(February 5 – 16:50 ET) – The Canada Customs and Revenue Agency is reporting that a tax preparer in Markham, Ontario, was $15,600 and sentenced to a 90 day jail term after being convicted of 52 counts related to the misuse of social insurance numbers

Figures and Data (Canada) Inc., a tax preparation firm, and Prakash (Peter) Khanna, its operating director, were also fined $645 each for evading federal income tax. Khanna was sentenced to a further 90 day jail term to run concurrent with the first sentence.

CCRA says Khanna had a list containing the names and social insurance numbers of 52 former clients faxed to a large number of accountants and tax preparers, primarily in the Durham region. Khanna alleged with a notation on the list that these former clients were people who deliberately tried to “scam and cheat” him and his company. The list, titled “Red Alert”, was intended, according to Khanna, to warn other accountants and tax preparers of individuals who were delinquent in paying for services they had received from the company. Khanna did not obtain written consent from each of the listed individuals to transmit or communicate their social insurance numbers to anyone other than the CCRA.

Furthermore, the company created, issued, and filed with CCRA T4A slips, T4A-Pension Superannuation and Other Income Information Slips, in the name of some of the individuals on the list of clients even though they were tax clients of the company and had never performed work for the company or Khanna. By doing this, Khanna claimed a false expense for part-time wages in the amount of $18,817 on the 1995 corporate income tax return for Figures and Data (Canada) Inc. and thereby evaded $1,290 in federal income tax.

CCRA issued a reminder to tax preparers that the collection and reporting of social insurance numbers and business numbers places an important responsibility on the preparer of tax information slips or income tax returns. The agency says an individual’s social insurance number or business number is protected under the Privacy Act, as well as the confidentiality provisions of the Income Tax Act, that ensures that the use of the S.I.N. or B.N. is strictly for tax administration purposes.

Any person communicating, in any form, the social insurance number or business number, for any purpose other than that for which it was provided to the person, is guilty of an offense and subject to prosecution by CCRA.
-IE Staff