used this knowledge to help my clients save millions of dollars of taxes.

With that in mind, I want to help you save unnecessary expenses, so I decided to reveal the 8 Biggest Taxation No-No’s EVER.

8.  Try and do it yourself.  Taxation is a complicated topic for many and if you don’t live and breathe tax then you should consider either hiring someone to help you along or at the very least hire someone to set you up correctly and who will take the time to learn about you and your business so that you are getting all of the tax deductions and credits available to you all the time.

7.  Think that you are above taxation.   Everyone pays taxes no matter their income level; whether it be income tax, payroll tax, or consumption tax.  To think that there is a magic “Pay no tax” card is a huge mistake and the CRA does not take “detaxers” or the underground economy lightly..

6.  Brag about not paying taxes / scamming the government.  Our tax system here in Canada is a self-assessing system with the government’s responsibility being the checks and balances.  It’s not that they don’t trust you but… They don’t trust you, which is why they have huge departments responsible for catching the tax cheats.  If the government doesn’t get you, your ego might;

5.  Post information online about yourself or your business and think that the government will not see it and use it against you.   The “government” are a bunch of people like you and I who are trying to make a living.  If you claim you are suffering from financial hardship yet post pictures on Facebook showing yourself living it up, or if you claim to be Canadian and your profile states that you are born in the US, the collectors or auditors will find it and us it against you.

4.  File late, miss installment payments or fail to make remittances.  All this will do is add penalties and interest onto your tax account and there are very few excuses the government will accept to have them reversed or cancelled.   Many large tax debts start in just this way.

3.  Carry a balance.  If at all possible it is critical to make sure that you do not carry a balance with the CRA.  With interest being charged at a floating rate of just over 10%, compounding daily, your balance can grow at a shocking rate.  The CRA is not a bank and you should not think it’s okay to treat their debt as a bank loan.

2.  Don’t be afraid to search online for your tax advice.  Not only has the CRA moved to strengthen their online presence but there are a lot of professionals online who have posted their experiences with the CRA and steps they took to resolve tax problems for themselves and their clients.  Anyone suggestion otherwise is doing so to avoid you from finding out there are other – better – tax solution providers in Canada.

1.  Thinking that anyone can help you.  This is the absolute biggest tax no-no I have encountered in 17-years of taxation.  If you have an electrical problem at home, do you call a plumber?  Would you ask a dentist to perform open-heart surgery?  How about asking a former auditor to help you with a collections problem, or an appeals officer to help you correct your payroll nanny account issues?  How about going to an Insolvency firm to have a lien removed from you house which was placed there by CRA collections?

It doesn’t make sense but don’t get me wrong.  If you have created a tax crime, such as tax evasion,  you will need a tax lawyer, and if you need tax returns prepared, they need to be done by an accountant, and a former CRA auditor is the right solution if you have a difficult, complex corporate tax audit underway,

In taxation it is critical that you have experience on your side when you work to resolve your tax issues and understanding the way the CRA operates is more important than you could imagine.

Tax debts begin with audit or compliance issues.

Then they go to collections.

Collections leads to enforcement – garnishments, requirements to pay (RTP), liens, seizures, director’s liability, and much more.

You need experienced former collections staff to help you, and with almost 11-years of progressive collections experience in all areas, from collector to resource officer, to team leader, believe me when I say that experience helps!

When your representative knows more than the collector, or trained that collector, you know you have the best representation possible.

To leave your $250,000 tax liability to anyone else would keep me up at night too.

Claiming Gas or Mileage? How to avoid having this expense denied by the Canada Revenue Agency.

Many taxpayers here in Canada are advised to “keep their receipts” when they claim mileage and / or gas on their tax returns.  The thought here is that the Canada Revenue Agency (CRA) might audit your tax return and will deny your claim if you cannot show proof, but what are you allowed to deduct?  Does it matter if you are self-employed or if you are a salaried employee?  Did you know that just keeping your receipts is not enough and there might be deductions you are entitled to that you are not claiming?

It all matters.

If you are claiming vehicle expenses and you are a salaried T4 employee working for someone else, then you need to know this;

Or, if you are self employed, you need to know this;

So if you rely on your accountant to take care of this for you, or if you wish to use the services of Intaxicating Tax Services, at the very least, you need to be aware of this important fact;

The CRA regularly rejects gas receipts from taxpayers who pay for their gas with debit cards.  Why?  Because they are not sure if you are getting cash back on the transaction – that does not show on the debit slip.

