Mark Feldstein & Associates

On July 28, 2010 in the Ontario Court of Justice in Sudbury, 979055 Ontario Limited, operating as Walden Welding pleaded guilty to one count of tax evasion.  The Court levied a fine of $160,000 which represented 200% of the federal taxes that would have been evaded.  In addition to the fine, all taxes and interest owing, as well as civil penalties assessed by the Canada Revenue Agency (CRA) had to be paid.

Walden Welding  provides welding, fabrication and installation services.  It is jointly owned by Marlon and Judith Adams, who each own 50% of the company’s shares.  During a CRA investigation of the company, it was discovered that personal expenditures, such as home and cottage renovations, personal trips and other large personal purchases, had been claimed as business expenses by the company in the 2004 to 2007 taxation years.  This resulted in the company’s taxable income being under-reported by $483,182 and as a consequence federal taxes totaling $80,517 were evaded.  A civil reassessment, including taxes owed, interest and penalties, in the amount of $142,505 was received by the corporation and was subsequently paid in full.

As noted above, following conviction all taxes, interest, civil penalties and court fines must be paid when individuals or corporations are convicted of tax evasion.   Where gross negligence has occurred the CRA can assess a penalty of up to 50% of unpaid taxes or improperly claimed benefits.  As well, on summary conviction, the Court may levy a fine of 50% to 200% of the tax evaded and impose a jail sentence of up to two years.

In order to avoid CRA penalties and prosecution, undisclosed income can be reported and delinquent returns can be filed under the Voluntary Disclosure Program.  However, eligibility for the Voluntary Disclosure Program is limited.  As soon as the CRA begins an action or investigation against the taxpayer, the Voluntary Disclosure Program is no longer available.

Mark Feldstein Corporate Taxes, Tax Convictions Sudbury, Tax Evasion, Unclaimed Income

 As a result of charges of income tax evasion, GST evasion and obtaining tax refunds and credits to which he was not entitled, Joey James Kezar of Bobcaygeon appeared in the Ontario Court of Justice in Lindsay, Ontario on June 17, 2010.  He pleaded guilty to the charges and was fined $16,592 for the tax evasion charge, $1,517 for the GST evasion and $3,981 for the charge of obtaining tax refunds and credits to which he was not entitled.  In addition to court fines Mr. Kezar will be required to pay additional taxes owed, penalties, interest charges as well as repay unwarranted refunds and credits.  The total amount owed is in excess of $116,000.

During an investigation by the Canada Revenue Agency it was discovered that Mr. Kezar had not fully disclosed his income when his tax returns for the 2005 and 2006 taxation years were prepared.  He had not reported the sales from his business, block and brick work and chimney repair services, on his GST Returns and had understated his net business income by more than $167,000 during the aforementioned taxation years.  As a result of inaccurately reporting his income he received a tax refund for the 2005 taxation year and his family received unwarranted GST credits and Canada Child Tax Benefits (CCTB) for 2005 and 2006.

All taxes owing, interest and penalties determined by the CRA, as well as court fines must be paid following a conviction of tax evasion.  Where gross negligence occurs the penalty may be up to 50% of the unpaid tax or improperly claimed benefit.  Further, a fine of 50% to 200% of the tax evaded and a jail sentence of up to two years may be imposed by the court on summary conviction.

CRA penalties and/or prosecution can be avoided.  If eligible, the taxpayer can file delinquent returns and claim previously unreported income under the Voluntary Disclosures Program.  The only stipulation regarding eligibility is that the tax returns must be filed and undisclosed income must be reported prior to any action or investigation initiated by the CRA.  Once the CRA initiates an action or investigation eligibility for the Program disappears.

Mark Feldstein Corporate Taxes, Personal Taxes Tax Evasion, Unclaimed Income

The sole Director and shareholder of Gold Seal Homes (K-W) Inc., Mr. Dumitru Lazar, appeared in the Ontario Court of Justice in Kitchener on June 16, 2010, at which time Mr. Lazar pleaded guilty to four counts of tax evasion.  Mr. Lazar was fined a sum of $75,280, which represented 50% of the federal taxes evaded.  Gold Seal Homes was fined $29,717.  Mr. Lazar and Gold Seal Homes will be required to pay not only the court fines, but also any civil penalties levied by the Canada Revenue Agency (CRA), as well as taxes and interest owing.

