philippine real estate taxation

Finance chief’s tax hike scheme: Soak the pros

2012-02-01T10:55:00.001-08:00

by Elaine R. Alanguilan

[ manilastandardtoday.com ] February 1, 2012

FINANCE Secretary Cesar Purisima has ordered Internal Revenue to step up measures to collect more income tax from professionals and self-employed people this year.

“The income tax payments of the professionals should drastically increase by year-end,” Purisima said at the sidelines of the Tax Management Association of the Philippines meeting Tuesday night.

He said he wanted to see the tax payments of professionals to average P100,000 by the end of this year from last year’s P5,600.

He said he was monitoring the income tax payments of professionals and self-employed people down to Internal Revenue’s regional district offices.

“We will continue to set ambitious goals in order for the [bureau] to reach its [revenue] goal],” Purisima said.

Internal Revenue has a revenue hurdle of P1.06 trillion this year from last year’s full-year target of P940 billion. It has yet to release the total amount it collected last year.

“If [Revenue Commissioner] Kim Henares reaches her target, she will be the first one to collect [revenues of] more than P1 trillion,” Purisima said.

Internal Revenue has already raised its target collection from professionals and other self-employed people to P222.28 billion for this year, an increase of 15 percent from last year’s projected revenue of P192.72 billion.

Income taxes from individuals account for more than 20 percent of Internal Revenue’s tax collection, and the bulk of it comes from salaried individuals whose income taxes are automatically withheld by their employers.

Purisima has said the incidence of tax evasion among professionals in the country is high, and that’s the reason Internal Revenue has been going after tax cheats more vigorously. Internal Revenue has been filing cases against professionals such as doctors and lawyers.

The Professional Regulation Commission lists some 3 million registered professionals, of which around 190,000 are high-earning doctors and lawyers. The rest are accountants, engineers, nurses and seafarers.

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Heirs of landed families, gold trader tax evaders, says BIR

2011-11-17T17:04:00.001-08:00

Posted on November 10, 2011 10:37:14 PM [ BusinessWorld Online ]

THE BUREAU of Internal Revenue (BIR) has filed tax evasion cases against the heirs of two families involved in a land transfer deal and the government employees who aided them.

The BIR pressed charges at the Department of Justice yesterday against the heirs of the late Gavino Vinluan of Pangasinan and an heir of the late Oscar R. Ongsiako of Makati City for willfully evading taxes and failing to file tax returns.

The Vinluan heirs -- Pilar V. Gonzales, Purita V. Canto, Federico Vinluan, Ramon R. Vinluan, Salvador Vinluan, Conchita V. Calvo, Hernando Vinluan, Gavino C. Vinluan, Heremias Vinluan, Socorro V. Gabionza, Israel Vinluan and Estrella V. Santiago -- allegedly failed to file estate tax returns after the death of Mr. Vinluan in February 1949.

According to investigations, Gavino left behind 25 properties and landholdings but no estate taxes were paid upon his death.

The heirs also executed a Deed of Extrajudicial Partition among Heirs with Sale for two parcels of land in 2009, but no capital gains tax or documentary stamp tax returns were submitted.

Melvin C. Castro, the deputy registrar of deeds of Lingayen, Pangasinan was also included in the charge sheet. He allegedly signed the Vinluans’ deeds, even without the Certificate Authorizing Registration (CAR) which is issued by the BIR to show that the required capital gains tax and documentary stamp tax returns have been filed and the liabilities have been paid.

The Vinluans have been assessed a tax deficiency of P7.40 million in capital gains tax and P1.86 million in documentary stamp tax for a total of P9.26 million.

Moreover, the BIR also filed charges against Juan Miguel V. Ongsiako for allegedly failing to pay estate and documentary stamp taxes after a P10-million, 870-square meter property along Roxas Boulevard was sold to him by his parents in October 2005.

The sale could have been a scheme of the family to transfer the assets from Oscar to Juan Miguel without paying estate taxes, the BIR said in a statement yesterday.

Juan Miguel’s total tax liability stands at P10.06 million, broken down into P3.65 million in estate tax, P5.11 million in capital gains tax and P1.3 million in documentary stamp tax, inclusive of surcharge and interest.

