HARVARD VERITAS

TO avail or not? That is the question confronting taxpayers, both individual and corporate, on whether to rely on the recently enacted Tax Amnesty Act to find closure to their tax problems and woes.

Let us do a fast rewind. Last February 2019, taxpayers received a hearty Valentine's gift from Congress and President Duterte. Republic Act ( RA) 11213: the long- awaited tax amnesty ( TA) under Package 1B of the Duterte administration’s Comprehensive

signed into law.

The Tax Amnesty Act offers taxpayers the opportunity to be forgiven of their past lapses in meeting their tax obligations, and eventually settle these liabilities affordably. As a complement to Tax Reform for Acceleration and Inclusion Law, the Tax Amnesty Act is expected to ramp- up revenue collections of the government to meet its priority infrastructural and socio- economic agenda. An amnesty may be construed as a relaxation of some stringent tax rules, but it is indicative that more aggressive tax enforcement efforts are forthcoming.

In the journey of the passage into law of the Tax Amnesty Act, there were deletions of some provisions contained in the version of the law sent by Congress to Malacañang for approval. In a veto letter dated Feb. 22, 2019, the President said the General Tax Amnesty ( GTA) provisions were being vetoed because of a lack of safeguards against tax evasion. The President said: “I believe that, ultimately, the original objective will not be met under the proposed framework. Without the provisions breaking down the walls of bank secrecy, setting the legal information for tax purposes, and safeguarding against those who abuse the amnesty by declaring an untruthful asset or net worth, a general amnesty that is overgenerous and unregulated would create an environment ripe for future tax evasion, the very thing we wish to address.”

In his veto message, the President also indicated, “The general amnesty program is meant to give taxpayers a fresh start as well as to signal the start of a fair tax enforcement campaign by the tax authorities. It is not meant to be abused for the gain of the few and the loss of the rest of the citizenry. These safeguards against tax evasion are estimated to contribute P76.6 billion to the public funds in the next five years which we hope to use to better our infrastructure and services.” It is to be noted that with the presidential veto of the GTA, the tax revenues estimated from the tax amnesty amounts to a lower P27.5 billion.

With the veto of the GTA provisions, what were left in the Tax Amnesty Law were the TA on delinquent accounts and the estate tax.

The veto letter came out with this insightful message: “More than the much welcomed revenue to be generated by this law, the amnesty is about rebuilding trust between the government and the people — an opportunity for citizens to disclose past failings and for the government to forgive them with the expectation of better compliance in the future.”

If and how these noble intentions will be attained remain to be seen.

TA on delinquent accounts

With the presidential veto of the General Tax Amnesty provisions, the TA on delinquent accounts and estate tax remained in RA 11213.

The TA on delinquent accounts provide a relief for those taxpayers who have unresolved tax cases pending collection proceedings in the Bureau of Internal Revenue ( BIR) or unsettled in the judicial courts or Department of Justice ( DoJ). This also covers situations where taxpayers failed to remit to the BIR taxes that they previously withheld from suppliers or employees. Several issuances have been promulgated by the Department of Finance and the BIR for this TA, including Revenue Regulations 4- 2018, Revenue Memorandum Circulars 232019 and 57- 2019. It is expected that additional guidelines will still be issued.

This TA covers all national internal revenue taxes for taxable year 2017 and prior years. I like to categorize the different situations covered in the TA into two. The first category consists of where the BIR has issued final assessment notices ( FAN) or final decision on disputed assessments ( FDDA), which have become final and executory since the taxpayer failed to contest these, administratively or judicially, within the prescribed time period. The BIR considers these as being delinquent accounts and included in its inventory of arrears accounts that amount to over P300 billion to date. The second category includes all other cases that may not have FAN or FDDA becoming final and executory but are considered delinquent under the guidelines. These include criminal cases pending with the DoJ or prosecutor’s office or the