How to recognize a dishonest tax scheme promoter

(NC) Your tax dollars fund programs that benefit our communities. People who evade taxes through schemes or other frauds take resources away from all Canadians.

Some dishonest or questionable tax schemes are plans and arrangements that attempt to deceive taxpayers by promising to reduce the taxes they owe, either through large deductions or tax-free income. They also include other creative ways to convince people to pay less than what they owe.

Dishonest tax scheme promoters are people or corporations who promote or sell plans that seek to break or bend the rules of the Canadian tax laws. These promoters deliberately make false statements to assist their clients in tax cheating, all the while obtaining a financial benefit themselves.

Promoters of questionable tax schemes are often polished and professional. They may go to great lengths to make the schemes look legitimate, showing you letters from experts and sharp presentations. These charmers may even claim that the scheme is approved by the Canada Revenue Agency (CRA) while discouraging you from seeking a second opinion or speaking to the CRA directly. They also won’t do this out of the goodness of their hearts – promoters will seek a commission or payment from you.

It’s important to be on the lookout for promoters year-round, and especially during tax season, because participating in a dishonest tax scheme can have serious consequences for you. These include penalties, court fines, jail time and being required to pay additional taxes.

If you are approached by a tax preparer who offers unusually large refunds, this can mean questionable practices. Don’t assume that these schemes and the promised benefits are legal under the Income Tax Act. While most preparers provide excellent service to tax filers, there are dishonest ones who file fraudulent tax returns. If you suspect anything suspicious, get a second opinion.

Find more information at canada.ca/tax-schemes.