The Canada Revenue Agency (CRA) and the federal Department of Justice have struck a deal with Iris Technologies, the parent company of wireless carrier Iristel, to stop seizing the latter’s assets after accusing the company of being involved in a $63 million tax “sham” — reports CBC News.
According to the CRA’s Tax Court filings, Markham, Ontario-based Iris Technologies was the “banker” in an international carousel scheme exploiting weaknesses in the Canadian tax system. As a result, Iris allegedly tricked authorities into paying out $63 million in illegitimate tax refunds.
The CRA previously claimed that Iris Technologies participated in a scheme to “defraud” the Minister of Revenue and, by extension, Canadian taxpayers. In April 2020, Canada’s tax authority determined that Iris would have to pay back the $63 million that had been erroneously refunded to the company, in addition to gross negligence penalties.
Iris Technologies and its CEO, Samer Bishay, have vehemently denied these allegations. “If I really did that, why am I not in handcuffs? There is no proof,” Bishay said in an interview last year. The telecommunications company filed appeals across multiple federal courts and sued the CRA and several of its agents for $275 million in response.
In 2020, the Federal Court of Canada issued a writ allowing authorities to “seize and sell” Iristel’s assets to recover the disputed money. However, the CRA suspended all efforts to collect on Iris’s supposed debt after the two parties, without much fanfare, entered into a deal earlier this year.
In exchange, Iris Technologies took off the names of specific CRA officials from its lawsuit against the agency. Evidence of the deal was found when the CBC‘s The Fifth Estate reviewed Federal Court records. Bishay told The Fifth Estate back in February that his company “dropped” the names of certain CRA officials from its lawsuit “in return for [the CRA] not to collect.”
“We continue to sue the minister of revenue though,” he added.
The CRA’s allegations against Iris still stand despite the agreement, which Bishay said will last until the conclusion of the Tax Court proceedings between the two sides. Despite being four years into the legal battle, there has been little progress and no trial dates have been set.
According to the Department of Justice, the legal proceedings are being held up by Iristel’s refusal to provide emails and attached invoices related to the disputed tax refund claim that “intended to defraud” the government.
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