Business World

BIR audits return to haunt taxpayers

- Melissa Luz T. Lopez

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. —

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