POLICE HELP TO WEED OUT GROW-OP TAX CHEATS

For pot growers in B.C., the taxman cometh. Police are now working
closely with Canada Revenue Agency auditors, who calculate how much
money busted growers would have been making in their operations, and
levy taxes accordingly.

"Every single grow-op that we now take down we actually refer that to
Canada Revenue, and then they'll do their own investigation," said
RCMP Sgt. Stu Seib of the Clearwater detachment, 120 kilometres north
of Kamloops. "They will often backdate and see how much . . . money
would've been made off the crops. They will charge for unclaimed
revenue. People are making quite good profit off the proceeds of
crime, and this way they're held accountable."

RCMP detachments across B.C. report serial grow-op offenders to the
CRA, said B.C. RCMP spokeswoman Cpl. Annie Linteau.

"If there's evidence of previous crops, then generally they are
referred," Linteau said.

Clearwater Mounties have pursued pot growers aggressively, initiating
property seizures for forfeiture. Three properties found with growops
have been forfeited to the province in civil court, and one is under
court proceedings.

But if authorities can't prove a property owner was aware of a growop
operated by a renter, police can't seek forfeiture. Tax laws and
charges of theft of electricity can be used to extract money from
growers, whether they rent or own, Seib said.

The City of Surrey in 2009 submitted a report to Parliament's justice
committee, asking for legislation to require police agencies and
municipalities to report to the CRA anyone "prosecuted for or
suspected of conducting an illegal marijuana grow."

Surrey officials calculated that in 2008 the 277 grow-ops found in the
city would have generated nearly $97 million in income. Taxes, if
paid, would have amounted to $28 million for the federal government
and $14 million for B.C. The report used an RCMP estimate of 20,000
grow-ops in B.C. to conclude growers evaded $3 billion in taxes annually.

The CRA accepts taxes on illegal income, said CRA spokesman Dave
Morgan. "Our concern is that individuals are reporting income
regardless of their source," Morgan said.

"If a person reported on their tax returns that their income was
earned from selling marijuana, we could not generally disclose this to
the police. When police have laid criminal charges, the CRA can
disclose taxpayer information when it can be demonstrated that the
taxpayer information requested is linked to the accusations."

The tax agency uses its Special Enforcement Program to audit people
suspected of evading taxes on illegal income.

"We would look at all forms of taxation, whether it's income tax or
GST/ HST," Morgan said.

A breakdown by province and type of criminal income was not available,
Morgan said.

For 2009-10 the SEP completed 928 audits across Canada, plus 1,999
actions to obtain tax returns, and 216 people were convicted of tax
offences, with 34 of them sentenced to prison, said a CRA report to
Parliament. ?