BIR to conduct lifestyle check on taxpayers

MANILA, Philippines - The Bureau of Internal Revenue (BIR), under intense pressure to raise more revenues, will now go after individual taxpayers found to be living beyond their legitimate means.

There will now be lifestyle checks similar to what is conducted among public officials, BIR Revenue Commissioner Joel Tan-Torres said in Revenue Memorandum Order 19-2010 issued last Tuesday.

The order provides the guidelines on the lifestyle check system which was aimed at “several individual taxpayers with substantial investments, assets or conspicuous lifestyles but have relatively small incomes declared.”

Tan-Torres said the BIR has noticed that some individuals have attempted to evade or minimize tax payments even though they are earning more than enough as seen through their lavish lifestyles. Indicators of such lifestyles include frequent and expensive travel, acquiring posh properties including real estate and motor vehicles.

The BIR chief said the new regulation would “help address the difficulty of examining an individual’s tax compliance when there is no direct evidence of income or records are not available or inaccurate.”

“It is clear that the taxpayer is earning income as shown by the substantial assets or lavish lifestyles they maintain,” he said.

The BIR, faced with a collection target of P830 billion this year, said it would implement the new regulation using public documents submitted to agencies such as the Bureau of Immigration, Land Transportation Office, Manila Electric Co. and even credit card firms. Using these documents, Tan-Torres said does not violate the privacy of a citizen because these are public documents.

These documents, he said, provide indications of the taxpayers’ travel in and out of the country and properties and whether these are commensurate to his or her declared sources of income.

The BIR has been trying to collect more money to meet its P830 billion target which has already been reduced from an original figure of P875 billion.