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BIR wants to skirt DOJ stage in tax evasion cases

By Iris C. Gonzales (The Philippine Star) Updated November 05, 2012 12:00 AM

MANILA, Philippines - The Bureau of Internal Revenue (BIR) wants to have the power to file tax evasion cases against individuals and companies without going through the Department of Justice (DOJ), a ranking official said.

This is among the reforms the BIR wants to pursue in the long run even as officials conceded it would take time for such a major initiative to be implemented.

In an interview, BIR assistant commissioner James Roldan said such reform would boost the fight against tax evasion.

But Roldan conceded it would take time and may face a lot of opposition.

“We would have to push for the amendment of the National Internal Revenue Code (NIRC),” Roldan said.

At present, the NIRC mandates the BIR to file a complaint first before the Department of Justice which would assess if there are grounds for the filing of a tax evasion case.

Roldan said this takes time.

More than the lengthy procedure, he said, there are times when the BIR complaints are dismissed by the Justice department due to a difference in assessment between BIR and DOJ lawyers.

Under its Run After Tax Evaders (RATE) program, the BIR has been filing before the Justice department tax evasion cases against erring individuals and companies.

It hopes to collect P50.773 billion in unpaid taxes from 133 cases it has so far filed before the DOJ since the beginning of the Aquino administration in 2010.

Since 2005, a total of 258 cases have been filed under the program.

Data from the BIR showed that of the total number of cases, at least 26 have been resolved by the Department of Justice and 14 have been filed in court.

Some 52 cases have been submitted for resolution while others are still for assignment or are still in the preliminary investigation stage.

Among the high-profile cases is the tax evasion case against former chief justice Renato Corona, his daughter and his son-in-law.

The BIR said it would continue to file tax evasion cases at the Justice department once every two weeks to send a message to delinquent taxpayers that the agency is serious in boosting collections.

Accounting for 70 percent of government revenues, the BIR hopes to collect P1.066 trillion this year.
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Tax evasion charges filed vs ex-chief justice

Posted on August 30, 2012 10:28:19 PM [ BusinessWorld Online ]
BY SIEGFRID O. ALEGADO, Reporter

FORMER CHIEF JUSTICE Renato C. Corona, his daughter and son-in-law were yesterday charged by the Bureau of Internal Revenue (BIR) with tax evasion totaling over ₱150 million.

Internal Revenue Commissioner Kim S. Jacinto-Henares told a briefing that Mr. Corona, who was ousted more than two months ago, was charged before the Justice department "for willful attempt to evade or defeat tax and for deliberate failure to file… income tax returns" for the years 2003-2005, 2007-2008 and 2010.

The same evidence -- Statement of Assets, Liabilities and Net Worth (SALN), deeds of sale, and bank accounts -- presented during Mr. Corona’s five-month impeachment trial were indicated by the BIR in its charge sheet.

Mr. Corona on May 29 was found guilty of betraying public trust for failing to declare his true SALN.

His tax deficiency has been set at ₱120.5 million, the BIR said in a statement.

The amount was arrived at "by comparing the increase in his net worth with his reported taxable income over time," it further noted

Also facing tax evasion charges were Mr. Corona’s daughter Ma. Carla Beatriz C. Castillo and husband Constantino T. Castillo III with alleged income tax liabilities of ₱20.24 million and ₱9.93 million, respectively.

The Castillos were dragged into the impeachment trial after the bureau found out that they bought certain properties named after Mr. Corona.

Mr. Corona allegedly earned more than what he declared, Ms. Henares said, noting the discrepancy in his declared income per alphalist (₱26.45 million) and true net worth (₱161.15 million). An alphalist indicates the list of employees, their compensation and taxes withheld.

A taxpayer is not required to file an income tax return (ITR) for purely compensation income under the BIR’s substituted scheme, but other income aside from compensation should be declared, the revenue agency said.

A BIR investigation further showed that Mr. Corona allegedly undervalued three of his properties and underdeclared cash by ₱17.3 million and ₱134.44 million, respectively, as well as failed to declare two other properties valued at ₱12.75 million.

The BIR also said Mr. Castillo supposedly "failed to file his ITR for taxable year 2003… and deliberately understated his ITR in the year 2009," while Ms. Castillo "failed to file an… ITR for the taxable year 2010."

