Friday, April 8, 2016

KPMG protects Tax Scammers - Hires former CRA bigshots - Update

The Canada Revenue Agency's long-dormant court action against accounting firm KPMG won't go to court anytime soon.

A judge first ordered KPMG in February 2013 to hand over to the CRA the names of all the multimillionaire Canadians caught using an offshore tax dodge set up by the accounting firm in the Isle of Man, a scheme that was a "sham" and "intended to deceive". KPMG fought that order for years and now the next court date is nine months away. That means KPMG's appeal will be heard almost four years after the judge first authorized the CRA's request to get the names of the wealthy Canadians.

Jeff Sadrian
Jeff Sadrian left the Canada Revenue Agency and joined the upper echelons of KPMG at the same time as the government was pursuing the accounting firm in court. Until last July he was in the CRA's compliance division. He began working as a senior adviser for KPMG in "tax litigation and dispute resolution" in October. KPMG hired the 30-year CRA veteran at the same time that the tax agency was resurrecting legal efforts to force the accounting giant to hand over the names of the wealthy Canadians who used its offshore scheme.

The CRA said Sadrian worked on compliance files relating to international and large business matters. Sadrian joined another onetime top CRA executive, Paul Lynch, a former acting assistant commissioner who joined the accounting firm in May 2010 — straight from the CRA. Today they both work on the same topics: tax litigation and dispute resolution at KPMG.

Paul Lynch

Elio Luongo
In 2013, Sadrian appeared on a panel alongside Elio Luongo who is KPMG's head of tax. The two men were part of a discussion that dealt, in part, with international offshore tax evasion.

"Sometimes when we see a file, I don't know if it's tax evasion or tax avoidance so I just call it tax 'avoid-sion' — it's a combo," Sadrian told the audience of assembled tax lawyers, accountants and government officials.

It was revealed last week that the Canada Revenue Agency offered secret amnesty to scores of multi-millionaire clients caught red-handed using KPMG's offshore tax "sham" on the Isle of Man — a reprieve that was supposed to be confidential until it was revealed by a CBC investigation. ​At least 25 multi-millionaire Canadians used the offshore scam. While 15 'identified themselves' the rest have not and apparently don't intend to.
The amnesty allows for clients of the accounting giant KPMG to be free from any future civil or criminal prosecution — as well as any penalties or fines — for their involvement in the scheme. The clients simply had to agree to pay their back taxes and modest interest on these offshore investments, which they had failed to report on their income tax returns.

Documents show that the schemes had attracted at least $130 million.
Legal experts say even if the CRA wins the motion in civil court to get the KPMG names, that will just be the beginning of the process. If KPMG exhausts the appeal process, several more years will go by.

Dennis Howlett, executive director of Canadians for Tax Fairness says the government should pursue the case as a criminal matter. If that had occurred the CRA would just get a search warrant, usually within weeks.

"The CRA is pursuing this matter before the courts, and it intends to pursue it to the fullest extent possible," the prime minister said.
Monday, April 11, 2016. The federal government says it expects to recoup $2.6 billion in unpaid income taxes over the next five years with an “aggressive” plan to combat tax evasion. Revenue Minister Diane Lebouthillier explained today how the Canada Revenue Agency plans to tackle the problem in light of the massive Panama Papers data leak.

Lebouthillier said that money will be used to hire 100 additional auditors and add more resources to review international transfers of more than $10,000. The CRA will first review transactions involving the Isle of Man.