Robert M. Guillermo, the registrar of deeds of Pasay City, was likewise included in the Ongsiako case for allegedly allowing the transfer of ownership of the land without a certification from the BIR.

“The above master stroke of tax evasion could not have attained a level of sophistication without the aid of the Register of Deeds who willfully turned a blind eye and issued the new title without indicating the CAR serial number to decrease the probability of fraud detection,” BIR Commissioner Kim S. Jacinto-Henares said during the case filing yesterday.

Meanwhile, the bureau also ran after gold trader Virgilio I. Ocampo who sold P1.12 billion worth of refined gold to the Bangko Sentral ng Pilipinas from 2005 to 2008, but failed to file quarterly and annual tax returns for his taxable income.

Mr. Ocampo’s tax liability is estimated to be P804.42 million for the four-year period.

The BIR has now filed 79 cases under its Run After Tax Evaders program during the Aquino administration. -- Diane Claire J. Jiao

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Businessman ordered arrested over P5.5-B tax evasion case

2011-10-31T13:11:00.000-07:00

Posted on October 31, 2011 10:58:09 PM [ BusinessWorld Online ]

A BUSINESSMAN has been ordered arrested over tax evasion charges filed by the Bureau of Internal Revenue (BIR), with the warrant to be served by the National Bureau of Investigation (NBI).

In a resolution dated Oct. 19 and released by the BIR yesterday, the first division of the Court of Tax Appeals has issued an arrest warrant against businessman Macario L. Gaw, Jr. with a P120,000 bail bond. The businessman has a total tax deficiency of P5.5 billion for the period 2007-2008.

“The court, after due deliberation, finds the existence of probable cause for the issuance of warrant of arrest against the accused in these consolidated criminal cases,” the resolution read.

In a telephone interview, BIR Commissioner Kim S. Jacinto-Henares said that the arrest warrant will be sent by the court sheriff to the Department of Justice (DoJ), which will order the NBI to serve the order.

Justice Secretary Leila M. de Lima has assured that the warrant will be served, added the BIR chief.

“Yes, she has assured us of the implementation of the warrant. In fact, she was the one who ordered it,” Ms. Henares said, referring to Ms. de Lima.

For her part, Ms. de Lima, in a text message, said she has instructed Prosecutor General Claro A. Arellano to obtain a copy of the arrest warrant and hand it over to the NBI for implementation.

In August last year, the BIR filed tax evasion charges against Mr. Gaw for failing to pay the correct income taxes for 2007 and 2008. He also did not indicate correct information in income tax returns and failed to file value-added tax (VAT) returns for 2008.

The BIR said Mr. Gaw, president of Mega Packaging Corp. and Macro Liquefied Petroleum Gas Co., has tax deficiency broken down as P1.3-billion basic income tax, P1 billion as basic VAT and the rest in interest and surcharges.

The case stemmed from Mr. Gaw’s purchase of 10 parcels of land in 2007 and 2008 worth P4.12 billion that were later on sold for P8.42 billion. The lots were declared as capital assets with Mr. Gaw paying only 6% of the capital gains tax worth P9.11 million for 2007 and P418.75 million in 2008. If the lots were declared ordinary assets, these could have been subjected to 32% income tax and 12% VAT.

The BIR claimed that Mr. Gaw used multiple Tax Identification Numbers, making it harder to track the violations.

The DoJ has found probable cause and ordered the filing of charges against Mr. Gaw at the Court of Tax Appeals (CTA) in March.

Last week, the CTA’s second division ordered the arrest of spouses Jacinto C. Ligot and Erlinda Yambao Ligot over tax evasion charges also filed by the BIR.

The retired general was former military comptroller and was named in a plunder case at the Office of the Ombudsman. A plea bargain between him and the Ombudsman has been approved by the Sandiganbayan but its implementation was withheld. -- Nathaniel R. Melican

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BIR to investigate banks on estate tax

2011-10-16T14:44:00.000-07:00

Published : Monday, October 17, 2011 00:00 [ manilatimes.net ]

Written by : KATRINA MENNEN A. VALDEZ

THE Bureau of Internal Revenue vowed to put an end to the “collusion” between banks and heirs of the deceased in eroding estate tax collection.

