Why do people get audited? It could very possibly be that the CRA computer simply selected your tax return for tax audit. Or potentially your type of business is part of a compliance tax audit test program.
Most people feel frightened or worried once receive tax audit request letters sent by Canada Revenue Agency or CRA. It is necessary to understand some important aspects of tax audit to be able to deal with it successfully. Such as how CRA select tax audit targets, how the tax audit is conducted, etc.
How CRA select files for their tax audits?
To pick potential tax audit target, CRA typically use the following four methods:
1. Computer-generated lists
Most returns are selected for tax audit review from computer-generated lists. For example, the computer system can compare selected financial information of clients engaged in similar business or occupations and generate lists of returns with tax audit potential. From these lists CRA chooses specific returns to be audited.
2. Tax Audit projects
In some cases, CRA test the compliance of a particular group of clients. If the tax audit test results indicate that there is significant non compliance within the group, CRA may audit its members on a local, regional, or national basis.
3. Leads for tax audit
Leads include information from other tax audits or investigations, as well as information from outside sources.
4. Secondary files
Sometimes CRA select files for tax audit because of their association with other previously selected files. For example, if you are in partnership with another client, and that person’s file has been selected for tax audit, it is usually more convenient to examine all the records at the same time.
How are tax audits conducted?
If your return is selected for tax audit, an auditor will review your records at a CRA office or called office audit or at your place of business, also known as field audit. The tax audit usually includes an examination of the following documents:
– Information on file at the CRA, such as the returns selected for tax audit, financial statements, tax audit reports from any previous tax audits, and any other information on file; and
– Your business records including your ledgers, journals, bank accounts, sales invoices, purchase vouchers, and expense accounts.
The auditor will contact you and either request that you send specific records to a CRA office, or arrange a convenient date and time to start the tax audit at your place of business. Throughout the process, the auditor can get information from any relevant people.
Notice of a Desk Audit will probably arrive by mail and may require that you identify specific items on the return that are in question. You or your professional tax representative may be required to bring certain documents such as bank records to your local tax office for examination. This allows the tax man to check for unreported income. Generally speaking, tax office audits are performed with a Tax Examiner who will request various documents and explanations of deductions.
When a tax audit is scheduled at your home or office it should be considered a serious matter. The revenue agents handling these types of tax audits have received a great deal of training beyond the typical Tax Examiner. Naturally, during any type of audit, it can lead to audits of other tax years and other tax deductions.
Why get professional tax audit help?
While the auditor’s function is to insure compliance with the law, many government auditors are often pressed for time so they don’t always perform a comprehensive review of all appropriate documents. Plus, it’s often difficult for an auditor to be objective, assuring the taxpayer of his or her rights.
Very often, auditors request information without explaining how the information will be used, plus they may not explain properly what might happen to those missing information. Because of these issues, errors can occur on the part of the auditor and as a result, an assessment with error along with potential fraud penalties costing the taxpayer thousands of dollars. Never take chances with the CRA tax audit. Hire tax audit experts who will make sure your rights are protected.
As experienced tax professionals, we focus our tax practice on helping individuals and businesses resolve their tax audit problems. We bring a depth of financial and tax experience to the tax resolution arena along with a great deal of insight as to the most effective ways to handle an tax audit. We sensitively guide you through the procedure and explain exactly what you need to know and what to do.
More often than not, we can arrange it so that you will not have to meet with an auditor or tax agent. So, don’t go in alone. It’s a scary feeling to face the CRA alone and we can help make the experience less frightening. Remember, every taxpayer has the fundamental right of due process, fairness and representation.
It is very important to hire tax resolution experts who can professionally asses your options, defend your position and get you all your rights.
In summary the tax audit services we provide include: CRA Income Tax Audit, GST/HST Tax Audit, Payroll CRA Audit, Tax Audit Representation, Help with WSIB Audit, etc.
What You Need to Do Immediately to Fix Your Tax Audit Problems?
If you feel you will be audited by CRA pretty soon or you have received letters or calls or personal visit from the tax man, then you cannot afford to wait any longer! Do something to resolve your tax audit problems.
It makes far more sense, and will be less costly, to resolve your tax audit problem right away, rather than dealing with the financial burden of huge reassessment amount and other penalties later.
The first step is to stop procrastinating and running. Take action today!
Hire someone who is qualified and has the experience to help you survive the tax audit. Many people try to handle their tax audit themselves, resulting in disastrous financial results. Some even ended up fighting in court.
We have helped many clients with their tax audits. Our experience and expertise have led to superior results that even senior tax auditors respect. See that yourself in testimonials.
Get Tax Audit help TODAY by calling Tax 911 Now team at 877-918-2991 or go to Contact page.
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To begin with, we offer first time RISK FREE unlimited time consultation just to help you to understand the depth and complexity of your tax problems. We will also provide you the recommended steps to take to fix your tax problems. It is no obligation and thus it is completely up to you to decide what to do from there.
We guarantee the tax audit result we can get is much more beneficial than if you do it yourself. Save you thousands of dollars in addition to the relief of the awful stress. We take the emotional factors out of the process. We take care of the uncertainty for you.
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