CRA Auditors Charged

I’m certainly not saying that all, or even a significant number, of CRA’s tax auditors are corrupt, but this story in the Montreal Gazette highlights some very interesting issues surrounding restaurant tax audits.

The corrupt tax auditors seemed to focus on restaurants, knowing that they could “justify” large reassessments, unless the owners paid them bribes.  In at least one case, the auditor asked for the bribe before auditing the restaurant!  Finally, the auditors could just as easily make a restaurant appear to be reporting all of its income as it could make it look like they were evading large amounts of tax.

An RCMP investigation of Canada Revenue Agency employees has resulted in three former auditors being accused of shaking down restaurant owners for cash.

An auditor is alleged to have extorted $100,000 from one restaurant’s owners and is being charged with agreeing to accept a bribe, two counts of fraud against the government and breach of trust.  The CRA auditor claimed to have found $3 million in undeclared revenues and offered to make it go away, if the owners paid a $250,000 bribe.  The owners negotiated the bribe down to $100,000 and paid it by remortgaging a house.

Another auditor tried to extort $50,000 from the owner of Restaurant Agostini.

“According to a release issued Tuesday by the RCMP, Falcone, who resigned in 2009, allegedly made an offer to lower ‘a bogus tax notice, before even auditing (the owner’s) financial statements, in exchange for $50,000. The restaurant owner refused to pay the bribe.’”

And yet another auditor is alleged to have offered to “lower an upcoming tax notice” that the owner of La Belle Place restaurant was about to be hit with, in return for a $90,000 bribe.

The really scary part, is that one official familiar with the investigation claims that “it is just the beginning.”

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