Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Avoiding 'Charity' Scams
Another tax preparer has been sentenced to jail for the issuance of fraudulent official donation receipts. This tax preparer was based in Etobicoke, Ontario and issued over 34 million of false receipts.
Here is the Canada Revenue Agency News Release:
“Tax preparer sentenced to two years in jail for fraudulent charitable donations scheme
Toronto, Ontario, June 17, 2011 … The Canada Revenue Agency (CRA) announced today that Isaac (Ike) Amoako was sentenced in the Ontario Superior Court in Toronto on June 16, 2011 to two years imprisonment on two counts of fraud over $5,000. Amoako pleaded guilty to the charges on February 23, 2011.
Amoako, aged 48 years, was a shareholder and director of Orbit Financial Services Ltd., a tax preparation business located in Etobicoke, Ontario. During the 2004 to 2006 tax years Amoako, along with two other directors of Orbit, filed approximately 5,800 tax returns including false charitable donations totaling at least $34,267,556. The false donation claims generated at least $9,780,780 in fraudulent income tax refunds or uncollected taxes payable.
The court heard that Amoako offered his clients the opportunity to give him money for charitable donations in order to generate a larger tax refund or reduce their tax owing. Once Amoako received the money from his clients he filed a tax return on their behalf claiming a deduction for a charitable donation up to ten times the amount of money actually paid by the client.
Amoako prepared tax returns for a fee ranging from $40 to $60, then charged an additional fee of approximately 10% of the charitable donation amount claimed on their behalf. Amoako also remitted false returns using E-file agent numbers registered either in his name or in the names of other individuals who did not know that their names and personal information were being used for this purpose. When the CRA began to suspend these E-file agent accounts due to unsupported and questionable activity, Amoako began to remit false paper returns.
The preceding information was obtained from the court records.
When individuals or corporations are convicted of tax evasion, they have to pay the full amount of tax owing, plus interest, and any penalties the CRA assesses. In cases of gross negligence, the Income Tax Act and Excise Tax Act allow the CRA to assess a penalty of up to 50% of the unpaid tax or the improperly claimed benefit. In addition, the court may, on summary conviction, fine them 50% to 200% of the tax evaded, and sentence them to a jail term of up to two years.
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.