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Help - CRA!!

thagibbler

New member
Dec 6, 2008
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Don't matter just don't bite it
Wondered if I could get some help. A self-employed salesman who works for me just told me he hasn't filed his income tax for 2 years and they are now harrassing him to file. He obviously has not remitted instalments so he is asking me to help him make some sort of plan with CRA to pay them off. What else should he be worried about....jail.....severe fines? He is one of my best guys and hope I don't lose him to this.

Income each year would be around $60-$70K.

Any help would be appreciated...thanks.
 

21pro

Crotch Sniffer
Oct 22, 2003
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Caledon East
I had the same problem with a former salesperson. For me, it was worth fronting the unpaid taxes... as a 'bonus'... I haven't owned that business for years, but he has become a very loyal friend. Anyways, I had my CA work out the case to present the CRA... I only had to submit $57k for him when they were seeking $128k. but, it also led to me and my various businesses getting audited the following 2 years. didn't matter, everything was clean... but they still try to get money out of you that they are not owed.

CRA auditors are crooked.

my opinion is just one from a fellow business man that had a somewhat similar predicament... and thus, your thread jumped out at me.

anyways, there are a few CAs and alot of CGAs here on terb. you'll get better (professional) advice than I could give. regardless, if you are looking at helping- talk to your accountant before getting back to him.
 

Big Sleazy

Active member
Sep 13, 2004
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I was in the same situation. But I hadn't paid for 5 yrs. They came after me hard. I ended up paying all the back taxes and late payment fees and interest. Ended up costing me close to $80K. Now I keep myself sqeaky clean. Pay in installments and on time and file annually on time. If there's one thing the Gov't is good at it's collecting taxes. Everything else they get involved with they fuck up. But collecting your money, well....there real good.

BS
 

Rockslinger

Banned
Apr 24, 2005
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I was in the same situation. But I hadn't paid for 5 yrs. They came after me hard. I ended up paying all the back taxes and late payment fees and interest. Ended up costing me close to $80K.
You should have hired Brian Mulroney's lawyer. Didn't he declare the $225,000 like 7 years late and paid tax on only $150,000?
 

toguy5252

Well-known member
Jun 22, 2009
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He will not do and jail for this. There will be interest and penalty and their is some discretion to deal with that. Speak to your accountant. Although i don't want to minimize the severity it is not quite a big a deal as you and your employee may believe.
 

toguy5252

Well-known member
Jun 22, 2009
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I neglected to mention before that when you say that he is a "self-employed salesman who works for me" you may wish to confirm with your accountant that he is not in fact an employee. Many employers think that just because you call someone self-employed that they are not employees nonetheless. It is often the case that they are deemed to be employees and that you ought to have been withholding and remitting. Check with your accountant and make sure that you are not stepping into a liability.
 

thagibbler

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Dec 6, 2008
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Don't matter just don't bite it
Let me be clear about this. He is self-employed but you said he 'worked' for you. You mean, you engaged him as an independent salesman, not an employee, right?
I engaged him as an independent salesman.......correct. I worded that incorrectly but I do understand that I need to get better at saying that. We are in the process of getting his taxes prepared through my CA now, and then try to work a deal. This is the plan at the moment......
 

thagibbler

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Dec 6, 2008
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Don't matter just don't bite it
It is often the case that they are deemed to be employees and that you ought to have been withholding and remitting. Check with your accountant and make sure that you are not stepping into a liability.
Other distributors within the company have been using independent salesman for years. As well, most, if not all distributors that have been around for any length of time have been audited. I would prefer to keep them independent.
 

wet_suit_one

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Aug 6, 2005
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Just for the record, once you get into the tax amnesty area and interpretations of whether someone is an employee or not, these are matters of LAW not accounting. You need to talk to a tax attorney.

Also, same thing applies to the tax amnesty, because you NEED solicitor client privilege to protect your identity or else the CRA can simply force your accountant to cough up the name of the tax delinquent.

Don't say I didn't warn you.
 

SkyRider

Banned
Mar 31, 2009
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Other distributors within the company have been using independent salesman for years. As well, most, if not all distributors that have been around for any length of time have been audited.
Maybe this is accepted industry practice and the CRA has recognized it as such. Here are a couple of other examples.
Many of the people who sell Primerica products are "independent" salespersons as are many (if not all) people who sell Mary Kay cosmetic products. In the case of Mary Kay, I think the salesperson actually buys the products from Mary Kay at wholesale prices and tries to onsell them at retail prices.
 

Rockslinger

Banned
Apr 24, 2005
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"As tax lawyers, DioGuardi Tax Law can stand between you and the TaxMan while we negotiate a fair settlement of your tax situation. Complete lawyer-client confidentiality is guaranteed."
That is pure marketing hype. Does anybody actually think that the CRA really want to put people in jail? Even that mobster Nicolo Rizzuto who pleaded guilty to hiding money in a Swiss bank account didn't get jail time. Just fess up and pay the damn taxes!
 

SkyRider

Banned
Mar 31, 2009
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Thank goodness this incident did not involve the CRA or Canada. Tax dispute gone bad. An American crashes his aircraft into an IRS building setting it on fire.
 

toguy5252

Well-known member
Jun 22, 2009
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That is pure marketing hype. Does anybody actually think that the CRA really want to put people in jail? Even that mobster Nicolo Rizzuto who pleaded guilty to hiding money in a Swiss bank account didn't get jail time. Just fess up and pay the damn taxes!
I repeat. He is not going to jail for this, however, he does need to deal with it as it will not go away and interest and penalty continue to accrue.
 

toguy5252

Well-known member
Jun 22, 2009
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Other distributors within the company have been using independent salesman for years. As well, most, if not all distributors that have been around for any length of time have been audited. I would prefer to keep them independent.
Do not assume that just because you call someone an independent contractor that he/she is. I can tell you that there are indicia which are looked at in each circumstance and the individual may not in fact be an independent contractor as a matter of law. You should consult your company lawyer. There have been many cases in which companies have been stuck with very large liabilities because they mistakenly believed that "employees" were independent contractors. Do yourself a favor and get some advice.
 

Primetime21

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Nov 27, 2001
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The issue of whether someone is an employee or not can be addressed with any C.A. (especially one who specializes in tax). In fact, anybody can visit the CRA website and find the page or authority for the criteria for most situations. I doubt that this case is that complex to necessitate a tax lawyer.
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You would be surprised. I have a friend who has a cleaning business and contracts the work out to her employees as she needs them. They signed a contrat that they would be sub-contractors and responsible for their own taxes, well that didnt mean anything. CRA audited one of her employees and they determined that she should have been issuing t4 slips for them as well as submitting deductions on their behalf. It wasn't a big business either, with the extra auditors CRA hired a couple of years ago it is the smaller and medium size business that seem to get more closely scrutinized.
 

canaille

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Dec 30, 2009
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The CRA has something called a Voluntary Disclosure Program, which allows you fess up to your non-compliance with the tax laws. I have particpated before in a corporate capacity. By making a voluntary disclosure before the CRA discovers you, they will not assess penalties and/or interest. Best of all you don't need a lawyer which costs money. I dealt directly with the CRA local office and their tax auditor will help you through the process. Best to call anonymously at first without providing any information about yourself to get familiar with the process. You will still need to pay the actual tax liability assessed, but more importantly you will not be charged with any criminal offense.
 
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