Redress Risk Management (post until May 31/19)

Seek out reputable accountant to guard against tax fraud

Unfortunately for taxpayers, cases of fraud involving tax preparers are a well-known phenomenon in Canada, and serve to highlight the importance of using a reputable accountant, says Toronto tax litigation lawyer David J. Rotfleisch.

“I've had numerous clients who have been victims, or wilful participants, in tax fraud committed by preparers. Common frauds are bogus charitable receipts sold for 10 to 12 per cent cash (taxpayer pays $10 and gets a receipt for $100) and outright bogus claims of expenses — personal such as daycare or any type of business expenses," says Rotfleisch, founding tax lawyer at Rotfleisch & Samulovitch Professional Corporation.

“I've also acted for tax preparers who have committed these frauds, including an innovative one who was also involved in immigration fraud. He showed bogus income for the immigrants to justify their landed status and claimed the bogus expenses on tax returns of other clients.”

In another case that does not allege fraud, Metro News recently reported that the Canada Revenue Agency raided the office of a tax preparation company and seized documents, amid claims of errors in preparing returns.

“Taxpayers must make sure they go to reputable tax preparation firms or accountants,” says Rotfleisch. He suggests using accountants with professional designations, and asking for references.

Ultimately, he cautions, a taxpayer is liable for any errors in their returns.

“If the tax preparer makes mistakes or deliberate false claims without the taxpayers knowledge, then the taxpayer is only liable for penalties and interest. If the taxpayer wilfully participates then prosecution, including jail time, is possible.”

To Read More David Rotfleisch Posts Click Here
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