Deputy Commissioner Estela Sales, who heads the legal and inspection group, told reporters that the agency has intensified its review on the mode of transfer of properties to individuals, particularly whether such transfer is acquired through donation inter vivos or as an inheritance.

”We want to determine whether there are badges of fraud as to the transfer of properties which is being done to avoid payment of higher taxes, which is the estate tax,” Sales said.

“There are suspicions and if we are able to prove such fraud then the transfer can be nullified pending the payment of the proper tax due plus criminal liability on the part of the taxpayer and the bank itself,” she said.

Finance Secretary Cesar Purisima earlier said the estate tax is one of the most problematic areas as far as tax administration is concerned given the substantial number of people who die every year. In 2010, the government raised merely P1.34 billion in estate taxes out of the P822.6 billion in total taxes collected. In 2009, the BIR realized P915 million from the estate tax. Claro Ortiz, BIR head revenue executive assistant and overall coordinator for Run After Tax Evaders, said banks will be equally held criminally liable as that of the erring heir should the collusion be proven. ”Its a common secret that a number of banks actually allow the heirs of their [deceased] depositors to withdraw or transfer money despite knowledge that a depositor has indeed already expired,” he said.

”The BIR aims to put an end on that practice by going after not only the heirs but as well as the banks who consented the same,” he added.

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Government to press collection of estate taxes

2011-08-01T14:05:00.001-07:00

By Iris C. Gonzales (The Philippine Star) Updated August 02, 2011 12:00 AM

MANILA, Philippines - The Aquino administration hopes to increase estate tax collections by stepping up efforts to monitor payments made by heirs of deceased persons, Finance Secretary Cesar Purisima said yesterday.

In a budget hearing at the House, Purisima said there would be a strong focus on estate taxes as yearly collections from this type of tax are very low.

“For the past seven years, collections have been below P1 billion,” the Finance chief said.

Purisima believes that yearly collections can go up to more than a billion. He said that in some cases, the amount could go as high as P3 to P5 billion for only one person.

“So I believe, we should be collecting more than a billion from estate taxes,” Purisima said.

In connection with this plan, the Bureau of Internal Revenue (BIR) would be investigating banks to find out if their officers are guilty of conniving with the heirs of deceased persons in order for them to skirt around their estate tax obligations.

At present, heirs of deceased persons need to pay a tax equivalent to 20 percent of the estate of the deceased.

Some individuals try to escape this provision by withdrawing the accounts of the deceased persons without declaring to the banks the incident of death.

The campaign is similar to the program launched during the time of former BIR Commissioner Joel Tan-Torres.

Through the project, the agency will monitor the payment of estate taxes which the BIR for so many years has not given much attention to.

According to data from the National Statistics Office, there were 403,191 deaths in 2004, 415,271 in 2005 and 389,081 in 2006.

Based on BIR records, however, only 29,198 estate tax returns were filed in 2007, 29,863 in 2008 and 26,811 in 2009.

These figures revealed that there is a very low number of estate tax returns filed. Collections amounted to P649.9 million in 2007, P854.9 million in 2008 and P876.8 million in 2009.

The BIR said it will coordinate with civil registers, hospitals, memorial parks, cemeteries, funeral parlors, crematoriums, judicial clerks of courts, obituaries, life insurance companies and other financial institutions, to access and secure records of the decedents.

The BIR is tasked to collect P920 billion this year, higher than last year’s actual collections of P822.39 billion.

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Aquino admin secures dismissal of BIR official

2011-07-27T14:57:00.000-07:00

By Iris C. Gonzales (The Philippine Star) Updated July 28, 2011 12:00 AM

MANILA, Philippines - The Aquino administration has secured the dismissal of a ranking official of the Bureau of Internal Revenue (BIR) as well as the suspension of a local government treasurer being investigated for corruption.

The Revenue Integrity Protection Service (RIPS), the anti-corruption unit of the Department of Finance (DOF) has secured the dismissal of the BIR official for accumulating wealth disproportionate with his income as a public official.

