With the series of tax evasion cases being filed by the Bureau of Internal Revenue (BIR) against individual and corporate taxpayers, it is very important to know the nature, scope and process of the Run After Tax Evaders (RATE) Program, which was initiated in 2005 by the Department of Finance (DOF) and BIR.
Pursuant to the RATE Program, BIR is mandated to investigate criminal violations of the National Internal Revenue Code of 1997 and assist in the prosecution of criminal cases that will generate the maximum deterrent effect, enhance voluntary compliance, and promote public confidence in the tax system.
Under the previous administration, 492 tax evasion cases were filed with the Department of Justice (DOJ). The biggest and most controversial is the P2.2-billion tax evasion case filed against Sen. Manny Pacquiao resulting in a freeze order on his bank accounts.
In the 2016 Annual Report of BIR, a total of 72 RATE cases were filed with the DOJ, with the estimated tax liabilities amounting to P10.72 billion.
However, the objective to prosecute high profile tax evaders is yet to be seen.
If you received a Letter of Authority (LOA) under the RATE program, it means the BIR found some evidence of fraudulent activities which you may have intentionally or unintentionally done.
a. Failure to file tax return/s
b. Failure to pay taxes
c. Deliberate underdeclaration of income or overdeclaration of expenses by more than 30 percent of that declared per return
d. Hiding or transferring of assets or income
e. Keeping more than one set of books of accounts
These seem to be common violations among taxpayers due to ignorance or greed to evade paying the right taxes. This is despite the seriousness of its consequences i.e., civil penalties resulting in the imposition of a 50-percent surcharge and criminal penalties resulting in imprisonment and/or imposition of fine upon conviction by the court, among others.
In fact, all corrupt BIR examiners and government officials are guilty of tax evasion since income from all sources including corruption and other illegal means is subject to income tax.
Unfortunately, like in the previous administration and probably in all governments, politics can determine who among the high-profile individuals or corporations will be charged tax evasion cases.
If the previous administration used tax evasion to impeach former Chief Justice Corona, the current administration is also using it to impeach Chief Justice Sereno, and allegedly deal with its ‘political enemies’ like Rappler and Dunkin’ Donuts of the Prietos.
The allegation may have some basis but caveat to all legislators and government officials that all of us, including all appointees and elected officials, may be slapped with a tax evasion case, if not now, in the future.
The power of the BIR to assess and collect the tax is extended to 10 years from the date of discovery of the fraud case. Therefore, any underdeclared assets and income in the submitted SALNs of all public officials may be used anytime to file a tax evasion case, if not now, in the future.
Once a prima facie evidence of fraud has been established, a formal investigation can be initiated through the issuance of a Letter of Authority (LOA) against the subject taxpayer. However, there are certain cases wherein the issuance of LOA is not anymore needed i.e.,
nonfiling of tax returns, unlawful pursuit of business, etc.
After the investigation and the existence of fraud was determined whether through direct or indirect approach e.g. Net Worth Method, a criminal case for tax evasion shall be filed with the Department of Justice (DOJ).
That’s why I am proposing a general tax amnesty to allow everyone, especially our politicians, to start afresh, especially in support of the comprehensive tax reform starting with the passage of TRAIN which aims to promote a simpler, fairer and more efficient tax system.
If we want the tax reform to work for all of us, we have to help the government especially BIR in running after real and big-time tax evaders in our neighborhood, circle of friends and even in the associations or business organizations including online platforms or services which are also required to register and pay their taxes.
Better advise them to avail themselves of the tax amnesty if it gets implemented or inform BIR of their unjust and fraudulent activities to evade taxes. We need to uphold integrity and honesty in paying taxes.
For individual and corporate taxpayers, whether you’re a top taxpayer or not, better do tax planning and compliance review to make sure you haven’t overlooked any tax regulations or make sure your accountant or bookkeeper files and pays your taxes correctly and on time.
For accountants and tax agents, whether you’re a Certified Public Accountant (CPA) or not, but especially if you’re a CPA, please be honest in preparing the financial statements and tax returns of your clients. Don’t be a conduit for evading taxes.
For our tax administration, other than making everything simple, fair and efficient with the aid of technology, let’s continue to work with the private sector in making sure everyone contributes their fair share, keeping in mind that governance is a shared responsibility.
We are all taxpayers. Let’s all ask for official receipts!
A genuine tax reform is where those of us who earn more will pay more taxes while the rest of us, especially the poorest of the poor, will be taken care of by our government through public services using the taxes collected.—CONTRIBUTED
This article was originally published on The Philippine Daily Inquirer.