Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Avoiding 'Charity' Scams
Here is a copy of a CRA press release on a tax preparer who has been sentenced to 3 years in jail for issuing $34 million of official donation receipts as part of a charitable donations scheme.
Canada Revenue Agency News Release
Tax preparer sentenced to 3 years in jail for $34 million charitable donations scheme
Brampton, Ontario, June 8, 2011 … The Canada Revenue Agency (CRA) announced today that Eric Armah of Brampton was sentenced in the Ontario Court of Justice in Brampton on June 6, 2011 to three years imprisonment on one count of fraud over $5,000. Armah pleaded guilty to the charge on April 29, 2011.
Armah was a partner in a tax preparation business in Toronto, and later Brampton, known as E & F Tax Associates or Bankay Financial Services Inc., during the 2004 to 2006 tax years. He submitted more than $34 million in false charitable donation claims on clients’ returns during this period, generating in excess of $9 million in fraudulent income tax refunds or uncollected taxes payable.
The court heard that Armah told 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. He generally charged an additional $40-$50 for the preparation of a tax return. Over 30 clients of E & F Tax Associates collaborated in this scheme.
Where required, Armah provided false charitable donation receipts in support of the donation credits reported. The donation receipts were in the names of various charitable organizations to which he was connected. During its 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.
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.