RIPS won with finality its case against BIR Assistant Commissioner Edwin Abella, who was found guilty of dishonesty in 2005 for acquiring questionable wealth beyond his and his wife’s capacity.

The decision of the Ombudsman came out on Jan. 14, 2005.

In its decision, the Ombudsman said there was “substantial evidence” that Abella committed dishonesty for “acquiring vast amounts of money and properties manifestly out of proportion to his salary and other lawful means of income.

Based on the evidence filed by RIPS, the Ombudsman said it was impossible for the respondent’s net worth to increase from P3.8 million in 1999 to P8.4 million in 2002 with his earnings.

The Ombudsman found Abella guilty of not declaring in his Statement of Assets, Liabilities and Net Worth six properties he owned including real estate assets. One property was valued at P10 million.

The respondent appealed the Ombudsman’s decision, in a pleading dated Feb. 7, 2005.

Abella said the decision was “based on grave errors of facts and law and unfounded conjectures and surmises.”

However, the Ombudsman denied Abella’s motion for reconsideration in an order dated June 11, 2011.

“The respondent failed to present new evidence that would warrant a reversal of the questioned decision,” the order stated.

Meanwhile, the Ombudsman also suspended for six months without pay a ranking local government official.

Manila City Treasurer Liberty Toledo, which RIPS sued for grave misconduct and dishonesty.

The Ombudsman said: “Notwithstanding any motion, appeal, or petition that may be filed by the respondent… the implementation of this order shall not be interrupted within the prescribed period.”

With the order, the City government of Manila is expected to implement the suspension order five days from the receipt of the Ombudsman’s decision.

According to the case filed by RIPS, from 1999 to 2004, Toledo failed to declare millions worth of properties in her SALN.

The assets were found “grossly disproportionate” to her and her husband’s annual income, DOF-RIPS said.

“The evidence on hand sufficiently warrants the preventive suspension of respondent Liberty Toledo pending the conduct of administrative investigation of the instant case,” the Ombudsman said in the order.

As such, the Ombudsman said the with the nature of her duties and functions and “the influence that her position brings her continued stay in office may prejudice the investigation of the case.”

RIPS was established to investigate allegations of corrupt practices of officials and employees of the Department of Finance and revenue agencies.

To date, RIPS has already filed a total of 86 cases against 126 public officials, 51 of whom were suspended while 19 were already dismissed from service.

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Tax bureau orders all building owners to check on tenants

2011-07-27T14:56:00.000-07:00

Posted on July 27, 2011 09:45:25 PM [ BusinessWorld Online ]

BY DIANE CLAIRE C. JIAO, Reporter

OWNERS of commercial establishments will now be required to ensure that their tenants are registered taxpayers, according to the latest issuance of the Bureau of Internal Revenue (BIR).

The BIR has begun its drive to track the untaxed sector with Revenue Regulations No. 12-2011, issued on July 25.

The latest tax regulation sets the reportorial requirements for establishments leasing commercial spaces.

“It shall be the primary responsibility of all owners or sub-lessors of commercial establishments/buildings/spaces to ensure that the person intending to lease their commercial space is a BIR-registered taxpayer,” the issuance stated.

Their tenants must have a tax identification number (TIN), a BIR Certificate of Registration and duly registered receipts, it added.

These requirements ensure that those engaged in retail remit value-added taxes and income taxes to the government.

“It is the duty of building owners to ensure that those they deal with are registered taxpayers,” BIR Commissioner Kim S. Jacinto-Henares said in a telephone interview yesterday.

“If not, they are aiding and abetting tax evasion,” she warned.

“I am only leveling the playing field. These commercial establishments pay taxes to the government, so their tenants must also do the same,” she explained.

Under the new issuance, building owners will now be required to submit, under oath, a tax registration profile of their lessees to the BIR twice a year.

They must provide the layout and unit addresses of their entire commercial space to the bureau, as well as the certified true copy of their lease contract per tenant.

Lessee Information Statements must also be passed to the BIR, indicating the registered names of the tenant, the TINs, the Authority to Print number for their official receipts and invoices, and the permit number for their cash register or other points of sale machines.