During an investigation by the CRA it became evident that Mr. Lazar built and sold 15 houses, but only reported the sale of one house.  In failing to report the sale of all 15 houses, income totaling $474,599 was not reported, resulting in evasion of federal income tax in the amount of $113,934.  Mr. Lazar also neglected to report GST totaling $36,626 for the 2001 and 2002 taxation years.

In addition to the above, it was learned that Gold Seal Homes paid $107,849 for non-deductible expenses related to construction of Mr. Lazar’s personal residence, having been directed to do so by Mr. Lazar, who alone has signing authority for Gold Seal’s bank account.  The Company did not report and remit GST totaling $39,735 for the 2002 to 2005 taxation years and underreported its income by $107,849, thereby evading income tax in the amount of $19,698.  Mr. Lazar was responsible for the information provided in Gold Seal’s tax returns. 

CRA penalties and charges can be avoided.  Provided the CRA has not initiated an action or investigation, the taxpayer is eligible for the Voluntary Disclosures Program.  Under this Program delinquent tax returns can be filed and previously undisclosed income can be reported.  By entering the Voluntary Dislosures Program, the taxpayer may only be required to pay the taxes owing, plus interest.

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Subsequent to a plea of guilty, the Ontario Court of Justice in Timmins fined Mr. Thomas Alford of Richmond Hill $3,000 for failing to file his 2004 to 2006 personal income tax returns, $1,000 for each count of failure to file.

Following a  conviction of failure to file, all taxes, interest and penalties assessed the Canada Revenue Agency (CRA) must be paid and the delinquent returns must be filed.

The taxpayer can avoid penalties and/or charges being laid by the CRA by filing outstanding tax returns and claiming undisclosed income under the Voluntary Disclosures Program.  Under this Program, the only requirement for eligibility is that the taxpayer file the returns and claim the undisclosed income prior to being contacted by the CRA.  By reporting under the Voluntary Disclosures Program it is possible that only the taxes and interest owing will have to be paid.  However, if the CRA has initiated action or an investigation the taxpayer is not longer entitled to enter the Program and penalties and/or prosecution will follow.

Mark Feldstein Personal Taxes Richmond Hill, Timmins, Unclaimed Income

Mr. Gary Felder of London, Ontario, self employed in the construction industry, pleaded guilty to three counts of failing to file income tax and GST returns.  The Ontario Court of Justice in London imposed a fine of $3,000.  Mr. Felder had neglected to file an individual tax return for the 2005 taxation year as well as two GST returns related to his business.  Following the laying of charges by Canada Revenue Agency (CRA), Mr. Felder filed the outstanding tax returns.

Upon conviction of failure to file tax and/or GST returns the individual/corporation must file the delinquent returns, pay the taxes and interest owing, as well as any penalties determined by the CRA.

To avoid penalties and/or prosecution by the CRA, delinquent returns must be filed and undisclosed income must be reported under the Voluntary Disclosures Program prior to action or investigation by the CRA.  Eligibility for the Voluntary Disclosures Program is dependent on the taxpayer taking action before they are contacted by the CRA.  In taking pre-emptive action, the taxpayer may only be required to pay the taxes and interest owing.

Mark Feldstein Personal Taxes, Tax Convictions London, Tax Evasion, Unclaimed Income

In the Ontario Court of Justice in Newmarket a Campbellford resident, Alex Humberto Piedrasanta pleaded guilty to four counts of tax evasion.  The fine imposed of $22,600 represents 50% of the federal taxes Mr. Piedrasanta tried to evade.

The Canada Revenue Agency (CRA) discovered the failure to report income and remit GST during a routine audit.  When working as a subcontractor for two painting contractors in the Vaughan area, Mr. Piedrasanta prepared invoices and collected payments from contractors.  In 2002 and 2003 income in the amount of $120,688 was not reported and as a result the tax owing, $27,349, was not paid.  There was also a failure to remit GST for the period of January 1, 2002 to December 31, 2004 in the amount of $17,851.

All taxes owing, interest and any penalties assessed by the CRA must be paid following a conviction of tax evasion.  A penalty of up to 50% of the unpaid tax or improperly claimed benefit can be applied in cases of gross negligence.  On summary conviction the court has the authority to impose a fine of 50% to 200% of the tax evaded and rule that the taxpayer serve time in jail for a period of up to two years.

There is a mechanism by which taxpayers can avoid penalty and/or prosecution if they have failed to file tax returns or have not reported income.  Provided that the CRA has not instigated any action or investigation, the delinquent returns can be filed and the income can be reported through the Voluntary Disclosures Program.  It is possible that the taxpayer will  only be required to pay the taxes and interest owing.

