It’s only a matter of time.

If you’re evading taxes, and the CRA isn’t after you, don’t think you’re safe. It’s only a matter time of before the Agency tracks you down.

Why haven’t they found you yet? Simply put, the Canada Revenue Agency presently lacks the human resources to process the “dead” data they have on millions of Canadians. But the situation could change at any time.

As with other arms of Government, the “Agency” will eventually begin to mine its own dead data using identifiers like your SIN or date of birth. Contrary to what most people believe, the Agency has not forgotten about you. It’s just sitting on your file for lack of effective enforcement ability. From its point of view, your case will only get easier to prosecute with the passage of time. As with any other crime anywhere, there is no time limit in law for the Agency’s agents to act and enforce criminal provisions of the Income Tax Act. There is, however, a time limit for which the Government will give a tax amnesty. So if you are evading taxes, you need to come clean NOW!

For years, the Agency has been trying to increase their numbers of auditors and investigators to more forcefully enforce the tax laws. The response from past governments, however, has been always ambivalent. The Agency thus has had to contend with limited budgets from Government and huge amounts of data on residents which could never be checked using manual methods. All in all, this led to less aggressive enforcement of the law.

The lack of government resources has forced the Agency to put pressure on accountants to act as their enforcement agents, encouraging accountants to advise their clients to come forward to correct their tax delinquencies as administrative actions. This creates an extremely dangerous mindset for the delinquent taxpayer, who is misled into believing that failure to file and tax evasion are not criminal offenses. The prevalent counsel of accountants, encouraged by the Agency, does not make proper reference to the law. Thus the tax offender is denied his or her legal right to the protection of legal counsel for the resolution of his/her tax crime, exposing the tax offender to criminal prosecution and penalties.

As technology becomes more affordable, the environment is slowly changing in big organizations like the Agency. They now have the tools to scan the SIN numbers and dates of birth in its files, transforming “dead” data into living taxpayer transcripts that can be analyzed for filing anomalies that may signal tax evasion. Beginning with a single piece of data, the Agency can develop many investigative leads until they identify the cases with the richest potential. These cases can then be handed over to agents for field investigation and possible prosecution. Thus the need for human resources is diminished and the opportunities for successful prosecution and collection is enriched.

Such investigative empowerment will embolden the Agency and harden its attitude vis-� -vis tax offenders. At the time of writing this blog, the Agency is already re-directing resources previously focused on Appeals to Enforcement of the law.

Armed with this depth of personal information, the Agency will increasingly deal from a position of strength and actively prosecute those who continue to believe, regardless of the law, that the Income Tax Act is entirely administrative.

The environment is changing, and so should the mindset of taxpayers. Remember, ignorance of the law is no excuse and there is no time limit on the government’s right to prosecute you for failure to file or tax evasion.

Thus, they will be able to apply their new-found knowledge to pursue you for tax offenses incurred at any time in your past.

A lawyer-protected tax amnesty can be negotiated to protect you from prosecution and penalties for any taxes offenses that occurred within the last ten years. But it is most important that you seek experienced legal tax counsel to represent you and protect you.

An accountant is not licensed to represent you in legal matters, and prosecution for criminal tax evasion is entirely legal, not administrative. Even more important, an accountant cannot offer you with the protection of solicitor-client privilege, and so can – and most likely will – be compelled to testify against you in tax court, revealing all your financial secrets and incriminating you with that knowledge.

Resolving past tax offenses should be an urgent issue on your personal agenda. And choosing legal counsel with the appropriate tax law experience is critical.