These will be submitted every Jan. 31 for all tenants as of Dec. 31 of the previous year, and every July 31 for the tenants as of June 30 of the current year.

Warned

However, for this year, the BIR has set a transition period, giving all building owners until Sept. 1 to submit their requirements for their tenants as of July 31.

Those who do not submit these requirements will be penalized by the BIR for willfully failing to pay taxes and supply correct information, subject to a fine of no less than P10,000 and imprisonment of up to 10 years.

Owners of commercial establishments who also falsify information will be charged with perjury, the issuance warned further.

A tax alert from Punongbayan & Araullo reminded lessors to start getting the required information from their tenants.

“Report accurate information because these may be used against you during tax examination,” the tax alert read.

“To ensure correctness of the information provided, you are advised to request for the source documents.”

Building owners must also ensure that the documentary stamp tax due on their lease contracts have already been paid, and that proof of payment will be made available at the BIR’s request.

Lastly, Punongbayan & Araullo urged lessors to require their unregistered lessees to begin the process already, to make it in time for the Sept. 1 due date of the report.

The BIR has identified the informal sector as one of the areas it will focus on to expand the tax base and increase revenues.

Ms. Jacinto-Henares had earlier estimated that the untaxed sector comprised 40% of the taxable population of the country.

The BIR, which accounts for some 70% of state revenues, is tasked to collect P940 billion this year. According to preliminary data, it had already collected P458 billion in the first half of the year, a 13.5% increase from the P403.5 billion netted in the same period in 2010. However, it missed the mid-year target of P460.3 billion.

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Tollways liable for local tax, court says

2011-07-18T14:05:00.000-07:00

by Orland L. Mauricio

[ manilastandardtoday.com ] July 18, 2011

Toll plazas along the North Luzon Expressway from Balintawak to Sta. Ines (in Pampanga are considered branches or sales outlets of the Manila North Tollways Corporation and are therefore subject to payment of local business taxes and other fees under the National Building Code.

In a July 7, 2011-decision, Malolos City Judge Wilfredo T. Nieves of the Regional Trial Court – Branch 84, ruled that the tollways operator has no tax exemption privilege under its Supplemental Toll Operation Agreement with the government and ordered the company to pay taxes and other fees to the municipality of Guiguinto.

The STOA is a 1988-agreement executed by and between MNTC and the Phillippine National Construction Corp., whose legislative franchise to operate NLEX expired May 1, 2007. The agreement also included the Toll Regulatory Board, apparently to represent the government and the latter’s imprimatur to the contract.

The court ruling was a result of two civil complaints filed last February 2 and 9, 2009 by MNTC seeking to prevent Guiguinto from collecting permit fees under the National Building Code amounting to P2,283,474.20; unpaid mayor’s permit and other regulatory fees in the amount of P33,498.30 from January 2004 to January 2008; and business taxes and deficiencies for the year 2005 to 2007 in the amount of P67,443,765.93.

The tax assessments were contained in two notices sent by Guiguinto to MNTC on September 12 and October 14, 2008. In answer, MNTC wrote two protest letters contesting the assessments of back taxes but these were denied by Guiguinto which threatened to collect the unpaid taxes or close the MNTC offices in the town.

Guiguinto Mayor Isagani Pascual hailed the RTC ruling as a long, overdue verdict to assert the autonomy and right of municipalities hosting NLEX offices and toll gates to collect local business taxes and other fees under the Local Government Code.

Nieves dismissed MNTC’s claim that the NLEX service centers in Sta. Rita and Tabang, Guiguinto that sell transponders or Easy Tags, accept payments for loads, and cash payments from millions of motorists passing thru the two toll plazas and issue toll receipts are not “its branches or sales outlets conducting business within Guiguinto” but mere support facilities.

“MNTC wants the Court to believe that the big volume of its sales due to the millions of motorists passing thru its Sta. Rita and Tabang toll plaza are recorded only in its principal office in Caloocan City(Balintawak) where they are supposed to pay their business tax,” Nieves said.

