A simple way to test anyone who says you don’t need a tax lawyer to clean up your failure to file and/or tax evasion.

“It’s all talk…” This common expression refers to the fact that oral representations disappear, but the written word stays. In a court of law, the difference between “talk” and a written statement as evidence is enormous—for obvious reasons. When it comes to interpreting the Income Tax Act, taxpayers need to remember the difference between talk and a written statement. If a financial or other trusted advisor tells you that there is no criminality involved in your tax transgressions, don’t take their word for it. Get their opinion in writing. BEFORE you follow their advice. Here’s why:

Today there seems to be an incredibly widespread allowance for the interpretation of the Income Tax Act by non-lawyers. Although not licensed or insured to interpret tax law, many financial practitioners and advisors are bold enough to cross the line completely and advise their clients on the criminal provisions of the Income Tax Act. Sections 238 and 239 of the Act deal with failure to file and income tax evasion, clearly defining both actions as criminal offences. Meanwhile, many advisors assure their clients that they are qualified by the Voluntary Disclosure Policy of the CRA to deal with the resolution of tax offences. Others claim that the CRA will not likely prosecute, or that these sections are not really criminal offences. What these advisors all have in common is a lack of credibility and – more important – liability for their claims. Because it’s all talk.

Why should the opinion of a financial or other trusted advisor on a criminal (meaning legal) matter be trusted if the advisor won’t put in writing?

When someone represents something as fact, then his/her credibility and the likelihood of it being true is enhanced with a written warranty. This applies to merchants in the sale of goods, and so should it apply to non-lawyers. The lawyer, when retained, will provide you with a written legal opinion on the facts regarding the law. The credibility of the lawyer’s opinion is enhanced by the fact of his/her training and license to practice law, and supported by the fact that opinion is provided to you as a written statement of opinion.

Failure to file and/or tax evasion are clearly offences under the Income Tax Act – even if you are not under investigation by the CRA. To state otherwise is negligent and playing roulette with the client’s personal freedom and wealth. Should your accountant or other trusted advisor say tax violations are not real offences, or that it is unlikely the CRA will prosecute, ask for the opinion in writing. Here’s an opinion letter — drafted by a lawyer — that you can ask them to sign to support their opinion and involve them more personally in your situation by assuming a share of your risk.

Remember, the “talk” will disappear, but the writing stays.

Over the past year, there have been a few professionals equating outright a tax amnesty with the Government voluntary disclosure program. The reasons for this vary but they all have something in common. They all deal with tax evasion on an administrative rather than legal basis. Simply put, they are all sounding boards and promoters of Government policy and lack any legal analysis or content in what they say and represent to the public. They forget, particularly those of combined accounting and legal training, what matters above all for a lawyer, is their client’s rights under law. They forget the differences between a voluntary disclosure POLICY and the protection of the client’s rights in the legal sense. Most importantly, they forget that they are dealing with criminal activity.

The voluntary disclosure program/policy is essentially a system of procedures and protocols adopted by Government. It is easily cancelled by the administrators who put it in place. It is a policy to entice the surrender of tax evaders and/or individuals who have failed to file. It is an administrative device with little regard paid to legal questions such as the individual’s right against self-incrimination or the privilege between a client and his lawyer. It is left to the individual’s lawyer to position his client so that the information provided during the process with the Agency is subject to legal rights. Those lawyers that do not regularly deal with such legal questions will find this an arduous task.

Many professionals dealing with voluntary disclosure as POLICY forget that tax evasion and failure to file are criminal offences under the Income Tax Act. An individual can be imprisoned for either offence. Everything an individual or his representative say or deliver to the CRA can be used against a taxpayer should it decide to prosecute. Unquestionably, the lawyer is best equipped to deal with tax evasion and failure to file at any stage. However, should there be little or no legal content to the process employed by the “lawyer” and it simply mirrors CRA’s administrative policy, it can be argued that the client has waived all legal rights and privilege, among other things. Succinctly, the client’s only recourse in Court would be the “stupidity” of the “lawyer”. Not much of a defense in any case!

The individual and “lawyer” need to remember that the CRA has a mandate to collect as much money as possible and/or prosecute. Obviously, there is a need to understand policy at the Government level to fully represent the client. However, there is a more important need for “lawyers” to act as such and fully appreciate the client’s rights under law. Those who equate a tax amnesty with a voluntary disclosure POLICY act at their client’s peril. They are dealing with a criminal matter in administrative fashion and risk their client’s personal liberty and wealth.