A spokesman for Revenue Minister Kerry-Lynne Findlay says the unwarranted tax refund has since been recovered and he suggested Thursday that federal employees responsible could face punishment.
The statement came after a published report that the Canada Revenue Agency gave the since-deceased Nick Rizzuto that refund when, in fact, he owed the taxman $1.5 million.
Rizzuto had just been arrested as part of a sweeping police operation in November 2006 and sent to prison. The elderly Mob boss was eventually released, and was murdered in his kitchen in 2010.
Enquete, an investigative program on Radio-Canada, says Rizzuto received a cheque dated Sept. 13, 2007 for more than $381,000. A photo of a cheque worth $381,737 made out to Rizzuto was posted on Radio-Canada's website on Wednesday.
"As has been reported in the media, the income tax refund that was incorrectly sent to Rizzuto has been recovered in its entirety," said an emailed statement from Findlay spokesman Alex Seguin.
"This Government considers any misconduct by tax officials unacceptable. Those responsible for misconduct must be held accountable. We are acting to hold people accountable."
Radio-Canada, the French-language CBC network, quoted Jean-Pierre Paquette, a former Canada Revenue Agency auditor, as saying he told the Rizzuto family not to cash the cheque and that he even went to Rizzuto's home to get the cheque.
Paquette said he believes the cheque was probably the work of a corrupt civil servant.
The opposition assigned blame at the political level over the issue.
"The federal government of (Prime Minister) Stephen Harper is once again demonstrating its carelessness, its inability to manage the public purse," NDP Leader Tom Mulcair said in Montreal.
"It's a glaring case of incompetence from the Conservative government."
The federal government last year axed its Special Enforcement Program, an elite unit at the revenue agency that focused on organized crime.Suggest a correction