Example: I go to fill up my car 3 times a week, and each time I put in $20.00 worth of gasoline, but get cash back of $80.00 each time.  My debit slip reads $100.00, and I claim $300.00 worth of gasoline expenses for that week on my tax return when in actual fact I was only entitled to receive a deduction in the amount of $60.00.

In addition, if you are required to travel a lot for work, make sure that you have a calendar at home and at the office (on the office computers) which show the location of the meeting, the name of the organization and / or people that you are meeting, as well as the purpose of the meeting (ie/ sales, cold call, delivery).  Make sure that you track the mileage as well.  This way when the CRA questions the high claims, you can show them with 100% certainty that your travel claims are for work purposes.

It also helps to keep all the gas transactions on the same credit card for organizational purposes.

It takes a little effort and organization but it’s worth it.

Intaxicating Tax Services can be found @ http://www.intaxicating.ca and make sure to drop by our helpful blog here.

The Canada Revenue Agency Informant Leads aka “Snitch” Line

You have come to this blog for more information on the Canada Revenue Agency’s (CRA) Informant Leads or Snitch Line.  Yes, the line does exist and if you are looking for the number in order to use it, that number is 1.866.809.6841.

You may have heard me speak on CFAX1070 about the CRA Snitch line, or possibly you heard my interview on CBC.ca regarding the existence and use of this line.  If you have not, then let me take a moment to clear the air on this line.  The Informant Leads line does exist.  In fact, it has become such a popular tool for finding new collection sources that it’s increased volume of calls can be directly attributed to a reduction in the need for collections staff / auditors and investigators who were responsible for digging up new leads.

It is absolutely not possible for someone to call the line, make up a story and have someone investigated.  Anyone who states that does not know the purpose of this line and obviously has no experience working in the CRA.  To say that is irresponsible and fear mongering.   The CRA will act on leads but there must be some proof provided.  Simply asking for your neighbour to be audited because they drive a nicer car than you is not going to begin years or investigations-hell for them.  If, however, you purchase an item from a retail establishment, and are charged taxes, but you notice that the teller never ran the purchase through the till, then you can be assured that they are pocketing the taxes instead of remitting it to the CRA.  Or, if you notice on the receipt that they have charged you the wrong rate of tax, then you need to notify the CRA.

In one case, while I was working at the CRA, I purchased a large ticket item from a local store only to find out later that the taxes on the bill totaled 28%.  I went back to the store to ask for it to be corrected, only to have them advise me that it was a “US cash register” and that the rate was incorrect.  I took the receipt into the office hoping to launch an internal investigation but was told it would be 6-weeks before they were able to look at it.

So I walked over to a phone beside my desk, called the snitch line, explained the issue and after providing the receipt as proof, found that an investigation was launched the next day and heard through the grapevine that over $200,000.00 was recovered from the company.

That is where the snitch line can be put to good use.

If, however, you hear your neighbour bragging about how much money he makes under the table and he lives way better than you do?  You can call the snitch line.   Or if your ex-spouse is unwilling to file their outstanding tax returns because it would mean they would have to increase child support payments, then you can call the snitch line.  The CRA will take the information, begin with an internal investigation to see if there is merit, then possibly drop by the home or business to get a feel for whether an audit is required or if a net worth assessment is needed.

At the end of the day, the intention of the snitch line is to provide a direct link to the CRA’s Audit department and it assists the CRA as they use these “tips” to recover funds from professional tax avoiders.

Key words the CRA likes to hear includes;

Their names, their address, an amount of unreported income greater than, say $50K, maybe a second set of books, or 2nd property in the name of their cat…

It never hurts to call.

It always hurts to not call.

This line is anonymous and believe it or not, the majority of “tips” come from exes who are left holding the bag while their ex-spouses are living it up.

I figured I would post this since it is the most frequently asked question I get.  Yes a line exists and yes it gets acted on… and fast if the dollar amount to be recovered is high.

I have actual experience seeing this line work and I know for certain of instances where people have called this line in effort to discredit or attack someone and at the end of the day, the CRA  has investigated that person or party and punished them for making a false claim.  Those in glass houses should never throw stones.

Snitch Logo

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