The Liaison Officer Initiative and Liaison Officer Assistance Request programs help small businesses, including sole proprietorships and partnerships, fulfill their tax obligations. These programs include educational and in-person support activities, with an emphasis on providing assistance at critical times during a business life cycle. They’re designed to help your clients do their recordkeeping and tax reporting correctly the first time, and include services such as Small Business Support Visits, Books and Records Reviews, Compliance Support Arrangements, and seminars. You and your clients can save money, effort, and time by taking advantage of these free, voluntary risk-free services.
The LOI selects new small businesses to contact about program services. In addition, the LOAR allows some taxpayers in the greater Montreal and Toronto areas to request assistance from a liaison officer. These programs are voluntary, so your clients are free to refuse their services or to withdraw from the programs at any time. They encourage small businesses to take advantage of their services since they’re designed to help avoid bookkeeping and tax reporting errors that can lead to potentially large penalties. If you have a client who isn't contacted by the LOI and wants to take advantage of these programs, they can request LOAR service. To qualify, the business:
- Must not be incorporated
- Must have business, professional, rental, or commission income
- Must have a postal code within the greater Montreal or Toronto areas
- Must be available to meet between 8 a.m. and 4 p.m. Eastern time
- Must not have already been visited by a liaison officer
Once one of your clients makes a LOAR, a liaison officer contacts it to assess whether an in-person visit or seminar is the best way to proceed. Your client is then free to refuse service or withdraw from participation at any time, worry-free and without penalty. The program does not use any information discovered during any part of the process to assist the Canada Revenue Agency in enforcement actions. This encourages active participation, which also saves the CRA time, effort, and money.
Small Business Support Visits
During Small Business Support Visits, liaison officers visit your clients’ places of work to answer tax-related questions and address related concerns, provide general information about tax matters, and offer advice about common small business tax preparation errors. Your clients are encouraged to seek answers to their concerns frankly and openly. Liaison officers do not share information gleaned during these visits or the topics of subjects discussed with the CRA. The intent of Small Business Support Visits is to help small businesses meet their tax obligations, not punish them for discrepancies.
Books and Records Reviews
During these reviews, liaison officers review your clients’ books and other records and offer guidance regarding recordkeeping completeness and accuracy. This voluntary, proactive service is not an audit and does not lead to CRA-driven changes to past tax filings, and is intended to help your clients avoid problems prior to tax filing. Any information discovered or subjects discussed during these visits is never shared with the CRA or anyone else. Taxpayers who participate in the LOI may take advantage of the Voluntary Disclosures Program without fear of penalty or prosecution to disclose and correct inaccurate or incomplete information not previously reported, as long as there hasn't been an audit or criminal investigation related to the disclosures.
Compliance Support Arrangements
Liaison officers draw up a written document known as Compliance Support Arrangements, which they submit to taxpayers and ask them to sign. CSAs authorize a Books and Records Review and outline CRA and taxpayer responsibilities, common small business tax errors, and industry benchmarks that your clients can compare with their own businesses. Your clients are under no obligation to sign CSAs, and in any case, signed CSAs are not legally binding. Industry benchmarks used in CSAs are established using information that a large number of similar businesses have reported, and may include ratios you can compare with calculations you derive from your clients’ books. Every business is different, so you shouldn’t necessarily be worried if your clients’ metrics stray from established benchmarks. These metrics may help you find and fix bookkeeping and reporting errors and advise your client on ways to improve the performance of their businesses.
In addition, the LOI and LOAR programs allow many small businesses to attend LOI seminars. These seminars provide information about common tax errors, basic bookkeeping concepts, financial benchmarking for particular industries, and CRA small business services. All of these services are designed to help you and your clients avoid common tax errors and spend less time, effort, and money figuring out and reporting tax obligations. In addition, the programs provide you and your clients with a unique opportunity to discuss tax-related concerns with CRA representatives without fear of reprisal and without triggering audits. Consider using these CRA assistance programs to find solutions to difficult issues, disclose and correct past discrepancies, help clients enhance profitability, and supplement your own ongoing client education process.