“CRA versus the People of Canada.”
The income tax act being so convoluted, it provides a gold mine for CRA. With over two million words in the income tax act alone, not to mention the Excise Tax Act, The Information Circulars, The Interpretations, and the fact that CRA themselves can’t understand the Acts, the situation has become unmanageable and we need to introduce a program of simplification of the ITA. I will be writing on our proposal for a solution to this lunacy in a separate article.

This battle is a one sided affair where most assaulted taxpayers have to fold because they cannot afford the cost of the battle. Even though companies such as ours have managed the rough efficiencies of scale, to keep the cost to the consumer down to a manageable fee, however it is still a hunk of change for the average small business to come up with.
It is an interesting view of the battle field where CRA agents extract their toll from the toils of the people. The tax man has never been a popular entity, but one wonders how much pressure they can put on small business before there is an explosion. Some kind of tax anger uprising will happen, of that there is no doubt.

The level of intensity of this battle is escalating. The other day in a response to a Globe and Mail article on CRA activities, I read as follows; “It is said government is needed to protect person and property. That’s what I permit in my schools I provision you. What is unsaid but equally true is I will initiate force/aggression against said persons if they fail to inventory their property so I can decide what I take or they are allowed to keep. I am the Mafia with a flag and an anthem.”

Such a statement is in alignment with what taxpayers are telling me what they think and feel about our tax collections agency. Anger is at a boiling point. Blogs bombast the CRA, interest in class action suits is building. There are cases for damages in the courts, trouble is brewing in TaxLand.

I can tell you, if I were working for the CRA, I would wear a bullet proof vest between my home and my Tax Services Office. When taxpayers are on the verge of suicide, facing financial ruin, there is no telling where their emotions will go or what the results will be. Will it be anger or suicide? No one can be certain of the pending outcome.  We have seen outbreaks of violence before in other situations, where people break and shootings occur. I really hope CRA cleans up their act before something awful starts happening, and then the copy cats get the idea. You may think I am being overly dramatic, but please understand that it is me who is hearing the hostility directly from the taxpayers who are under the abuse of overzealous auditors who act like the raiders of the Dark Forces from the evil empire. here will be retribution, what exactly it looks like is anyone’s guess. What is for sure; is there is a “Tipping Point”coming.

What we read on the CRA’s web site about what an audit is or how you can expect to be treated. Reasonable treatment is certainly not what taxpayers who come to see us are experiencing. To be fair, no one comes to us who has had a good experience in an audit. So either there are no good experiences by taxpayers, or there are good experiences but we just don’t hear about them. Which of those two possibilities are true will be based on your own perceptions.

Some CRA staff are the salt of the earth, others act as if they work for the Mafia and are quite threatening. At one point when I took an auditor to task about the nastiness of the written communication, I complained and was told that they needed to be blunt for legal reasons. So I redid the letter for them to show that it could be every bit as clear, only the tone was factually neutral. My letter was much easier to digest, yet still addressed the seriousness of the matter. From my perspective, it is pointless to suggest that the taxpayer could go to jail, when that just would not be the case.

Our aggressive auditor problem has been compounded because the Conservative government added millions of dollars in performance pay for public service executives during the recession even as it pledged to slash bonuses in the face of hard times. One can only rationally assume that the increase of bonuses for CRA bureaucrats is like giving a business sales person a performance bonus, in which case the company makes more sales.

This information was provided to you the reader, as a result of Stockwell Day doing an Access to Information. This revealed that in CRA’s case the Management Tab went up, and so to did the CRA Revenue. Thus proving that pay bonuses do result in higher taxation. What does this tell you about our taxation system.

The government promised in June, 2009 to cut bonuses by 70 per cent – a target it eventually succeeded in meeting when the final numbers came in earlier this year.

However, in the technical language of the federal bureaucracy, “bonus pay” is only a small part of what many would consider to be a bonus. There is also the practice of giving an extra lump-sum payment at the end of the year based on performance. Executives in the Federal Government also qualify for extra bonuses by calling the bonuses “At Risk Pay.” These are often very lucrative bonuses and are on the rise.
While most private employers have a similar concept of at-risk pay that is often referred to as incentive pay, he said most workers still call these payouts a bonus.

