Enforcement notification - Tax evasion - Director of temporary staffing agencies convicted of tax fraud for failing to report over $2.3 million

TORONTO, Sept. 14, 2023 /CNW/ - The Canada Revenue Agency (CRA) announced today that Sung Oh Chung, of Thornhill, Ontario, was sentenced in the Toronto Courthouse on September 12, 2023, to a conditional sentence of two years less a day and a fine of $681,235, after pleading guilty on March 21, 2023, to fraud over $5,000 under the Criminal Code.

A CRA investigation revealed that Chung failed to report personal income in the amount of $2,310,678 on his individual income tax returns for the years 2012 to 2016 inclusive. Chung appropriated these funds from unreported sales and from unreported or unremitted Goods and Services Tax/Harmonized Sales Tax of Sovereign Staffing Inc. (SSI) and Talent Savvies Inc. (TSI), of which he was a director. By doing so, Chung evaded a total of $681,325 in taxes.

SSI and TSI provided temporary labour services in the Greater Toronto Area and used multiple bank accounts for their business operations, but only reported one account to the CRA, allowing Chung to appropriate some of the funds from the other bank accounts used.

Chung was required to pay $500,000 within 24 hours of sentencing, with the balance to be paid before September 11, 2025. 

All case-specific information above was obtained from the court records.

Chung's business partner, Kwang Won Lee, pleaded guilty to one count of fraud over $5,000 under the Criminal Code and was sentenced on September 7, 2023. For more information, see Convicted of tax fraud: temporary staffing agencies' director fined $999,000.

In addition to the court imposed fines and/or jail sentences, convicted taxpayers have to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA. 

Tax evasion is a crime. Falsifying records and claims, wilfully not reporting income, or inflating expenses can lead to criminal charges, prosecution, court imposed fines, jail time, and a criminal record. From April 1, 2022, to March 31, 2023, there were 31 convictions, with court imposed fines totalling $6,925,440. These taxpayers were sentenced for wilfully evading payment amounts totalling $8,142,512 in federal tax. Out of the 31 convictions, 12 individuals were sent to jail for a total of 32.7 years.

The CRA is dedicated to maintaining the integrity of Canada's tax system, thereby contributing to the social and economic well-being of Canadians. The CRA continues to aggressively pursue tax evasion, and false claims with all the tools available to it. The CRA works to make sure that individuals and businesses report all income earned and only claim benefits to which they are entitled, so that important benefit programs can be administered to those who need them. Any individual or business who underreports income, or claims losses or benefits to which they are not entitled may have to repay the benefit amounts and may be subject to other possible action.

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SOURCE Canada Revenue Agency