The cases were filed as a result of the BIR’s Run After Tax Evaders program.

Mr. Corona, meanwhile, said he and his family "have long expected" the filing of charges, as they "have been exchanging communications with the BIR and have complied with their deadlines."

"As a man of law, I will abide by the processes… We will respond accordingly…," he said in a text message to reporters, adding that they are awaiting the service of subpoena and complaint.

"By the grace of God, we will overcome. This too will come to pass," Mr. Corona noted.

Mr. Corona was an appointee of then president now Pampanga Rep. Gloria Macapagal-Arroyo, but his assumption to the highest judicial post was rocked by controversy as it was done during an election ban on appointments. The appointment was, however, upheld by the Supreme Court which ruled that its justices are exempt from the constitutional restriction. He was impeached by the House of Representatives in December last year.
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BIR to hire 4,000 accountants, collection agents

Published on 21 August 2012 [ manilatimes.net ]
Written by Raffy Ayeng, Reporter

TO further improve tax collection, the Bureau of Internal Revenue (BIR) will hire 4,000 more personnel to be deployed in the field, particularly certified public accountants, collection officers and lawyers.

According to BIR Commissioner Kim Jacinto-Henares, the additional workforce will be detailed in mobile offices such as mall kiosks nationwide.

The new personnel will increase the BIR workforce of 12,000 to 16,000.

“We need to hire more people because other than the fact that some employees die, retire and resign, we also have to keep up with the demand brought about by the large and increasing number of taxpayers all over the country,” Henares said.

The bureau is strengthening its Run After the Tax Evaders Program. Given personnel constraints, the agency had focused on “big” tax evaders.

“Of course there are many people that we are running after. It’s just a matter of timing, and prioritizing the big ones. We are only few at the BIR, as compared to the number of taxpayers,” Henares said.

“We have a lot of programs on the table especially in the areas of enforcement, monitoring as well as making payment of taxes easier for the people. In order to either continually compel or encourage them to pay their respective taxes in good faith we have to hire more people to sustain our goals,” she added.

Reymarie de la Cruz, head of the bureau’s tax information and education division, said that the number of registered individual taxpayers as of last year was 18,957,477, compensation income earners numbered 10,254,400 and professional taxpayers, 1,821,599. There were 615,734 corporate taxpayers, and various taxpayers numbering 6.26 million, including estates and trusts; marginal income earners or those who are earning less than P100,000 a year; and those with one-time transactions.

The BIR chief said that the bureau had asked the Department of Budget and Management to allot funding for new hires.

 “This will not be a one-time process. This will be a continuing process, since the applicants have to take a series of examinations including psychological test. Then if they passed, interview will follow through, and then we will come back to them and inform them whether there are available positions waiting for them,” she said.
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Self-employed, professionals boost 2011 tax take

Published on 15 August 2012 [ manilatimes.net ]
Written by

THE Bureau of Internal Revenue’s (BIR) program to run after self-employed and professional tax-evaders has resulted to an increase in its tax collections in 2011.

According to BIR Commissioner Kim-Jacinto Henares, tax collected from self-employed individuals and professionals in 2011 increased by 37.8 percent to P10.19 billion last year from P7.39 billion in 2010.

“There is still a huge room for growth. Compliance among professionals and the self-employed is still nowhere near where it should be,” she said, adding that the publicized filing against tax evaders was working.

A study by the National Tax Research Center found that salaried Filipinos paid 6 percent of their income as tax on average, as against only 1 percent for self-employed and professionals. Finance Secretary Cesar Purisima recently directed BIR to raise the average tax from self-employed and professionals.

The BIR, which accounts for two-thirds of state revenues, is tasked to raise P1.066 trillion this year to help cap the national government budget deficit at P279 billion.

The BIR is mulling mulls to intensify its program to run after minimal taxpayers by sending more personnel who would pose as clients of self-employed individuals and professionals, and identify those who fail to issue receipts.

As of June this year, the BIR’s Run After Tax Evaders Program resulted to the filing of a total of 111 tax evasion cases worth a combined P39.73 billion since the start of the Aquino administration.

The Department of Justice had resolved 26 of these cases, with 14 filed in court. Another 52 cases had been submitted for resolution in various courts. In the first six months of this year, the bureau raised P521.159 billion, or 14 percent short of its P535.357-billion target for the period. 
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Tax laws enforcement vs delinquents to continue — Henares


Written by  Ed Velasco
Monday, 30 July 2012 00:00 [ tribune.net.ph ]

Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares warned all tax delinquents the claws of the law will not stop until everybody pays the right taxes due to government.

