CRA restores preparer’s cancelled EFILE privileges

Canada Revenue Agency (CRA) staff has scope to exercise discretion on some minor administrative matters, but they don’t always use it. We’re alerting you to a recent situation in case you’ve had a similar experience.

After a tax preparer in Alberta was assessed a $150 penalty on his own taxes by the CRA, the last thing he expected was to have his EFILE registration revoked and his business and reputation put in jeopardy.

The lapses were due to minor oversights and mistakes — a T4 slip was missed and two T5s were sent to the wrong place. But once the penalty was assessed, the preparer’s EFILE registration was revoked in accordance with the CRA’s criteria for EFILE registrants.

CRITERIA TO PROTECT TAXPAYERS

THE CRA’S criteria aim to protect taxpayers and the integrity of the tax system by denying EFILE privileges to anyone with a history of tax fraud or tax evasion. Among other things, current registrants can have their EFILE privileges revoked if they are assessed a penalty under the Income Tax Act or Excise Tax Act.

But revocation isn’t automatic. For minor penalties, the CRA gives its staff latitude to determine whether the sanction is warranted case-by-case. The preparer says that all the CRA staff he dealt with were helpful and had sympathy for his plight, but they seemed unaware of or reluctant to use their discretion. The only solution offered was for him to file an objection and try to get the penalty and suspension overturned – a process that could take months.

CPA – CRA COLLABORATION

Recognizing that the practitioner’s situation could be a symptom of a wider, systemic problem, Chartered Professional Accountants of Canada (CPA Canada) alerted senior CRA management. After the CRA considered the matter, the preparer’s EFILE registration was restored. The CRA said, “We also took the opportunity to remind our Helpdesk staff to use the discretion outlined in their procedures when dealing with a penalty that is a minimal amount, and to communicate with headquarters if they have any questions or concerns when dealing with similar cases in the future.”

In the end, everything worked out for the preparer, and the CRA’s reminder to its staff could prevent more unwarranted revocations in the future.  

CPA Canada got involved in this case because of its concern about a broader systemic problem that could adversely affect other practitioners, contrary to the public interest.

Like any large organization, the CRA faces challenges in making sure their policies and procedures are followed. If you encounter problems like this in your CRA dealings, email Gabe Hayos and let us know.