BIR to professionals, traders ‘Disclose income details to avoid tax evasion case’

CEBU, Philippines – The Bureau of Internal Revenue has particularly advised businessmen and professionals to disclose details of their real income so to avoid facing tax evasion case in court.

Lawyer Neri Yu of the BIR-Cebu said the local revenue office has recommended complaints of tax evasion involving mostly traders and professionals to the national BIR for probable filing of case.

“Kun duna gyoy grounds of possible tax evasion i-recommend na sa regional director ngadto sa national office aron sila nay mo-file og kaso ngadto sa Department of Justice,” Yu, Legal Division chief, said in an interview yesterday.

The regional office, through its Regional Investigation Division, starts the investigation by comparing the value of a taxpayer’s assets and properties to what is being declared in his income tax return. This is to identify possible proofs for committing tax evasion.

“So, we’ll recommend for probable filing of case. Pero di na siya final, the commissioner still has to decide on the filing of case with the DOJ,” Yu explained.

He also noted that the auditing process is done by sending a letter of notice to erring professionals who have discrepancy in their income tax reporting.

With third party sources, cross-checking aims to compare the amount of sales of goods and services declared by an enterprise or individual with the value paid by consumers of goods and services.

“From there, naa na tay basis whether there is probable evasion; because ang criteria man gud to be considered tax evasion, there must be more than 30 percent of under reporting of income,” he pointed out, adding overstating deductions, exemptions or credits and failing to file appropriate tax returns are ways to evade taxes.

Tax avoidance is one economic crime in which taxpayers may pursue other illegal avenues to reduce their payments and fail to pay legally due obligations.

In the same interview, RID Chief Zennen Tabanao disclosed that as of yesterday, around 306 tax evasion cases have been filed with the Justice Department against erring taxpayers nationwide for this year.

Tabanao said four of these possible cases being recommended to the revenue national office have involved respondents coming from Cebu.

For his part, Regional Director Hermeno Palamine has also recognized the cooperation and positive response of local professionals to the bureau's campaign on paying the right taxes.

“BIR would also like to acknowledge the professionals kay so far wa may violent reaction,” he said. The director added they have sent around 200 letters of notice to taxpayers found to have been involved in insufficient tax reporting.

Yu cited some ways for a professional to cut his payable income tax. The value of the free social services that a medical doctor, for example, has provided to the poor people can be deducted from his tax dues.

“Mao nang gitawag nato og charity works, na’y mga medical mission doctors ug ang lawyers modawat og Pro Bono cases,” he stated, explaining the professional can issue an official receipt indicating the free service but telling no actual payment was received.

He also noted the bureau could identify the legitimacy of the receipts by validating them in the course of the investigation.

In addition, the Run After Tax Evaders program has mandated the bureau to investigate criminal investigations of the National Internal Revenue Code of 1997.

It also aids in the trial of criminal cases that will create the maximum restriction effect, enhance voluntary compliance and promote public confidence in the tax system.