The Canada Revenue Agency’s Voluntary Disclosure Program (VDP) has gone through a number of organizational changes over the past few years. For many years, disclosures were made to the local Tax Services Office. More recently, the CRA has moved the handling of disclosures to Regional Centres; Shawinigan – Sud Tax Centre for the Atlantic, Quebec, and Ontario Regions, Winnipeg Tax Centre for the Prairie Region and Surrey Tax Centre for the Pacific Region.
With the move of the VDP to Regional Centres, the CRA has implemented a new screening process. Screeners are now reviewing disclosure packages soon after receipt and are comparing the package to a CRA developed checklist. If any item on the checklist is missing or incomplete, then the CRA returns the package to the sender, along with a covering letter and a checklist that identifies the missing or incomplete information. There are, however, certain issues that have arisen with respect to the CRA’s screening process and use of the checklist.
First, it prevents a disclosure from being made by a taxpayer who does not have a social insurance number, business number, etc. If an identification number is not available, the disclosure may need to be made on a no-names basis while the taxpayer applies for an identification number.
Second, the CRA will not accept a disclosure if the amount in issue is not identified. This is problematic as, often, disclosures are made before the work needed to calculate the omitted or under-reported amount has been completed. In the past, this information was forwarded within 90 days of filing the disclosure and was an approach acceptable to the CRA.
Third, where the disclosure package is large, screeners do not appear to be reviewing all of the documents before issuing the letter and checklist. Therefore, it is advisable to use a covering letter for each disclosure package which identifies compliance with each item on the CRA’s checklist and a detailed explanation as to why any checklist item is outstanding. It is not yet clear whether, even upon explanation, the CRA will accept a disclosure if a checklist item is outstanding.