Charitable Donation Fraud
I thought it was important to focus on discussing charitable donations as this week's tax topic. The government is cracking down on individuals who have declared charitable donations from unauthorized charities on their tax returns.
You see, the Canada Revenue Agency publishes a list of authorized charities on their website and if you have claimed a donation to a charity that is not on the list you could be facing a re-assessment and significant interest and penalties.
The CRA requires that all receipts for authorized charitable donations have the following content:
1. a statement that the receipt is an "official receipt for income tax purposes"
2. your name and address
3. the charity's Business Number (BN)/Registration Number
4. the amount of the cash donation or the fair market value of the non-cash donation
5. the date of the donation (the year is sufficient for donations of cash)
6. the Canada Revenue Agency's (CRA's) name and Web site address (www.cra.gc.ca/charities) and
7. a unique serial number
If you have made a donation that you have declared on a tax return that is not on the CRA list of authorized charities or it was on the list but your receipt does not contain the information outlined above the CRA will show you absolutely zero compassion, not IF but WHEN you get caught.
If you are in this situation there are a couple of things you can do. One thing you should not do is attempt to negotiate with the CRA on your own.
1. If the CRA does not know about your improper tax filing, you can make an application under the Voluntary Disclosure Program that if accepted, will save you from penalties and prosecution.
2. If the CRA has sent you a re-assessment or has already questioned a donation you have declared you may be subject to aggressive interest and penalties. If you cannot pay the debt, the CRA determines that you owe, in full, the CRA will then proceed to collect their money through enforcement remedies that could include wage garnishments and bank account freezes.
Our Firm has handled so many of these cases and we can help you too. For more information about the CRA and charitable donations the Mark Feldstein and Associates website.