Calls flood snitch line to find Canadians who hide money offshore — thanks to 15% informants’ reward

Posted on July 14, 2014 in Governance Delivery System

NationalPost.com – News/Canada/Politics
July 14, 2014.   Dean Beeby, Canadian Press

The Canada Revenue Agency has 80 new leads on taxpayers who may be hiding money offshore after getting hundreds of calls on its new snitch line.

The flush of information has even the agency’s harshest critics acknowledging the initial success of the hotline, established Jan. 15 to help ferret out billions of dollars stashed overseas.

As of May 31, more than 800 people rang the number, drawn by a cash reward system that gives the tipster up to 15 per cent of the amount in taxes that the agency eventually collects.

Only 251 of those calls were actual informants, and only 100 went to the next required step, filing a written submission identifying themselves and providing detailed information on the alleged overseas tax evasion.

The agency closed 20 of those written files as dead ends, but is pursuing the remainder.

Details of the program’s first few months were obtained under the Access to Information Act, supplemented by information provided directly by the Canada Revenue Agency.

“I’ve been surprised, pleasantly surprised,” said Jonathan Garbutt, a Toronto tax lawyer who has been a vocal critic of the way the program was established.

“I’m not … as pessimistic as I was,” he said in an interview, adding that at least two of the tipsters have become his clients, and other potential offshore whistleblowers are consulting him.

The program is modelled on a U.S. counterpart that is much more generous, offering rewards as high as 30 per cent, for example. The Internal Revenue Service paid out US$104 million to one snitch after collecting US$5 billion in back taxes from Swiss banks.

The snitch must also reveal his or her identity, unlike another snitch line at the CRA, which is focused on domestic tax fraud and pays no rewards.

Sen. Percy Downe, long a critic of the agency’s efforts to collect on money hidden offshore, said he welcomes the initiative.

“I’m glad it’s finally up and running,” he said in an interview from Charlottetown.

But the reward level should match the American program, he said, and massive job cuts at the CRA raise doubts about whether it can properly pursue the leads.

“The department fails to put the resources into fighting overseas tax evasion and this is another example of it, rather than doing 30 per cent (rewards) they’re doing 15 per cent.”

The CRA believes this is a good start to the program. The early call and submission statistics indicate that there is interest on the part of informants to participate in this program
Garbutt also praised the American system, which generally requires tipsters to have legal counsel to help the IRS winnow out the soft leads. “They only see wheat, they don’t see chaff,” he said.

Garbutt also raised questions about diminishing resources at the agency, which has shed more than 2,500 jobs in recent years.

“They don’t seem to be overwhelmed yet, but I think they could probably get there pretty quick.”

The snitch program, with an annual budget of about $700,000, has not paid out any rewards to date.

“It may take several years from the date of entering into a contract with the CRA until the additional federal tax is assessed,” said agency spokesman Philippe Brideau.

“The CRA believes this is a good start to the program. … The early call and submission statistics indicate that there is interest on the part of informants to participate in this program.”

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One Response to “Calls flood snitch line to find Canadians who hide money offshore — thanks to 15% informants’ reward”

  1. Megan Richer says:

    In this article I agree with the Canadian Revenue Agency that this snitch line is a positive thing. Snitching can have a negative connotation which can prevent people from calling, but with this 15% reward it leaves people wanting to make the call when they know some valuable information. Being a student in the Social Work program, I take an interest in there being ways to help others who need it, and that is what the tax paying dollars do. I believe that this is something important that is being addressed because the money that gets put back into Canada, will result in more tax dollars that can be put into the economy so that society can have better resources.

    It is unfortunate that people can be greedy enough as to committing fraud like this. Some people view tax paying as if the money is being stolen from them to be used for purposes that are unnecessary, while this is not true. Things such as social assistance occur from taxes, and other sorts of things that give families extra help. Although no money has been given out in reward to the phone calls made yet, I think that this program will continue to raise awareness of the crime that is being committed, and more people will make the call and report the information they have. Reflecting on Sen. Percy Downe’s opinion on the 15% reward, I am not sure that I agree that it should be raised to 30%, because this can become a program that people participate in to purely make a profit off of, and can possibly turn people against each other. A question that I have is why Downe thinks that it should be raised to 30%, and what more benefits he sees coming from raising it the amount. Overall, I like the snitch line that was installed.

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