“When people hear bonus, they will likely think it’s going to be anything you get that isn’t part of your salary, paid out annually,” he said. “That’s just how people think. A bonus is a bonus.”

“Clearly the government was very careful in the language they used,” said Christopher Chen, a private-sector compensation consultant at Hay Group in Toronto. “And they followed through exactly to the letter of their own definition of bonus.”

What this boils down to is that CRA is paying their way to larger tax revenue from small business in Canada. That would be fine if CRA was being reasonable in their audits. It is not our experience that audits are not usually based on the published policies and practices on the CRA web site.

Simply rewarding the tax man for collecting quantity of dollars puts the auditors in a conflict of interest situation. On one hand there is there service contract signed with CRA with their job description, but on the other hand there is pressure to bring in dollars as the number one objective. These two interests are juxtaposed to two different interests. Do the audit right or get as much booty as you can.
So the question has to be asked. “Does CRA mean what they write? Or is that just marketing to lull taxpayers in to a false sense of security in knowing that they never intentionally did anything wrong, and inadvertently believe that the CRA audit is just what the Agency web site says it is.?”

For a taxpayer to think that they have nothing to worry about is completely foolhardy. In today’s audits where the auditors are measured on the amount of money they collect, you cannot rationally be assumed that the audit is just a compliance education. An audit is an education all right, a financially very painful one indeed.

Now with the PST Auditors leaving the Provincial work force and now working for CRA, audit numbers have spiked and on top of this so too has the nastiness an unreasonableness of audits increased.

We are seeing that the ITA and ETA are not enforced equally across the country, for instance we see that the Pacific CRA Tax Services Offices (TSO) operations are the most aggressive and punitive in the country. In the case of one particularly nasty CRA auditor; a Mr. Chuck Henault, he teamed up with a bailiff to harass and intimidate a small business. Chuck likes to have conference calls with the taxpayer and the bailiff on the line and to demand money or he will close the business down. This is in spite of the fact that the taxpayer was current in his filings and payments. The balance owing was as a result of a CRA audit determining a mistake in accounting. A particularly nasty bit was forcing the taxpayer to pay bailiff fees, when there was no need for a bailiff in the first place.  In this case we had to get the Minister of Revenue involved with this case. This is an ongoing battle; at least we now have the assurance that they won’t cause the loss of 16 family’s sources of income. Not that Chuck or the Bailiff care about that at all. The bailiff an Chuck were pretty outraged by our attack on them, but they have since become a bit more respectful and a lot more careful. In this case and one other where CRA put the Directors other business out of business for lack of common sense and reason. CRA went from audit to closing the business down in no time. This is particularly unfair, unreasonable and frustrating when the business did nothing wrong. The GST owing was an error of interpretation by the auditor who later admitted the mistake. Now we are headed for tax court on this one. Civil court will follow.

CRA website promotes what an audit is, however they use enforcement and other titles to muddy the water. Enforcement supposedly is to deal with special audits, but we are seeing more and more aggressive audits under this banner. This process certainly works to intimidate, however it has little to do with a regular audit.

Investigations and enforcement is used to muddy the water allowing investigations under the guise of a CRA audit. This is not only crossing the Rubicon, but it is highly aggressive disregard for the laws of Canada. Auditors who think that there are no restrictions under the ITA or the ETA (Income Tax Act and the Excise Tax Act) are misinformed and grossly negligent in their duties to the people of Canada.

We are also experiencing auditors, who think it is ok to punish taxpayers beyond the scope of the auditors’ jobs if they are not cow towed by the auditor. We are making sure that these misguided bullies get some startling wake up actions from us. Contrary to some auditors thinking that there are no restrictions to their powers, there are in fact laws and rights in this country that they have to observe. The rule of law governs, and this often has to be brought to auditors’ attention. Tax Audit Solutions holds auditors accountable to behave within the law. Auditors are often shocked to find themselves under the lime light for abusing their power. The courts take a dim view of auditors abusing their positions of trust. CRA auditor bullying is not tolerated in the courts.

What we have here is a situation that has gone beyond reason. Because Canadians are often afraid to fight, or cannot afford the help they need to defend themselves against CRA, it presents us with an opportunity to assist others when they need the help the most.
There is a ton more information on our web site, be sure to go to [1] www.taxauditsolutions.ca