Mark Feldstein & Associates

Mario Pietrangeli of Napanee received a guilty verdict for federal income tax and GST evasion in the Ontario Court of Justice in Napanee. His sentence consisted of fines totaling $149,000 which had to be paid within two years, two years probation, and a 12-month conditional sentence which included four months of house arrest as well as good behavior and keeping the peace, comply with the Income Tax Act. If Pietrangeli had voluntarily disclosed the missing sales before Canada Revenue Agency started its investigation, he could have avoided fines and house arrest.

Pietrangeli sold scrap metal and salvaged parts from scrap automobiles as well as purchased the same at his place of business, Napanee Scrap Metal and Auto Parts. In January 2009, Canada Revenue Agency began an investigation. It was shown that Pietrangeli concealed revenue by withholding relevant books and records from his tax preparer. His bookkeeper was mislead by Pietrangeli into believing he sold to company for the years 2004 – 2006.

The Canada Revenue Agency also found false business expenses were being claimed, and some income was actually claimed as expenses.

Pietrangeli tried to avoid paying $80,455 in federal taxes during 2004 – 2005 by not reporting sales totaling $671,394. He also did not remit $118,838 in GST for the years 2004 – 2006.

Mark Feldstein Tax Convictions GST, Napanee, Tax Evasion, Voluntary Disclosure

Faiz Khan of Markham was convicted of one count of fraud over $5,000 in the Ontario Court of Justice in Toronto on November 26, 2010. Faiz received a conditional sentence of 2 years less a day. Khan will be under house arrest for a year and a half with 6 months under curfew. He will be on probation for the next two years. He has to pay $824,971, and was banned from gambling and preparing tax returns. If Khan had voluntarily disclosed the tax scheme to Canada Revenue Agency before they started any investigation, he could have avoided penalties, prosecution, and the loss of his livelihood.

During an investigation by Canada Revenue Agency, it was revealed that Faiz prepared false tax returns and false donation claims. During the years 2004 – 2008, he falsified documents on behalf of his 52 clients which understated their federal taxes by $575,971, thereby increasing their tax refunds.

The names of four charities on the falsified donation slips were City Chapel Ministries International, Destiny Ministries International Christian Mission, Pan African Canadian Multicultural Centre and Ave Development Foundation. They had their charity status revoked by CRA. Read more…

Mark Feldstein Personal Taxes, Tax Convictions charitable donations, Markham, Tax Evasion, Voluntary Disclosure

During his court appearance in the Ontario Court of Justice in Lindsay James Bradford Medd attempted to use the argument, still actively promoted by some individuals and groups, that it is possible to lawfully declare oneself exempt from tax.  Despite Medd’s statement that the Court had “no jurisdiction or authority” over him as “a human being” he was found guilty of four counts each of Income Tax and Goods and Services Tax (GST evasion) on September 21, 2010.  The $43,830 fine imposed by the Court represents 100% of the taxes evaded by Medd and is in addition to the taxes and interest owing and all penalties determined by the Canada Revenue Agency (CRA).

The charges related to the 2003 through 2006 taxation years.  Medd has income from several sources including bookkeeping, accounting, tax preparation and consulting work, the sale of puppies and farm income.  After a routine audit the CRA instigated an investigation which included a search of Medd’s residence, as authorized by a search warrant.  It became evident from Medd’s bank and business records that Medd had failed to report personal income of $208,288 during the years in question.  He also failed to file GST returns  for the same period of time, thereby evading $14,250 in GST.

Mark Feldstein Corporate Taxes, Personal Taxes, Tax Convictions GST, Tax Evasion

A fine of $62,033 was imposed when Douglas Braund pleaded guilty to one count of Goods and Services Tax (GST) evasion in the Ontario Court of Justice in Kingston on December 21, 2010.  The fine represents 100% of the federal tax that Braund attempted to avoid paying.  The hefty fine is an additional expense, as Braund is still required to pay the taxes and interest owing as well as penalties as determined by the Canada Revenue Agency (CRA).