The RTC ruling came on the heels of the reopening last July 11 of the third NLEX toll plaza in Barangay Tabe, also in Guiguinto. The Tabe Toll plaza had been closed for several years since Metro Pacific Tollways Corporation acquired the MNTC from the Lopez Group.

The court also declared that MNTC is not exempt from paying local business taxes by virtue of the STOA. “A cursory perusal of the STOA fails to show any provision exempting plaintiff from the payment of taxes, much less local business taxes. Neither was plaintiff able to present proof that it was granted the legislative grace of tax exemption.”

The Court decision also set aside the opinion offered by the Bureau of Local Government Finance, an office under the Department of Finance that oversees the fiscal and financial affairs of local government units.

“We are reviewing decision and there are ongoing discussions between Tollways Association of the Philippines, DOF, LGUs regarding proper allocation of local business tax,” said Marlene Ochoa, vice president for corporate communication of MNTC. MNTC has 15days from July 7 to contest the ruling.

Guiguinto legal counsel Edwin Cerezo said the Nieves ruling is a welcome development for other towns and cities along the north expressway route to assert their power to tax the NLEX toll plazas they are hosting.

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Tax bureau offers fresh amnesty

2010-09-09T14:51:00.003-07:00

Friday, 10 September 2010 00:00 [ manilatimes.net ]

BY KATRINA MENNEN A. VALDEZ REPORTER

THE Aquino administration has offered to waive surcharges on deficiencies of erring taxpayers in a fresh amnesty aimed at plugging the government’s budget deficit this year. Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares said the agency will waive the surcharges against erring individual and corporate taxpayers provided that they would settle on or before October 29.

“We are willing to forgo surcharges when these erring taxpayers would come forward and amend their respective income tax returns [ITR] until October 29,” Jacinto-Henares said.

Under the abatement program, those who would voluntarily surrender and pay their rightful taxes by providing their amended ITRs would no longer be slapped with surcharges, the BIR chief said.

“Without the abatement program, those who would come to us and finally pay the right taxes, which already became due and demandable are being charged with 25 percent surcharges, while those who are caught by the BIR would be slapped with 50 percent surcharges,” she said.

These surcharges are on top of the 20-percent legal interest that the BIR imposes, which will not be waived under the abatement program.

“But in order to avail of the abatement program these erring taxpayers shall pay in lump sum,” the BIR chief said.

Under the program, taxpayers may settle any delinquent account or assessment by paying an amount equal to 100 percent of the basic tax assessed.

The program includes one-time transactions such as estate tax, donor’s tax, capital gains tax, final withholding tax, expanded withholding tax and documentary stamp tax on the transfer, sale, exchange, or disposition of assets.

However, taxpayers may only avail of the program and avoid criminal prosecution if they have yet to receive a letter of authority from the BIR.

Otherwise, they will not be exempt from paying surcharges, penalties and other charges, not to mention facing a criminal case.

The letter of authority is an official document that empowers a revenue officer to examine and scrutinize a taxpayer’s book of accounts and other accounting records to determine the latter’s correct liabilities.

The issuance of a letter of authority to a taxpayer signals the start of the audit process.

Finance Secretary Cesar Purisima said they have yet to publish a notice on the abatement program.

“There are a lot of erring taxpayers who want to finally pay their respective amount of taxes but are hesitant because of the penalties being imposed by the government. Hence, this is one way of meeting them halfway,” he said.

The government, however, will not waive the legal interest since the erring taxpayers already enjoyed their earnings in the past.

The last time the government offered a similar abatement program was in September 2006.

During that period the government raised P3 billion.

“Of course, we would continually file tax evasion cases every week. The only difference is that these people should not wait until they are discovered by the BIR. Otherwise, they would have to bear the civil and criminal consequences,” Purisima said.

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BIR exec sacked for ill-gotten wealth

2010-07-25T16:29:00.000-07:00

[ manilastandardtoday.com ] July 24-25, 2010

AN official of the Bureau of Internal Revenue (BIR) was sacked from the service for unexplained wealth.

The Office of the Ombudsman dismissed from the service Amado Navarro, Revenue Officer IV at the BIR Central Office in Quezon City, for dishonesty, grave misconduct and violation of Republic Act 6713 or the Code of Conduct and Ethical Standards for Public Officials and Employees.

