COIP - 2007 Tax Shelter Obligations
I participated in a tax shelter program through Canadian Organization for International Philanthropy (COIP) in 2007. Long story short: I received a generous return from CRA for that year. I was then audited and it was deemed that the tax shelter program was not lawful and ordered to repay the money I received from CRA plus interest. I repaid the money to the CRA and subsequently filed an appeal, which was coordinated by COIP.
In the couple years I was waiting to hear back on the appeal (I was advised it would take a while) I received a letter from a company called SunRX, stating that in order to fulfill the obligations of my program, I now have to repay the loan, either by a money payment or by supplying pharmaceuticals (medication) of equal value. This was quite a shock to me since it has been almost 6 years and I was convinced that my obligations were fulfilled for quite some time. So now this company wants me to pay around $1,000 including interest. I am very leery of this attempt to extract more money from me since COIP's charitable organization status has been revoked by the CRA, and I read an article in the newspaper some years ago basically stating that COIP's tax shelter was a sham.
This tax shelter cost me upfront around $2,400, then I paid about $700 in interest to the CRA when I was asked to repay the return I received. And now a company claiming to be representing my interest and to fulfill my program obligation, wants me to pay another $1,000. They have notified me in the last correspondence that if I don't settle the account by March 1, 2014, that they will forward this case to a collection agency.
I feel as if this tax shelter program was a hoax, I have no evidence (other than shiny, well pamphlets and brochures stating pharmaceutical aid was being sent to Africa) of the validity of this program and it doing what it claimed to be doing, that is helping people with HIV/AIDS in Africa. Now this company wants more money, and people like me, reluctant to pay MORE money to (what could be a fraud - since it seems to be) are afraid of the threat of a collection agency coming after us, and tarnishing our credit rating etc...
If anybody has any advice or experience with this I would be interested in hearing it. Thanks in advance.
I haven't had any experiences with COIP or any other tax shelter, but do have some thoughts.
Did you actually contribute the money, in cash, that you claimed as a tax credit? It seems that CRA rightly has a concern with tax shelters in that people were donating, say $1,000, and the company would issue a receipt for $10,000. The fact that you paid $2,400 to the shelter should have generated a credit of $960 for which CRA is asking for interest of $700 implies you actually claimed more than $2,400 on your tax return.
The new demands to extract money from you now seem odd. Did you actually sign a contract with them for services or to acquire a loan? If you did, you may have to pay up. If not, why just politely decline to pay?
You got yourself involved with some bad, bad boys here. Sounds to me like a fishing expedition - are you gullible enough to pay twice?
This might disappear if you ask for proof that you owe the money. Or ask your lawyer to write to them asking for proof that you owe money.
You were not the only one. A lot of people did fall for this scam or similar ones. Its unfortunate but true
It was right for the government to stop this sort of abuse. There are similar schemes still popping up, and when the CRA shuts them down, they will also pay dearly. A husband of one of my coworkers years ago was involved with a similar scheme. I remember when CRA came to their door, they ended up having to take out a mortgage to pay CRA back.
This year they will plan to take things even further. Anyone who plans to get involved with any similar organization, be prepared to hand over the "Savings" that were generated along with nice interest and penalties. Not to mention ruin your relationship with CRA forever.
However i think your particular situation now has to do with the charity attempting to extort further funds out of you. Do you have an initial contract with them? If so that contract will mention your obligation to them. If this money is not mentioned don't pay them,
They wont do anything to your credit
Also of note is the new rule, I wish someone can list the specifics, but when disputing or appealing with CRA, you will be required to put up half of the amount with CRA.
I will look it up later and edit the post. This will stop individuals from taking advantage of the time value of money.
To answer your question: you're absolutely right, the money I paid up front was for the interest on a loan that COIP "lent" in the amount of $12,000, to purchase the medicine units. The loan was then sold or transferred to another company which offered a lower interest. I must add that this was all part of the tax shelter program, all the arrangements were made, the paperwork was prepared by COIP, even for the responses to the CRA, including the application for reassessment.
I do have a contract signed, back from 2007 and it does state that at some point I will need to repay the loan, either by making a payment or with medication of equal value (i.e. $12,000).
