Personal Finance

My Co-Worker Just Got CRA Letter: "Pay Back $34,000 Dollars In 30 Days"

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  • Jul 17th, 2013 10:09 pm
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Penalty Box
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Oct 19, 2012
3359 posts
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Toronto

My Co-Worker Just Got CRA Letter: "Pay Back $34,000 Dollars In 30 Days"

My co-worker had a guy that used to get him $7,000 to $7,500 a year back in income taxes, while everybody else his income level was either getting only $2,000 or $600. He had been receiving these amounts of money for the past 6 or 7 years. What worries me is that I used the same guy and got more in income taxes too, but only for 3 years. I claimed everything legitimate, don't know what my co-worker claimed though. Last time I was with this tax preparer he told me that if I was going to claim gas for my car I needed some document signed by my company or not claim it at all. I claimed my gas anyways.

Anyways, my co-worler tried to get his taxman to help him and the guy turned his back on him basically telling him "Buddy what you want me to do, I just wrote down what you told me, it's your problem". What are the chances that I might be linked to this taxman and get audited too?
30 replies
Deal Expert
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Jun 9, 2003
25310 posts
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haha...if you get audited...you're royally screwed
Jr. Member
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Jun 24, 2013
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Well there is a good chance someone from CRA is reading this post, would not be too hard to track you.
Deal Addict
May 2, 2007
3013 posts
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Kingston
Fraud

You'd and your friend probably don't have worry about rent and meals for a while.
Deal Addict
Jan 18, 2010
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Is this a tax man (H&R) or an accountant (CA, CMA, CGA)?
Deal Addict
Mar 2, 2005
2033 posts
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Ouch. While CRA Audits aren't the end of the world, a million Canadians get audited every year according to a news report. But yes, it can be doom if your friend and yourself claimed deductions you weren't entitled to.

Claiming gas isn't as easy, although people do it, technically speaking CRA requires you to keep a log of your mileage that you have to drive for work. Driving to and from work isn't included in that.

In any case, you pray they don't come after you. Because the penalties add up very quickly. Having said that, his best resort is to go through the audit and settle a payment plan with them if he's found guilty, which he likely is.

Only dumb asses use accountants (LOL I still laugh at those who claim to be) to file their illegitimate claims. Folks actually manipulating money use tax lawyers. Google it to find out why.

The worst part of all this isn't the money, its the fact that you are flagged for life. Good luck filing legitimate claims in the future, because they have released the hounds.
Deal Addict
Jan 30, 2012
1836 posts
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TORONTO
Gammatron wrote: My co-worker had a guy that used to get him $7,000 to $7,500 a year back in income taxes, while everybody else his income level was either getting only $2,000 or $600.
That really isn't relevant, your coworker might have had medical bills, rrsp contributions, or any of a number of legitimate things.

Or your coworker was engaging in tax fraud.

When CRA sends a reassessment, CRA will explain why they are reassessing, the deductions they are disallowing, and any other corrections.
Gammatron wrote: Anyways, my co-worler tried to get his taxman to help him and the guy turned his back on him basically telling him "Buddy what you want me to do, I just wrote down what you told me, it's your problem".
If your coworker provided incorrect information to the tax preparer, then it is the fault of your coworker.

And if the tax preparer made mistakes, your coworker is still liable to CRA. The coworker can sue the tax preparer though.
Gammatron wrote: I claimed everything legitimate, don't know what my co-worker claimed though. Last time I was with this tax preparer he told me that if I was going to claim gas for my car I needed some document signed by my company or not claim it at all. I claimed my gas anyways.
Gammatron wrote: What are the chances that I might be linked to this taxman and get audited too?
An audit isn't the end of the world, it means that CRA wants to verify information on your tax return. If you declared all your income, and only claimed deductions that you are entitled to, then you have nothing to fear.

You aren't allowed to claim gas unless it is a legitimate business expense, AND your employer fills out form T2200, Declaration of Conditions of Employment, for you. Without that form it isn't allowed.

