Help lawyers help charities
Lawyers should not have to resort to paper-based workarounds to assist clients with their charity applications.
The Canadian Bar Association’s Charities and Not-for-Profit Law Section acknowledges how successful the Canada Revenue Agency, or CRA, has been in increasing the proportion of charity applications that are accepted thanks to the Charities IT Modernization Project, or CHAMP. But lawyers acting for charities face a number of difficult challenges with the MyBA online portal that result in extensive delays for clients.
In particular, obtaining an authorization to access a client’s online CRA account through the agency’s Represent a Client (RAC) service is unduly time-consuming and inefficient. The Section is requesting a consultation between lawyers who use the RAC service and CRA personnel with detailed knowledge of the service to better understand how information about new corporations, trusts or unincorporated associations is gathered and populated, and what the verification steps are to grant lawyers online access to their clients’ accounts.
Incorporation and charity applications
Clients often retain a lawyer both to incorporate their organization and complete their application for charitable status. This is usually part of a single retainer since incorporation documents setting out the charitable purposes are prepared at the same time as charitable status applications. It is important for lawyers to access the charitable status application prior to incorporation to ensure the client’s charitable purposes adequately encompass the charitable activities.
At the moment, it is not possible for lawyers to access a client’s account prior to incorporation, which forces them to incorporate first in order to get a business number with the CRA, which they then use to request access to the corporation’s online CRA account via the RAC service to obtain a temporary registration number and complete the charity application. Lawyers often have to use paper copies of the application before finalizing the charitable purposes of an organization and incorporating it. As the Section notes, this is not efficient. And neither is the impossibility to download an application except as a “print to PDF” document which does not always print accurately and is difficult to edit.
The CRA recently added extra security to the process for lawyers to gain access to a client’s business account. In addition to submitting a request signed by one of the incorporators through the MyBA online portal, the owner or director of the business has to give consent to the CRA directly by phone. If the CRA is unable to reach that person, the authorization is rejected without notice to the lawyer who filed the request.
Compounding the problem is that when the CRA calls someone over the phone, it is usually from a blocked number. “In today’s realities,” the Section writes, “a successful authorization is extremely unlikely. We have all received phone calls purporting to be from the CRA, asking for information, trying to collect money or threatening to show up with a sheriff if we do not pay. Phone calls received from the CRA, especially originating from a blocked number, are no longer a trusted means of communication.”
What information is included in a client’s account?
Another concern is that lawyers do not know what information about a business owner or director is collected, and how the CRA’s system populates or updates those accounts. When a business number is assigned, the Section explains, “we understand that the CRA database is populated with initial information, presumably from the incorporation documents. We do not know if the CRA system is updated when changes to directors are reported by a corporation to the applicable corporate ministry.”
This is a problem because a request for online authorization may be cancelled if information is missing on the account. This makes it hard for lawyers or their clients to determine whether the CRA has the information it needs to contact a business owner or director to verify a request for authorization.
“As lawyers representing new corporations, CBA Section members provide all the information through the incorporation process. We are unable to provide the balance of information the CRA needs on behalf of our clients because we are not authorized to do so. Therefore, the CRA often does not have the information it needs to verify authorization requests,” the CBA submission reads.
One possible workaround would be for clients to contact the CRA directly and give their information themselves. But most of them “retain lawyers expecting them to look after the charitable registration details and set up, and do not wish to do it themselves,” says the Section.
And even if they did, the CRA does not leave a call-back number if the business owner or director is not available to take the agency’s call, “because there are no staff resources to answer them. If clients call business enquiries to provide this information, whether in response to a call from the CRA or on their own initiative at our request, they may be on hold for a long time. This is not efficient for clients,” the Section adds.
The only available process for lawyers to provide the necessary information is a paper-based workaround that involves obtaining a signed authorization form for offline access and faxing it to the CRA with a letter confirming the business owner information. As the Section notes, this process is “extremely inefficient and results in significant delays (generally weeks) to provide client services.”
Better solutions are needed, and the CBA Section is looking forward to working with the CRA to improve the service experienced by lawyers and their clients.