From: AlanBaggett@volcanomail.com   
      
   Simple CRA credit checks find missing millions in money owed : CRA SOTW   
      
   Tax agency credit checks find missing millions in GST/HST money owed to Ottawa   
      
   By Dean Beeby, The Canadian Press | The Canadian Press – Sat, 29 Sep, 2012   
      
   OTTAWA - The Canada Revenue Agency has uncovered millions of dollars worth of   
   missing taxes by doing a simple credit check that the banks have been using   
   for years.   
   The project found almost $3 million of GST revenue that had been collected   
   from customers by new businesses but was never handed over to Ottawa, or was   
   fraudulently refunded to them.   
      
   The money turned up after 439 firms were targeted by running their   
   tax-registration information through a commercial credit-screening service   
   from Equifax Canada Ltd.   
   Banks and other financial institutions have for years vetted potential   
   customers applying for mortgages, loans and credit cards through commercial   
   credit-checking services.   
      
   But the Canada Revenue Agency had not been doing so with companies newly   
   registering as collectors of GST/HST taxes — some of which simply kept the   
   money.   
      
   The agency's pilot project was launched in 2010, as part of a wider effort to   
   flush out some of estimated $35 billion that remains untaxed in the   
   underground economy.   
      
   The so-called Interactive Warning System project, or IWS, focused on missing   
   GST/HST revenue and was slated to run for two years. But the results were   
   encouraging enough that it was ended in 2011 after just 12 months.   
      
   Internal documents outlining the project were obtained by The Canadian Press   
   under the Access to Information Act.   
      
   "The project was considered a success," said agency spokesman Philippe   
   Brideau. "The procedures and approaches tested provided us with risk   
   indicators that are part of the regular procedures."   
      
   Brideau says the agency is "currently exploring follow-up use of IWS products   
   for GST/HST compliance."   
      
   Documents show the agency eventually wants to catch income-tax cheats and   
   people improperly receiving government benefits by using credit checks.   
      
   IWS is a financial-industry term for a system that identifies problems with   
   names, addresses, social insurance numbers (or SINs), telephone numbers and   
   dates of birth that suggest possible fraud. The system automatically flags   
   high-risk credit    
   applications.   
   The agency's final report on the project, dated September last year, describes   
   how the system worked.   
      
   "For example, if someone is attempting to mask their identity by using the SIN   
   of a deceased person, this would be flagged by the IWS products and a warning   
   message would be generated to prompt further review," says the heavily   
   blacked-out report.   
      
   "The warning messages are generic, such as 'Applicant's SIN is reported as   
   misused.' Additional personal information is not provided with the warning."   
      
   Equifax's system, called SafeScan, might also flag a file if the postal code   
   and telephone number were inconsistent.   
      
   The Canada Agency Revenue used SafeScan to target 439 firms for a GST/HST   
   audit. Each audit uncovered an average of $6,800 in missing tax revenue.   
   Brideau says no charges were laid.   
      
   Quebec was excluded from the project because federal GST there is collected by   
   the provincial tax agency on behalf of Ottawa.   
      
   The agency completed a so-called privacy impact assessment, or PIA, in late   
   2007 to demonstrate the project would not put personal information at risk.   
      
   The assessment noted that "at no time will the interactive warning system   
   database interact with the CRA's databases," and said access to the   
   information would be limited to a few authorized individuals.   
      
   Privacy commissioner Jennifer Stoddart pressed the agency to use only one   
   credit-service provider to further reduce risks to privacy. The other major   
   provider in Canada is TransUnion of Canada Inc.   
      
   A spokesman for Stoddart said CRA agreed to conduct an evaluation after the   
   pilot project to review privacy risks before expanding the program nationally.   
      
   "To date, our office has not received a revised or additional PIA for this   
   project," Scott Hutchinson said.   
      
   The internal report shows the project cost $2.4 million, mostly salaries, to   
   uncover about $3 million in missing GST/HST revenue, for a net gain of less   
   than $600,000 — a relatively poor return compared with other CRA programs.   
      
   The project was one of a series of underground economy initiatives launched in   
   the last few years that have included audits of restaurant serving staff in   
   St. Catharines, Ont., and maple-sugar producers in Quebec.   
      
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