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Eyes on your assets

Eyes on your assets by: Edward L. Roguel

Did you notice that the new logo of the Bureau of Internal Revenue (BIR) looks like an eye?

It’s as if the BIR is saying, “I’m watching you.” 

Actually, the new logo “incorporates a diagram of the human eye to symbolize the initiative of the BIR of letting the public know and see what are the developments in the BIR under the policy of full transparency”  (Revenue Memorandum Order No.  3-2010). 

True to its word, the BIR is exerting all its efforts in “Making the Public Know” — the BIR’s new theme —  by issuing letters/publicities to inform the public of its programs to enhance the collections of taxes and the image of the BIR. 

However, the new BIR logo also alludes to its watchful eye trained on tax evaders as evidenced by its Run After Tax Evaders (RATE) program. In line with this program, the BIR entered into different memoranda of agreement with the National Bureau of Investigation (NBI), the Criminal Investigation and Detection Group (CIDG), the Philippine National Police, the Office of the Solicitor General (OSG) and other concerned agencies to effectively implement its programs against tax evaders. 

The BIR also trains its watchful eye on government agencies.  In fact, the BIR is planning to seize the assets of a local government for non-payment of withholding on compensation, value-added tax (VAT) and withholding VAT. 

Even the deceased are not spared by the 20/20 vision of the BIR.  Early this year, the BIR launched the Project Rest in Peace (RIP), which aims to collect estate taxes.  The BIR will closely monitor the potential estate tax cases by establishing linkages with civil registers, hospitals, memorial parks, cemeteries, funeral parlors, crematorium, judicial clerk of court, obituaries and life insurance companies. 

But did you know that the BIR also looks into the assets of taxpayers? 

The BIR issued Revenue Memorandum Order (RMO) No. 26-2010 which deals with the preparation of the list of assets of all taxpayers subject to an investigation/verification. 

Based on this RMO, the BIR examiner conducting the examination shall prepare a detailed list of all assets of the taxpayers being investigated.  Such list shall include, among others, the type of the assets, location of the assets, the bank accounts maintained (including the type of account, the account number, and the name and address of the bank), Transfer Certificate of Title (TCT) number (in case of real property), name/address of debtor and all other necessary information.   These shall be encoded by the BIR examiner in the database within one month from date of service of the Letter of Authority (LA)/ Tax Verification Notice (TVN).   A hard copy of the said list shall also be attached in the docket of the case.

The purpose of this list is to identify the assets that may be seized or levied by the BIR in the collection enforcement proceedings that may be instituted against the taxpayers in the future.  In other words, the taxpayers cannot hide their assets since the BIR knows the former’s resources.  The intention of the BIR, in this regard, may be noble.  But the question is whether or not this violates the constitutional right to privacy of taxpayers.  As pointed out by the Supreme Court, “[t]he right to be let alone is indeed the beginning of all freedom."  As a matter of fact, this right to be let alone is, to quote from Mr. Justice Brandeis, "the most comprehensive of rights and the right most valued by civilized men." G.R. No. L-20387. January 31, 1968.

Another issue that the BIR needs to resolve is the security of its database.  Can the BIR guarantee that the database containing the list of assets of taxpayers cannot be accessed by unauthorized personnel?  Most importantly, can the BIR assure taxpayers that its database can not be encroached by hackers? 

The BIR needs to address these issues in order to properly implement the RMO.  

In the meantime, the best thing a taxpayer can do is to ensure its compliance with the tax laws and regulations to avoid unnecessary assessments, or worse, the seizure of its assets. 

This article is not intended to be a substitute for professional advice.  For comments and inquiries, you may e-mail the author at Wowie.Roguel@ph.gt.com.  For other tax concerns, please check out our other tax services.