There are valid reasons why one firm or person gets audited over another. The Canada Revenue Agency (CRA) uses a complex assessment method, not a random selection. The CRA can identify incomplete, incorrect, overstated, or otherwise suspicious returns using purpose-built tools and procedures. These "high-risk" anomalies catch the CRA's notice.
The Canada Revenue Agency (CRA) may conduct an audit of a taxpayer's books and records to verify the accuracy of tax returns and compliance with filing and payment requirements. Here's a rundown of some of the most typical errors people make during an audit by the Canada Revenue Agency.
Ignoring the CRA.
Some taxpayers may feel that the audit will go away by avoiding the CRA altogether. This is a disastrous strategy that hurts the taxpayer. You can't make the CRA go away by ignoring them. Instead, taxpayers who ignore their issues miss important filing dates, leading the Canada Revenue Agency to conduct an audit based on assumptions. Under such assumptions, reassessments are only sometimes fair to the taxpayer.
Providing unnecessary information.
To be helpful and transparent during an audit by the Canada Revenue Agency (CRA), taxpayers frequently supply too much or unneeded information. Regrettably, they sometimes provide information or make confessions that might further complicate circumstances. Understand that CRA auditors actively seek discrepancies. Giving the CRA details they don't need gives them more opportunities to identify mistakes. Before contacting the CRA, taxpayers should carefully consider hiring legal counsel.
A tax audit by the CRA is a tedious and time-consuming ordeal that may become too much to handle. Taxpayers take their reassessments at face value, even when they know the CRA is incorrect, just to get the ordeal over with. Never give up because you're having trouble. Taxpayers who disagree with the IRS's assessment should hire a tax attorney to challenge the decision.
Reduced tax obligations are a typical result of having an outside party analyze the audit. The Canada Revenue Agency also often makes mistakes during audits that taxpayers are unaware of. If a taxpayer gives up and accepts the CRA's work, including any mistakes, the taxpayer accepts the task. Having an expert examine the CRA's work is a prudent decision that may save taxpayers thousands of dollars.
When receiving any communication from the CRA, taxpayers should immediately contact a skilled tax attorney for help. By consulting with the experts at Farber Tax Law, you may get assistance at every stage of the audit process and potentially save thousands of dollars in taxes. Former CRA employees and attorneys now work together to help you through every step of the audit process and find a satisfactory solution to your tax issue.