Iristel accuses CRA of lying in tax fight

In an increasingly bitter dispute with the nation's tax collector, Iristel Inc. has accused a Canada Revenue Agency employee of lying under oath in a court case related to an audit of the company, and has asked the Attorney General's office to investigate. In an Aug. 28 letter sent to the Attorney General's office, lawyers representing Iristel say that an April affidavit from the manager of the CRA's Aggressive GST/HST program, Vance Smith, includes a "deliberate mischaracterization" of conversations between the CRA and the CRTC about whether or not communities in the far north would be without 911 service should Iristel go under. Iristel has said that its survival hinges on the payment of tens of millions the company is owed in tax returns, but that the CRA is withholding because it suspects the company may be involved in a so-called "carousel scheme," in which it claims returns on taxes it didn't pay in the first place. In his affidavit, Smith said that CRTC officials told him that BCE Inc. covers the same areas covered by Iristel in the north, and that the CRTC was "not concerned that existing 911 services would be at risk should the applicant no longer be able to operate.” This statement, Iristel says in its letter to the Attorney General’s office, was the mischaracterization. Rather, Iristel goes on, the determination of lack of concern about 911 service in the north was made by the CRA, not the CRTC. Moreso, Iristel claims the call happened on a different day than Smith said it did, CRTC officials Smith said were on the call were not, and that the CRTC did not provide the information about specific northern communities Smith said they did. Iristel says it learned about those alleged discrepancies through documents it obtained from the CRTC through the Privacy Act, and is now asking the Attorney General to investigate Smith's affidavit. In a statement emailed to The Wire Report, the CRA declined to comment on the allegations, as well as a request for comment from Smith. Smith did not return a message left on his personal voicemail. "The confidentiality provisions of the Excise Tax Act prevents the Canada Revenue Agency (CRA) from discussing taxpayer information, and as such, the CRA’s general practice is not to comment on the specific details of court cases beyond what is in the public record," the CRA statement said. The agency also pointed to the Federal Court of Appeal's July decision, which the CRA statement said affirmed its argument that it was "entitled to determine whether any refund was actually payable through its audit and assessment process, before making a payment.” "The FCA noted that a 'pay now ask questions later' approach to GST claims is not consistent with the sound administration of public revenues," the CRA wrote in its statement. In that case, Iristel had asked the Federal Court of Appeal to force the CRA to turn over $63.2 million the company says it is owed in tax returns, but that the CRA is withholding while it conducts a pair of audits. While it overturned Iristel's request for the payout, the court affirmed Iristel's argument that the Federal Court has jurisdiction to review the CRA's conduct during the course of an audit. Iristel called the ruling a victory, saying in a statement at the time that "all taxpayers finding themselves in a dispute with the CRA won today because the court effectively told the CRA its bully tactics don’t wash.” The Attorney General's office declined to say whether or not it had opened any investigation as requested by Iristel, and referred questions to the CRA. Meanwhile, the Competitive Network Operators of Canada (CNOC) and the Public Interest Advocacy Centre (PIAC) have both written letters to Innovation Minister Navdeep Bains, saying they are concerned for Iristel's survival. "Based on public reports, and our conversations with Iristel, CNOC is concerned that the CRA’s sudden withholding of tax refunds pending a review of the merits of CRA’s investigation jeopardizes the financial stability of a competitor and telecommunications infrastructure provider," CNOC writes, "and thus puts at risk achievement of Canada’s telecommunications policy objectives." While it stresses that it takes no position on the merits of the tax dispute, PIAC writes in its letter to Bains that "we believe it is appropriate for your Department to ensure that the CRA is aware of the potential disruption to Canadians due to Iristel's business's possible discontinuance." "Any disconnection of Iristel services, porting of phone numbers, and general confusion induced by this service loss could significantly endanger public safety and put remote communities at risk," the letter reads. "These services are only more critical in the present circumstances, with Canadians relying on communications to deal with COVID-19 and 'normal' emergency connectivity." — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Adam Langenberg at alangenberg@thewirereport.ca

Iristel accuses CRA of lying in tax fight

News | September 14, 2020

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Iristel accuses CRA of lying in tax fight

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