Over the past ten years thousands of ordinary people across Canada – people like you – were invited by friends, co-workers, even family members, to attend a seminar that would help them get big tax refunds.
You were told it was all perfectly legal. The men running the seminar, Larry Watts and Carleton Branch, said they knew all the inside tricks at the CRA, and how CRA policies “trapped” you into paying tax. Branch claimed to have been a senior auditor for the CRA. So you believed him when he said you were entitled to refile your tax returns and report fabricated business income and business losses in order to get a refund of the taxes that were deducted from your salary at source.
The cost: $500 upfront to Mr. Watts and co, and then 20% of the anticipated tax refund.
You handed over your tax returns – or gave him fresh ones to file. Mr. Watts and Mr. Branch found tax preparers to prepare and submit your returns. And presto… big, big tax refund. Year after year. Until, one day a letter arrived from CRA “reviewing” your business expenses. And you were asked to provide details of your business, your employees, and all the other expenses you wrote off over the years.
Don’t worry, said Mr. Watts. The CRA’s position is illegal. You don’t have to answer them. Or if you do, here’s a guide on how to create dummy T4 slips for your dummy employees.
Eventually, CRA reassessed your returns, clawed back the refunds you received, with interest and, in many cases, heavy penalties for making false claims on your tax return.
In more recent years, you maybe didn’t get any refund… just the big penalties.
Don’t worry, said Mr. Watts again. We’ll object. We’ve even secured the services of a tax lawyer who will file the objection for you. Just send him $500 and sign this Objection. He’ll make it all go away. You haven’t done anything wrong.
And you didn’t hear anything for almost a year…. Until the tax lawyer, or Mr. Watts, or both, advised that your objection was not going to be successful, and that reassessments were coming from the CRA demanding payment of a huge reassessment. In some cases the tax bills are over $100,000. Enough to make bankruptcy a serious consideration.
But Mr. Watts said he could advise you on how to appeal to the tax court. He could do it even better than the tax lawyer, he said, so you should really pay him $500 and forget about the lawyer.
Except that Mr. Watts and Mr. Branch were already under criminal investigation by the Canada Revenue Agency, who had their residences raided in November 2012, and then charged both with defrauding Her Majesty and the public treasury by filing false income tax returns for clients and, of course, for themselves.
Conservatively, Fiscal Arbitrators and its promoters and tax filers have likely defrauded Her Majesty’s Treasury – your tax treasury – of hundreds of millions of tax dollars. Conservatively. (Now you know why your taxes are so high.)
Mr. Watts had his first court appearance on March 1, 2013. A date for Mr. Branch is no tknown. One of the tax preparers involved in the scheme has also been charged and appears in court Feb 28, 2013. Other agents and tax preparers are still at large or, in the case of one promoter from the Vancouver area, have escaped to foreign tax havens.
Leaving the people like you alone with the tax bills.
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