If it was legitimate, it's odd that you only claim for gas, since you can claim fuel, maintenance, insurance, automobile club expenses, lease costs or interest. http://blog.taxresource.ca/if-you-use-y ... mployment/
starboy869 wrote: You'd and your friend probably don't have worry about rent and meals for a while.
I doubt it, unless there are other factors. This level of tax fraud would probably be the tax owing, interest and a penalty.
Deal Grabber wrote: Only dumb asses use accountants (LOL I still laugh at those who claim to be)
Accountant isn't a reserved word in Canada, anyone can call themselves an accountant. Calling yourself a chartered accountant when you aren't a duly licensed CA is a serious offense.
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Feb 1, 2005
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Gammatron wrote: I claimed everything legitimate, don't know what my co-worker claimed though. Last time I was with this tax preparer he told me that if I was going to claim gas for my car I needed some document signed by my company or not claim it at all. I claimed my gas anyways.

Anyways, my co-worler tried to get his taxman to help him and the guy turned his back on him basically telling him "Buddy what you want me to do, I just wrote down what you told me, it's your problem". What are the chances that I might be linked to this taxman and get audited too?
So is the gas legitimate or not?

If it's not legitimate, and if you're concerned, then you should do a voluntary disclosure to avoid the penalties that would apply. I would think whether or not you get linked to the tax preparer depends on how easy it is for CRA to make that link...

Personally, I prefer not to go to bed with things hanging over me... leads to less sleep thinking about it and/or weird and sweaty dreams sometimes.
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Feb 19, 2004
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BC
ShopperfiendTO wrote: So is the gas legitimate or not?

If it's not legitimate, and if you're concerned, then you should do a voluntary disclosure to avoid the penalties that would apply. I would think whether or not you get linked to the tax preparer depends on how easy it is for CRA to make that link...

Personally, I prefer not to go to bed with things hanging over me... leads to less sleep thinking about it and/or weird and sweaty dreams sometimes.
+1

My parents got audited once but it was pretty easy to handle, just mailed in the supporting document.
insert witty comment
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Oct 4, 2009
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Montreal
manixc wrote: My parents got audited once but it was pretty easy to handle, just mailed in the supporting document.
That's not an audit, just a request for supporting documents.
Deal Addict
Jun 9, 2003
4646 posts
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S5 wrote: That's not an audit, just a request for supporting documents.
What's the difference? Honest question.

For 2012, I was asked to provide all the documentation (receipts, etc.) proving my moving expenses that I claimed for that year. I've referred to this as an audit into my moving expenses, is that not the case? What differentiates the two?
Deal Addict
May 28, 2006
2389 posts
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what if tax preparer gets paid based on a percentage of the refund and he fudge the numbers. I guess it would still be the fault of the client since it's up to him/her to check everything is correct in the tax return?
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Jun 23, 2013
402 posts
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Whitby
OP, you and your friend are going to jail... Al Capone evaded taxes just like you did .... better start pumping iron and get a bad ***** tattoo to scare off the other tax cheats you'll find in your cell.
Deal Fanatic
Apr 23, 2009
5161 posts
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South of Ottawa
Psycho44 wrote: what if tax preparer gets paid based on a percentage of the refund and he fudge the numbers. I guess it would still be the fault of the client since it's up to him/her to check everything is correct in the tax return?
Depends who signs the return.
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Sep 10, 2007
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OP hasn't replied back...seems like somebody knocked at his door right after he hit the submit button. I wonder who knocked?
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Jan 30, 2012
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TORONTO
Beachdown wrote: Depends who signs the return.
Wrong. The tax return is always signed by the taxpayer.

The taxpayer can not contract out the liability for errors & fraud to a tax preparer. The taxpayer is the one on the hook to CRA.

If you use a tax preparer, you are supposed to put the tax preparer's name & phone number on the return as well.

If there are errors and/or fraud on a tax return, the taxpayer is the one who is liable to CRA, not the tax preparer, even if the tax preparer was the cause of the errors and/or fraud.

If the tax preparer was the cause of the errors and/or fraud, the taxpayer can then turn around and sue the tax preparer, but that is a private matter between the taxpayer and the tax preparer.
Deal Expert
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Jul 30, 2007
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Op, go tell your buddy to buy some lottery tickets and hope for the best. :D

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