Run after tax evaders
Run after tax evaders
several news stories have been published on the efforts of the Bureau of
Internal Revenue (BIR) to prosecute alleged tax evaders in the country. As some of us may well know, there are
prosecuted cases involving hundreds of millions up to a billion peso-worth of
deficiency tax assessments. What a huge
sum of money, indeed! And with the
current administration which, as I understand, does not intend to impose
additional taxes and is very keen on tax collection enforcement, an enhanced
Run After Tax Evaders (RATE) program is a predictable consequence.
Run After Tax Evaders (RATE) program of the BIR actually started in 2005, and
we could observe that the on-going implementation of this program has garnered
considerable attention from the media, wherein taxpayers who have been
convicted of committing tax evasion could be, aside from being assessed for
huge sums of money, sentenced to imprisonment.
Yes, the penalty could be imprisonment.
what is tax evasion? Is the prosecution
limited to individuals? How about the
prosecution of corporate taxpayers?
old Supreme Court case of Yutivo Sons Hardware Company vs. Court of Tax Appeal
(G.R. No. L-13203, dated January 28, 1961), “tax evasion” was defined as a term
that connotes fraud through the use of pretenses and forbidden devices to
lessen or defeat taxes. Thus, the term
points to a deliberate intent on the part of a taxpayer to illicitly defeat the
specific, in relation with the tax evasion cases, to qualify under the RATE
Program of the BIR, a case must conform to the following conditions:
a. Cases representing violations under any
of Sections 254 (Attempt to Evade or
Defeat Tax), 255 (Failure to File
Return, Supply Correct and Accurate Information, Pay Tax, Withhold and Remit
Tax, and Refund Excess Taxes Withheld on Compensation), 257 (Penal Liability for Making False Entries,
Records or Reports, or Using Falsified or Fake Accountable Forms), and 258 (Unlawful Pursuit of Business) of the
NIRC of 1997, including One-Time Transactions, etc.;
b. High-profile taxpayers or taxpayers
well-known within the community, industry or sector to which the taxpayers
c. Estimated basic tax deficiency is at
least One Million Pesos (P1,000,000) per year and tax type, but priority should
be given to tax cases where the aggregate basic tax deficiencies for all tax
types per year is Fifty Million Pesos (P50,000,000) or more.
if a case falls under the foregoing conditions, a taxpayer should expect the
BIR chasing after him under the RATE Program.
But is the prosecution limited to individual taxpayers?
section 253 of the 1997 Tax Code, as amended, in the case of associations,
partnerships or corporations, the penalty shall be imposed on the partner,
president, general manager, branch manager, treasurer, officer-in-charge, and
the employees responsible for the violation.
the officers of a company and the employees responsible for the violation of
tax laws could be charged, and consequently sentenced to imprisonment of not
less than one and not more than 10 years, depending on the circumstances of
each case. Now, you would be probably
thinking of who signs the tax returns of a company. But yes, you should be… as he/she, by signing
the tax returns, represents the company in the eyes of the BIR under the
then should be done by the taxpayers?
answer the question, two key words should be remembered – knowledge and
compliance. The taxpayers should have
sufficient knowledge of its tax responsibilities – from the simple requirement
of being registered with the BIR up to the rules that must be complied with in
the filing of various tax returns and paying the tax dues.
to say, mere knowledge of the tax rules would be of no use without compliance
to these rules. Hence, the taxpayers
must also ensure that they conform with the tax rules applicable to their
transactions. In this regard, the
taxpayers should, by themselves or through a tax consultant, consider reviewing
their current tax practices and prompt the necessary corrections as soon as
recently heightened efforts of the BIR under its RATE program, coupled with the
constant pressure to meet the country’s target tax collections, would leave the
taxpayers with no other option but to be particularly vigilant in complying
with the tax laws.
the bottom line is: compliance with tax rules will spare the taxpayers from
distressing penalties, hefty interests and surcharges, huge deficiency taxes,
and restless thoughts of possible imprisonment.