RC199 VDP Form
Completing a RC199 form is a necessary step in applying for the CRA’s Voluntary Disclosure Program which can help prevent the potential of being charged with tax evasion and facing penalties, interest and possibly jail time.
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Applying for Voluntary Disclosure with the RC199 Form
If you have filed a previous tax return and made an error, or if you did not file a prior year return that should have been filed, there is an option that could be available to you. The Canada Revenue Agency (CRA) has a Voluntary Disclosure Program is that is designed to give taxpayers a second chance to correct previous returns or file old returns.
To apply for the Voluntary Disclosure Program, you will need to complete form RC199. If accepted under the program, you could have penalties reduced or eliminated. However, the process isn’t as straightforward as completing the RC199 form and then receiving relief.
What is the Voluntary Disclosure Program?
As mentioned, the Voluntary Disclosure Program (VDP) is designed as a second chance by the CRA. The general idea of the VDP is that you come forward and report honestly on prior year returns and, in exchange for providing this information, the CRA provides relief from prosecution and, in some cases, relief from penalties you would otherwise be required to pay.
To be accepted into the Voluntary Disclosure Program, you must meet the following conditions:
- Your disclosure must be voluntary. This means that you must apply before the CRA takes any compliance actions against you or a party related to you (e.g. your corporation).
- You must include all relevant information. For example, if you made two errors on a prior year return, your disclosure must include information on both errors.
- A penalty must apply. If you are not subject to a penalty by the CRA, the VDP is not for you.
- The information you are providing must be at least one year old.
- You must include payment of the tax owing. This is a new condition that was only added recently. If you cannot pay the amount owing in full, you may be required to make a payment arrangement with the CRA.
Beyond the RC199 Form: What You Should Know
As mentioned, applying for the VDP isn’t as simple as filling out a RC199 form and receiving relief. There are various factors that come into play that you should strongly consider before applying.
One is the existence of a new Limited Program. Starting in December 2017, the CRA introduced a new Limited Program that is geared towards those who have intentionally avoided their tax obligations. Under the Limited Program, an individual can still get relief from criminal prosecution, but they will not receive relief from penalties, other than gross negligence penalties. In addition, a taxpayer must waive their rights to object and appeal relating to the matter disclosed.
The potential issue here is that you will receive a different level of relief if the CRA determines that you willfully provided false or incorrect information. You cannot be certain how the CRA will interpret your situation until you have supplied the agency with the information.
When you apply for the VDP, you are giving the CRA information that it doesn’t already have. You must be very careful when doing so. Slipping up or making an error can lead to serious trouble. That is why it is strongly recommended that you work with an experienced professional when completing form RC199 and applying for the VDP.
Our expert team has a proven track record of successfully negotiating with the CRA. Not only does this give you the best chance of being accepted into the Voluntary Disclosure Program, but we can also provide assistance in negotiating a payment plan with the CRA.
For more information on how we can help, please contact us today.
Farber Tax Solutions can help you successfully deal with CRA problems. We utilize the experience of our tax experts to:
- 1| Offer a comprehensive solution that is focused on achieving the most favourable possible outcome for your tax issue;
- 2| Communicate with the CRA on your behalf and navigate the entire CRA dispute process; and
- 3| Offer a complete solution to your tax problems, including ex-CRA professionals and tax lawyers from Farber Tax Law.
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