I do remember from the seminar/presentation (sales pitch) on this tax shelter program, the money I paid up front was supposed to cover the interest, administration costs, as well as the purchase of medication to repay the original loan. This purchase to repay the original loan was supposed to be coordinated and arranged within the program.
5 years has gone by and I thought everything was taken care of and finalized, especially taking into consideration that COIP's charitable organization status was pulled by the CRA, after investigations revealed they were a fraud.
This boondoggle appears to have been an attempt at defrauding people who, like me, wanted to benefit on income taxes as well as help people in need of medication to control their ailments. If COIP orchestrated this scheme and there is no sign of medication being donated to Africa, should people who took part in the tax shelter be responsible to YET again fork over money to, supposedly, "repay" a loan with "medication".
When I called Integrated RM Inc., a company that's handling the unpaid account (from SunRX), they don't know anything about the details of the program (i.e. circumstances around the medication etc...) and recommended I contact COIP directly.
I contacted the financial adviser's office, through which I did this tax shelter, to book an appointment to see him next Monday. The previous meeting he was recommending I pay the outstanding amount to fulfill the obligations of my contract. I plan on taking the article from Toronto Star over with me indicating COIP is a fraud and see what he recommends I do moving forward.
I appreciate your and everyone's input on this! Thanks for your time and thoughts.
I do have a contract with them, and unfortunately it doesn't state that the money I paid up front will be used as interest for the initial loan, and enough to purchase medications to repay the loan...however that is something I remember very vividly about the tax shelter program. This was meant to be a one payment type program. The money people paid is supposed to cover everything needed. And now they are coming back for more....even more so after CRA has disallowed the donation and in their view the program is unlawful.
Originally Posted by Zeeshanbmerchant
Like I said, unfortunately I haven't found this anywhere in writing what the money I paid will be used for. Very cunning of them I must say.
well here is how i see it
They have sold your loan, for a discount to this collector, who is now going to attempt to claim it.
Obviously the entire program is a sham, good charities don't operate in the manner, but it wont help your case. The person collecting only know that you owe them money, since you were sold of to them.
Your answer is a simple one, was the obligation to them in the contract fulfilled. Did they deliver the medication, however your understanding of the obligation, and the consideration, and what is actually written in the contract are two very different things
First question i have upfront is why are they only asking for a $1000. Why not $12000. Seems to me if the obligation is fulfilled and if $12000 is the consideration in the contract than they should ask for the full amount. Unless of course a $1000 maybe the type of threshold for people to pay to make this problem go away
Furthermore you also have another point. If the party you signed the contract with, is considered to be willfully negligent in carrying out fraudelant affairs, is the contract legally binding,
But first i want to know why $1000. Why not more
Last edited by Zeeshanbmerchant; 2014-01-28 at 11:41 PM.
Talking to a lawyer could be extremely valuable. Even if they can't find something that invalidates this they may be able to make it too expensive to keep chasing you down.
SunRx in their letter "Statement of Account Payable" summerizes my account as owing 1,044 Medicine Units - valued at $12,000
Interest Currently Due - $353.39
They offer 2 Options for repay the account:
Option 1: To settle your debt with pharmaceuticals - $756 + $353.39 (interest) = $1,109.39
Option 2: To settle your debt with a CASH payment - $612 + $353.39 = $965.39
The reason it's around $1,000 and not $12,000 is because they claimed they have found suppliers outside of Canada that can sell the same medication (valued at $12,000) for a discounted price. Which is why this tax shelter seemed legitimate and enticing in the first place.
The option to settle the account with a cash payment is slightly lower than settling it with pharmaceuticals, and it seems to me that people, just to make this go away, will opt to pay the lower amount (pay in cash) which in turn is beneficial to the collector. I wonder if people chose option 1 and repaid with pharmaceuticals, if the collection company would actually attempt to purchase the medication. This seems so far fetched and convoluted that I sincerely doubt it.
There is now 4 companies involved in this kerfuffle: COIP (original company), PanAggregate Financial Corp., SunRx, and Integrated RM Inc. that is acting on behalf of SunRx to discuss the overdue account.
I'm surprised there isn't more to be found on the Internet, people in the same situation, because I know there is people out there that must be furious and feel duped.