CRA News release Tax preparer found guilty of fraud in charitable donations scheme
Posted under News | Canadian Charity Law | Avoiding 'Charity' Scams
A Brampton tax preparer issues in excess of $34 million in false charitable donation receipts, according to CRA.
News release Tax preparer found guilty of fraud in charitable donations scheme
Brampton, Ontario, May 17, 2011… Eric Armah of Brampton, pleaded guilty in the Ontario Court of Justice in Brampton on April 29, 2011, to one count of fraud over $5,000. Armah will be sentenced on June 6, 2011. Armah was a partner in a tax preparation business in Toronto, and later Brampton, called E & F Tax Associates, also known as Bankay Financial Services Inc. During 2004 to 2006, Armah submitted false charitable donations claims, in excess of $34 million, on his clients’ returns. This resulted in income tax refunds or uncollected taxes payable in excess of $9 million.
To operate the scheme, Armah indicated to his clients that a larger refund or reduced taxes could be obtained if the client made a charitable donation to a certain charity, at an amount far less than what actually appeared on the tax return. Armah charged his clients approximately 10% of the face value of the false charitable donation amount claimed. In addition, each client was charged a $40‑$50 fee for the preparation of each false return.
When required, Armah provided false charitable donation receipts to his clients in support of the donation credits reported. The donation receipts were in the names of various charitable organizations, many of which Armah was connected to. During the investigation, the CRA was able to recover the false tax returns stored on computers located at Armah’s home.
The preceding information was obtained from the court records.
Individuals who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs. They will not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated by the Canada Revenue Agency (CRA) against them. These individuals may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA’s website at http://www.cra.gc.ca/voluntarydisclosures.
Further information on convictions can be found in the Media Room on the CRA website at http://www.cra.gc.ca/convictions.