As President and General Manager of Douglas Braund Investments (Kingston) Limited, Mr. Braund kept the books and records for the Company, which operates the bus terminal on John Counter Boulevard in Kingston, Ontario.  The GST returns filed were, in part, based on the records that Braund maintained.  When the CRA conducted an audit it became evident ath false Input Tax Credits were being claimed and that the GST claimed on returns was being considerably less than was warranted.  Based on these findings, the auditor transferred the file to the Enforcement Division for further action.

In a subsequent CRA investigation it became apparent that by creating fictitious entries in the Company books Braund was falsifying the Input Tax Credit Claims.  The

Mark Feldstein Corporate Taxes GST, Kingston, Tax Evasion

Robert Morrison of Holland Centre faced three counts of tax evasion in the Ontario Court of Justice in Owen Sound on December 20, 2010.  Following Mr. Morrison’s guilty plea the Court levied a fine of $47,344, to be paid in the next five years.  The fine is supplementary to the taxes and interest owing, as well as the penalties determined by the Canada Revenue Agency (CRA).

Morrison, a masonry contractor operating in the Owen Sound area, had substantial income which he failed to report during the 2003 and 2004 taxation years.  This fact was discovered during an audit by the CRA’s Underground Economy Section.  As a result of this finding, the file was referred to the CRA’s Enforcement Division, who subsequently expanded the investigation to encompass the 2005, 2006 and 2007 taxation years.  Total federal income tax evaded was $61,173 and the total GST evaded totaled $33,514 during the period of 2003 to 2007.

Upon conviction of tax evasion all taxes, interest and CRA penalties must be paid.  Where gross negligence has occurred the CRA has the authority to assess a maximum penalty of 50% of the unpaid

Mark Feldstein Corporate Taxes, Tax Convictions Holland Centre, Owen Sound, Tax Evasion, Underground Economy Section

Diverting income to a U.S. corporation in an attempt to avoid paying Canadian income tax is not an option.  Sylvie Clement, a self-employed human resources consultant, attempted to divert a portion of her income to a company located in the United States and owned solely by her.   The end result was that she was charged with, and found guilty of, one count of tax evasion on December 21, 2010 in the Ontario Court of Justice in Ottawa.  The Court imposed a fine of $20,000, which represents 50% of the total income evaded.

An investigation by the Canada Revenue Agency (CRA) revealed that while all of Ms. Clement’s work was performed for the same client, some of the invoices issued were in the name of a U.S. corporation owned solely by Clement.  The client was asked to wire payments for these invoices to the bank account for the U.S. corporation.   Only the income paid for in Canada was declared on Clement’s personal tax returns.  The income diverted to the U.S. bank account was used to pay for personal expenditures.  The total annual personal expenditures exceeded the income reported on personal tax returns.  During the

Mark Feldstein Corporate Taxes, Personal Taxes, Tax Convictions Ottawa, Tax Evasion

 If you haven’t filed your GST returns in awhile, you may want to file them as soon as possible.  Mr. Cecil Gorman, a self-employed roofer, neglected to file GST returns during the period from July 1, 2000 to December 31, 2004.  The outstanding returns were filed when the Canada Revenue Agency (CRA) charged Mr. Gorman with six counts of failure to file GST returns.  On September 10, 2010, in the Ontario Court of Justice in Toronto, Mr. Gorman pleaded guilty to all six counts.  The resulting fine imposed by the Court was $6,000, or $1,000 per count.  A grace period of one year was given by the Court for payment of the fine.

The CRA’s Voluntary Disclosure Program allows taxpayers to file delinquent returns or claim previously unreported income without fear of prosecution or penalty, if the returns are filed and the income is declared prior to any action or investigation being initiated by the CRA.

Mark Feldstein Corporate Taxes, Tax Convictions failure to file, GST, Tax Evasion

A fine of $4,000 was levied in the Ontario Court of Justice in Guelph on September 10, 2010 against John Davies of Elora, Ontario after Mr. Davies pleaded guilty to four counts of failing to file tax returns.  A grace period of 15 months was given for payment of the fine.  In addition to filing the outstanding returns, all taxes and interest owing, Canada Revenue Agency (CRA) penalties and Court fines had to be paid. 