Mark Feldstein Tax Convictions Campbellford, Tax Evasion, Unclaimed Income

Dr. Jack Klundert, an optometrist in Windsor, Ontario was found guilty of one count of tax evasion in the Superior Court of Justice in Windsor on May 20th , 2010.  At the trial the jury heard that Dr. Klundert reported his professional income as nil on his 1993, 1994 and 1997 personal tax returns, when in fact he received $1.4 million in professional income.  Federal income taxes amounting to $348,000 were evaded by his failure to report this income.  Returns had not been filed for the 1995 and 1996 taxation years. 

Dr. Klundert maintained that he had a moral obligation to challenge the validity of the Income Tax Act.  His argument was that the government does not have the authority to collect income tax.  Fortunately for Dr. Klundert, he was in a financial position to take his challenge to court.    On two previous occasions Dr. Klundert was acquitted for the same offence.    Unfortunately, his third attempt was not successful.   Following his conviction Dr. Klundert  was fined $500,000 and given a one year jail sentence.

Failing to comply with the Income Tax Act has serious consequences.  As well as interest and penalty charges, there is the possibility of garnishment of wages and/or bank accounts, seizure of assets, criminal prosecution and court fines.

Upon conviction of tax evasion, taxpayers have to pay all taxes owing, plus interest and any penalties as assessed by the Canada Revenue Agency (CRA).  Where the case is one of gross negligence, the CRA can impose a penalty of up to 50% of the unpaid tax and improperly claimed benefit.  On indictment the court may fine the taxpayer  100% to 200% of the tax evaded and impose a jail sentence of  up to five years.

The Voluntary Disclosures Program allows individuals or corporations who are delinquent in filing tax returns or who have not reported all of their income to do so without the threat of penalty or prosecution, provided they take action prior to any investigation initiated against them by the CRA.  By voluntarily disclosing unreported income and filing outstanding tax returns the taxpayer may only be required to pay the taxes owing, plus interest.

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Marie Philp appeared in the Ontario Court of Justice in Owen Sound, to answer to charges of failure to file tax returns. She was charged with four counts of failure to file and was fined $1,000 for each count, resulting in a total fine of $4,000. Upon charges being laid Ms. Philp filed the outstanding tax returns.

Upon conviction of a charge of failure to file tax returns the taxpayer is required to file all outstanding returns, pay the fines imposed, the taxes and interest owing and any civil penalties determined by the Canada Revenue Agency (CRA).

There is a program available wherein a taxpayer can avoid penalty or prosecution by the CRA. Under the Voluntary Disclosures Program an individual or corporation can file outstanding tax returns and/or report previously unreported income and may only have to pay the taxes owing, plus interest. However, the returns must be filed and the income reported prior to any action or investigation by the CRA.

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Julia Blanchard of St. Catharines was sentenced on September 16, 2009 on five counts of failing to file corporate income tax returns and one count of failing to file GST returns. She was fined $1,500 for each count for a total fine of $9,000. Julia Blanchard pleaded guilty to these charges on March 17, 2009.

CRA made several request for the missing tax returns before serving notice demanding that the returns be filed. Failure to comply with the requests resulted in charges being laid. All of the outstanding returns have now been filed. CRA takes delinquent filers very serious. It is always advisable to file all tax returns on time and stay off CRA’s radar.

Mark Feldstein Corporate Taxes, Tax Convictions CRA, criminal charges, Tax Evasion, Unclaimed Income

Walter Pontiero General Contracting Ltd of King City, pleaded guilty on September 17, 2009 of GST evasion. There was a fine levied in the amount of $91,063 in the Ontario Court of Justice in Newmarket. The fine was 100 percent of the taxes evaded.

CRA’s investigation revealed that the company which is a subcontractor to homebuilders, filed GST returns for the periods July 31, 2002 to April 30, 2005, in which the total sales of the business were under reported by over $2.75 million dollars. Therefore, the company understated the GST it collected on sales by $198,238 and it understated its input tax credits by $107,174, resulting in $91,064 GST evaded.

Individuals or companies that have not filed their returns or have not reported all of their income, can apply under the voluntary disclosure program. CRA will not penalize or prosecute them if they make a full disclosure before CRA commences an action. If Mr. Walter Pontiero General Contracting Ltd applied under the VDP program there would be no penalties or prosecution but the taxes would have to be paid along with interest.

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