BIR audits return to haunt taxpayers
THE BUREAU of Internal Revenue (BIR) is set to resume field audits to pursue tax cheats, picking up from where the previous administration left off after a two-month halt in investigations.
In Revenue Memorandum Circular 89- 2016, BIR chief Caesar A. Dulay lifted an audit suspension that he imposed on his first day in office, effectively resuming all activities under the bureau’s Run After Tax Evaders (RATE) program.
The RATE program is an initiative of the BIR and the Department of Finance to unearth, investigate and charge persons or entities found evading taxes.
It was also designed to encourage voluntary compliance for taxpayers to pay the right taxes.
Offenses covered by the program include non- payment of taxes, non- filing of tax returns, “deliberate” under-declaration of income by more than 30% per return, hiding incomes and assets, and non-remittance of withholding taxes, according to the BIR’s Web site.
Under the new rule, Mr. Dulay ordered that field audits, field operations and business visits pertaining to RATE cases “shall be resumed/continued or conducted in accordance with the existing rules and regulations of the BIR.”
“To continue the mandate of the BIR to investigate criminal violations of the National Internal Revenue Code of 1997, as amended, and to prosecute such cases to deter — to the greatest possible degree — tax evasion… and to encourage voluntary com-
pliance with internal revenue tax laws, the suspension of the implementation of Letters of Authority (LoA) pertaining to the Run After Tax Evader Program is hereby lifted,” read the circular which was posted on the bureau’s Web site.
BIR officials conduct preliminary investigations before issuing LoAs to persons or companies found to have been evading taxes. Once reasonable ground for fraud is established, a criminal case is filed before the Department of Justice.
In 2010, the BIR tied up with the National Bureau of Investigation and the Criminal Investigation and Detection Group to carry out more thorough investigations under the RATE program.
The new order supercedes Revenue Memorandum Circular 70-2016 — issued on day one of the new administration of President Rodrigo R. Duterte on July 1 — which suspended BIR field operations to examine and verify taxpayer’s books of accounts and transaction records as Mr. Dulay launched an inventory of all LoAs and audit notices to make sure they did not mask shakedowns.
Information unearthed during audits of tax returns, informant tips, referrals from government agencies and news reports trigger investigations.
The BIR filed 492 tax evasion complaints involving a total of P84.457 billion in liabilities during the term of Commissioner Kim S. Jacinto-Henares. None of these cases had ended in a conviction as of July 1, records show. —