From: AlanBaggett@volcanomail.com   
      
   Take It From A Tax Lawyer: The Canada Revenue Agency Is Broken : CRA SOTW   
      
   David J. Rotfleisch    
   Canadian Tax Lawyer, Rotfleisch & Samulovitch PC   
      
       
   Having dealings with CRA for three decades, you form an opinion. I wish I had   
   good news for Canadian taxpayers.   
      
   I have been a Canadian tax lawyer for almost 30 years. Being a tax lawyer is   
   not as sexy as being a famous criminal defence lawyer like Brian Greenspan or   
   Marie Heinen. For the most part, I toil in the tax trenches and fight with   
   Canada Revenue Agency (   
   CRA) officials.   
      
   Having dealings with CRA for three decades, you form an opinion on the calibre   
   of the people, the quality of the work being done, the management and the   
   organization's overall effectiveness.   
      
   I wish I had good news for Canadian taxpayers.   
      
   My experience has been that CRA staff are unreasonable. Some tax audits seem   
   like make-work projects or a game of "chicken," but the problem in many cases   
   comes down to lack of training or plain smug behaviour. Too often, the CRA   
   creates problems rather    
   than solving them.   
      
   There have been articles about CRA's systemic problems with their call   
   centres, with various employees giving taxpayers wrong information and   
   blocking 50 per cent of calls.   
      
   The issues of inadequate training compounded with ample attitude are worse now   
   than 20 years ago. I was speaking to a colleague who had complained about this   
   to a senior CRA official. His response was that CRA expects tax lawyers and   
   accountants to help    
   train their people.   
      
   Do you train your roofer, plumber, or mechanic?   
      
   You can expect to get put through the wringer by CRA auditors who defy logic   
   and reason.   
      
   CRA has extraordinary powers that inspire fear and loathing. The Income Tax   
   Act gives collections officers the power to garnish amounts owing from a   
   taxpayer who has an outstanding balance on their tax account. This can include   
   an employee's wages,    
   accounts receivable, and the seizure of bank accounts or investment accounts,   
   all without court authorization.   
      
   If you get audited, you can expect to get put through the wringer by CRA   
   auditors who defy logic and reason, even when presented with clear evidence of   
   no wrong-doing. For the record, about five to 10 per cent of Canadians have   
   ongoing issues with CRA in    
   any given year; these are unpublished figures.   
      
   So, fighting with CRA really is like the proverbial "fighting City Hall."   
      
   Here's an example. We have a client who is a car dealer. He buys cars,   
   generally at auction and exports them to Africa and the Middle East. When you   
   buy a vehicle, you pay HST. When you export it, the HST is supposed to be   
   refunded. When dealing with    
   volume, the amount of HST paid quickly adds up. Our client applied for the   
   refunds which were denied. The arguments made by the CRA auditor made no sense.   
      
   We filed an appeal and refuted every point made by the tax auditor. The appeal   
   officer kept asking for more paperwork, much of it unnecessary. We advised our   
   client to comply. After almost two years from when the refunds were first   
   denied, our client    
   received his refund cheque for $900,000, including interest. However, the   
   client's business had serious cashflow problems for two years.   
      
   The CRA is wasting our time, energy and taxpayer's money.   
      
   Here's another example. We have a file that is now in appeals after the CRA   
   auditor ignored a 30-page submission, with detailed schedules, showing how our   
   client did not have $25 million in unreported earnings, based on a wrong CRA   
   analysis of casino    
   records.   
      
   Armed with a detailed explanation of each report, we sent an analysis to CRA   
   that showed the auditor was completely wrong in his determination. The auditor   
   did not respond and we kept following up, with no reply. Finally, the auditor   
   came up with a new    
   unreported amount of over $10 million, without responding to any of the points   
   raised in our submissions.   
      
   Our request for a meeting with the CRA team leader was ignored and the auditor   
   confirmed the tax assessment at $10 million. A tax appeal is still ongoing.   
      
   The CRA is wasting our time, energy and taxpayer's money in pursuing this. And   
   our client is incurring more legal fees.   
      
   In November 2016, the auditor general of Canada released a damning report on   
   CRA's performance. The handling of tax appeals was a particular target of   
   opprobrium; there is a huge backlog, generally well in excess of a year. So,   
   CRA has to hire more    
   people and implement better systems because tax auditors get it wrong so often.   
      
   CRA has repeatedly said that the underground economy — everyone using cash   
   and not charging HST/GST — is a major target of CRA tax investigations.   
   Waiters and waitresses in P.E.I. are being audited, with other communities   
   having been targeted in the    
   past.   
      
   Last week, it was announced that under threat of court action from the   
   Parliamentary Budget Office (PBO), CRA was finally releasing the so-called tax   
   gap information to the PBO. The tax gap measures the size of the tax loss to   
   the underground economy.   
      
   Importantly, CRA has fought the release of the tax gap for years. We suspect   
   that the information, when finally available, will not show CRA as being   
   especially effective at clamping down on big-time tax cheats. No date was   
   given for the release of the    
   tax gap.   
      
   So, the rest of our tax bills have to be raised to compensate for the   
   inability of CRA to collect what is owed by tax crooks.   
      
      
      
   ----------------------------------------------------------    
   Miss a Tax Tale Miss a lot!    
   Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com    
      
   ------------------------------------------------------------    
   Alan Baggett - http://www.taxcollectorsbible.com/ - Tax Collector's Bible    
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)