Recovering From a GST/QST Filing Error – Success Story

A Montreal retail business made a simple GST/QST filing mistake but that small error snowballed into refund freezes, warning letters, and the threat of a Revenu Québec audit. The owner was overwhelmed and feared thousands in penalties. With professional intervention, the business not only fixed the error but also recovered missing refunds and restored perfect compliance.

This success story shows how a retailer bounced back quickly from a tax filing error that could have become a serious problem.

The Problem: One Filing Error, Big Consequences

The retailer submitted a GST/QST return with:
• incorrect tax codes
• misreported sales
• missing ITC/ITR documentation
• POS errors that overstated taxable revenue
• duplicated expenses
• a mismatch between deposits and declared sales

Revenu Québec immediately noticed the discrepancy.

Consequences began piling up:
• refund held
• request for information letter issued
• account flagged for review
• next period’s filing blocked pending clarification

What seemed like a small error became a major operational disruption.

Step 1 — Diagnosing the Source of the Error

Mackisen performed a detailed audit of:
• POS exports
• bank deposits
• accounting system entries
• supplier invoices
• GST/QST coding
• sales vs. refunds
• merchant processor reports (Moneris, Square, etc.)

The core problem was identified:
Incorrect POS configuration and duplicated entries in accounting software.

Step 2 — Cleanup and Reconstruction

The CPA team:
• corrected sales totals
• removed duplicate revenue entries
• rebuilt ITC/ITR schedules
• matched deposits to actual daily sales
• ensured supplier invoices had valid GST/QST numbers
• separated refundable and non-refundable expenses

A full correction package was assembled.

Step 3 — Correcting and refilling the GST/QST Return

Mackisen:
• recalculated the correct GST and QST amounts
• prepared an amended FPZ-500-V return
• drafted a clear explanation letter for Revenu Québec
• included documentation supporting every adjustment

The revised filing addressed every discrepancy the auditor flagged.

Step 4 — Communicating With Revenu Québec

The CPA team handled all communication:
• responded professionally and promptly
• provided clear reconciliations
• explained the POS error in detail
• demonstrated transparency and good faith

This eliminated the need for a formal audit.

The Outcome

The business:
• avoided penalties
• avoided a full audit
• recovered its held refunds
• restored its GST/QST account to good standing
• implemented proper POS and bookkeeping processes
• gained confidence in compliance

What could have been a multi-thousand-dollar reassessment was resolved successfully.

Key Lessons

• Small GST/QST errors can escalate quickly
• POS systems must be configured correctly
• Refund holds are preventable with proper documentation
• Self-correcting early prevents audits and penalties
• A CPA-led response is far more effective than trying alone

Client Quote

“I thought one mistake would ruin everything. Mackisen fixed the filing, explained it to Revenu Québec, and saved me from an audit. I’m so relieved.”

Common Questions

Can I amend a GST/QST return?
Yes adjustments and amended returns are common.

Will Revenu Québec forgive mistakes?
If corrected quickly and professionally, yes.

Are retail businesses high-risk for audits?
Yes because of high-volume transactions and POS issues.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps retailers quickly resolve GST/QST filing errors, recover refunds, prevent audits, and implement systems that keep compliance strong.