Sounds Too Good To Be True?

Wow. Do I have a story for you.

I just found out of a Charity Scam that went around a few years back whereby loads of people "invested" in this start up charity and for their efforts, got large tax refunds immediately after. The returns were in the 17% range for someone who made $55000.

Apparently, people were asking their family members who couldn't afford to "invest" to put through these receipts on behalf of others who can. When the refunds would come in the mail, it "confirmed" that this was legitimate and subsequently set off a fury of activity and many an investment account were cashed out in order to participate in this "charity".

Fast forward 1 year. The scam was revealed in the papers. I didn't pay any real attention. And Revenue Canada started its investigations.

Someone I know told me they got their letter of re-assessment last summer. The government wasn't allowing this charitable donation and they want their money back with interest. For this person, it means $19350 for something that happened in 2005.

It didn't end here. There was a second "donation" in 2006 to the tune of $60000. So they are anticipating another audit result to appear and this is causing sleep disturbance. Monies has already had to be borrowed in order to pay back what is owing to the government.

The most difficult thing about this for me to understand?

This person allowed a family member to use their income tax form to put it through and monies gotten from the donation was given to the family member. Now that the government isn't allowing this claim through, the family member has refused to pay back this person. There have been people who have had to declare bankruptcy over this.

The charity wasn't a charity. But, allowing someone to claim something that isn't yours on your tax form is fraud. It is not different from carrying someone else's stuff you know nothing about in your luggage for them at an airport...

I feel awful for this person. The family isn't a family anymore. I suggest they continue to ask for the former family members (Son and ex-wife) to do the right thing and own up to making a poor decision and let's fix this situation together.