A self employed trucker who hauls scrap metal, Davies neglected to file his personal tax returns for 2003 to 2005.  He also failed to file the annual Goods and Services Tax Return for the 2003 taxation year.  Mr. Davies filed all delinquent returns prior to pleading guilty.

Had Mr. Davies known about the Canada Revenue Agency’s Voluntary Disclosure Program he might have been able to avoid CRA penalties and prosecution.  Under this Program, if the CRA has not initiated compliance action the taxpayer can submit all unremitted tax returns and claim previously undisclosed income.  As a result of filing and/or reporting under the Program, the taxpayer may only be required to pay the taxes and interest owing.

Mark Feldstein Tax Convictions failure to file, Tax Evasion

After a plea of guilty to six counts of tax evasion in the Ontario Court of Justice in London on September 1, 2010, Michael Hersey was fined $52,865, received a six month conditional sentence, and was ordered to perform 75 hours of community service within ten months.  A grace period of eighteen months was given for payment of the fine.  As part of the conditional sentence Hersey was ordered not to provide investment advice or to prepare tax returns.  In addition to the fine, all taxes, interest and civil penalties assessed by the Canada Revenue Agency (CRA) had to be paid.

Mr. Hersey owned a company that sold insurance products and investment vehicles, Professional Insurance Management Inc.  He controlled a second firm, Global Export Consulting.  This second firm provided logistical support to Envision Global Charity, a charity operating in Cuba, which Hersey helped found.

In 2003 and 2004 the two companies produced income for Hersey in the amount of $187,395.  The income, not reported on tax returns, was used for living expenses, legal judgments and loans and was shared with Hersey’s wife.

Mr. Hersey was the financial advisor and tax preparer for two individuals.  These individuals invested $326,000 through Hersey and subsequently discovered that their investments were worthless.  False charitable donation receipts were provided by Hersey totaling over $43,000 under the name of Envision Global Charity, a charity which Hersey helped found.  Hersey included the false receipts when he prepared the tax returns for the two individuals.  Envision Global Charity’s charitable status was revoked effective August 18, 2007, after a CRA audit of the organization.

CRA penalties and/or prosecution can be avoided by filing outstanding tax returns and/or reporting previously undisclosed income under the Voluntary Disclosure Program.  The Program is open to all, provided that the CRA has not initiated any action or investigation against the taxpayer.

Mark Feldstein Corporate Taxes, Tax Convictions charitable donations, investment schemes, London, Tax Evasion

Subsequent to a four day trial in July, 2010 the Ontario Court of Justice in Windsor found John Spooner guilty of one count of making false statements and 13 counts of evading GST payment.   The Court sentenced Mr. Spooner on January 21, 2011, imposing a fine of $27,000 as well as a conditional sentence of 120 days to be served in the community.  The fine is equal to 147% of the federal taxes evaded.  Taken together, the fine and federal taxes owing amount to $45,396.

As a self-employed sales agent, Mr. Spooner operated a business in the Windsor area, J B & B Enterprises.  For the quarter ending March 31, 2003, Spooner had made false statements on the GST return for his business.  The net GST owed was understated by $1,312.  There was also a failure to file eleven consecutive quarterly returns from April 2003 to December 2005 and the GST owing for this period of time was not remitted.  Total GST evaded was $18,396.

In all such cases, upon conviction, all taxes owing, plus interest, Canada Revenue Agency (CRA) penalties and Court fines must be paid.  It should be noted that the Court may impose a fine of up to 200% of the taxes evaded as well as a jail sentence of up to five years.

If full disclosure is made under the Voluntary Disclosure Program, it is possible that the taxpayer will avoid penalties and/or prosecution by the CRA.  Under this Program delinquent returns can be filed and previously unreported income can be disclosed, provided that the CRA has not taken action or initiated an investigation against the taxpayer.

Mark Feldstein Corporate Taxes, GST, HST, Personal Taxes, Tax Convictions failure to file, GST, Tax Evasion, Windsor