Henares was reacting to news reports the BIR under her helm has become too harsh as almost all sectors of the society are now taxed.

A sector that recently started paying a combined seven percent is that of small mining, particularly gold mining,  composed of 400,000 individuals.

The collection of two percent excise tax and five percent withholding tax against gold sellers caused the Bangko Sentral ng Pilipinas’ gold purchase to drop dramatically.

The tax also caused the sellers to sell their gold haul to black market where  the precious mineral is shipped out of the country.

“The policy is for the BIR to be an enforcement agency and not a customer service agency and make full use of the remedies allowed under the National Internal Revenue Code to enforce our tax laws and collect the taxes due the government in a timely manner,” Henares told The Daily Tribune.

She said law-abiding people need not to worry that BIR is becoming too harsh as the strict policy is only against those who don’t pay right taxes.

“If people are following the law and paying their taxes properly, they have nothing to worry. Only people who do not pay their taxes have to worry. It will be a gross injustice to those people who pay their taxes properly, especially the wage earners, if we do not do our job and make sure others do their legal obligation. I am only doing my job — which is to collect the right taxes,” Henares said.

Last year, Henares was also at the center of controversy when the Supreme Court (SC) ruled that the expanded value added tax (evat) on tolls was constitutional.

The SC ruling caused furor from millions of travelers using the six expressways in the country as it increased tolls by 12 percent.

The decision forced many motorists to pass by provincial roads to avoid paying exorbitant fees at toll roads.

Under Henares, the BIR filed a record number of criminal suits against alleged tax evaders that include celebrities, singers, doctors and even a pawnshop owner.

However, none among those charged for tax delinquency was sent to jail.
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BIR targets higher estate tax collection

By Maria Bernadette Lunas | Posted on July 16, 2012 | 12:01am
[ manilastandardtoday.com ]

The Bureau of Internal Revenue said it will check payments made by heirs of deceased property owners in a bid to raise estate tax collections.

BIR Commissioner Kim Henares said annual estate tax collection amounted to less than P1 billion, when it was supposedly “substantially higher.”

Estate tax, as defined by the BIR, is filed by the heirs when transmitting property to their name upon the death of the owner. It is not considered a tax on property.

The BIR, under the present tax rates, requires heirs of deceased persons to pay a tax equivalent to 20 percent of the value of the estate of the deceased.

The agency said it was intensifying the campaign to collect estate taxes amid the huge discrepancies between the number of deaths recorded by the National Statistics Office and the number of estate tax returns filed.

Data from the NSO showed there were 441,956 deaths in 2007; 464,581 in 2008; and 480,820 in 2009.

The BIR, however, said there were only 29,198 estate tax returns filed in 2007; 29,863 in 2008; and 26,811 in 2009.

Estate tax revenues amounted to only P649.9 million in 2007; P854.9 million in 2008; and P876.8 million in 2009.

Finance Secretary Cesar Purisima earlier said the government could actually generate “more than a billion from estate taxes in a single year,” adding that in some cases, the amount could go as high as P5 billion for a single family.

The BIR said it would coordinate with the NSO in monitoring deaths aside from other measures to determine estate tax delinquency in order to plug tax loopholes.

The agency discovered that some individuals had attempted to evade payment of corresponding estate tax by transferring properties with no declaration of death of the owner.

“Once the executor or administrator or any of the legal heirs failed to pay in six months, apart from the tax there will be surcharge and interest. And if they did not declare the estate and the BIR find out, they could be imprisoned,” Henares said.

“It’s like taxi meter.  At one point, the heirs might not get anything as their tax liability is equivalent to the property that they will inherit,” Henares said.
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KNOWING YOUR BIR REGULATIONS AND ISSUANCES

Revenue Regulations (RRs)
are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes

Revenue Memorandum Orders (RMOs) are issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing.

Revenue Memorandum Rulings (RMRs) are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio

Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.

Revenue Bulletins (RB) refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue's position on certain specific issues of law or administration in relation to the provisions of the Tax Code, relevant tax laws and other issuances for the guidance of the public.

BIR Rulings are official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.