The Ombudsman also ordered the filing of charges against Navarro before the lower courts for four counts of perjury, and seven counts of violation of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act.

A petition for forfeiture of Navarro’s ill-gotten properties will also be filed before the Regional Trial Court of Baguio City.

Navarro, who started as Revenue Officer I with an annual gross salary of only P11,904 in 1980, was found to have acquired several real properties including various residential lots in Baguio City, agricultural lands, commercial buildings, and a resort in La Union.

The charges stemmed from an investigation conducted by the Department of Finance-Revenue Protection Service (DOF-RIPS), which is tasked to conduct lifestyle checks on officials and employees of the DOF and its attached agencies.

The complaint stated that although the properties were declared in Navarro’s Statement of Assets, Liabilities and Net Worth (SALN) from 1980 to 2002, he failed to detail the acquisition costs of each property.

He also failed to disclose his business interests or financial connections, despite findings from the investigation that indicated he had several properties for lease, bikes for hire, a grocery store, and a gasoline station.

In addition, he also has several vehicles allegedly registered in the name of his relatives.

Meanwhile, in a separate case, the Ombudsman ordered the filing of charges against Victor Cerniaz Barros, Special Agent II of the Bureau of Customs.

Barros was charged with two counts of Falsification of Public Documents under Article 171 of the Revised Penal Code; five counts of violation of Sec. 7 of RA 3019; and one count of violation of Sec. 8 of RA 6713.

Barros reportedly failed to declare a housing loan of P2 million in his 1995 SALN; a property in Laguna in his 1996 SALN; a Cherokee Pioneer V6 in his SALNs from 1989 to 2006; and a Mercedes Benz, a Kawasaki motorcycle, and shares of stock in a general service enterprise in his SALNs for 2003 to 2005.

He was also indicted for failing to file his SALNs for the years 1980, 1982 to 1986, 1990, 1991, and 2006.

In a 53-page joint resolution, the Ombudsman said that “respondent, within a period of 13 years, has amassed wealth which is almost five times greater than the total annual gross compensation he had received from the government.”

The Ombudsman has ordered the forfeiture of unlawfully acquired properties of Barros and his wife.

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SC Upholds Two Tax Measures

2010-06-26T02:31:00.001-07:00

By Jay B. Rempillo

The Supreme Court has upheld the validity of the imposition by the Bureau of Internal Revenue (BIR) of minimum corporate income tax (MCIT) on corporations and creditable withholding tax (CWT) on sales of real properties classified as ordinary assets.

In a 48-page unanimous decision penned by Justice Renato C. Corona, the Court held that petitioner Chamber of Real Estate and Builders’ Associations, Inc., an association of real estate developers and builders in the country, “has miserably failed to discharge its burden of convincing the Court that the imposition of MCIT and CWT is unconstitutional.” In particular, the petitioner assailed the constitutionality of sec. 27(e) of RA 8424 (The National Internal Revenue Code of 1997), and the revenue regulations (RRs) issued by the BIR to implement said provision and those involving creditable withholding taxes.

The Court ruled that MCIT did not violate due process. It stressed that an income tax is arbitrary and confiscatory if it taxes capital because capital is not income. MCIT, however, is imposed not on capital but on gross income which is arrived at by deducting the capital spent by a corporation in the sale of its goods, i.e. the cost of goods and other direct expenses from gross sales, the Court explained.

The Court upheld the authority of the Finance Secretary to order the collection of CWT on sales of real property considered as ordinary assets. Section 57(b) of RA 8424 grants the Finance Secretary authority to require the withholding of a tax on items of income payable to any person, national or juridical, residing in the Philippines, it ruled.

The Court also ruled that there was no deprivation of property without due process with the imposition of CWT. It said that “nothing is taken that is not due so there is no confiscation of property repugnant to the constitutional guarantee of due process.” It stressed that CWT “does not impose new taxes nor does it increase taxes” but relates entirely to the method and time of payment. (GR No. 160756, Chamber of Real Estate and Builders’ Associations, Inc. v. Executive Secretary Romulo, March 9, 2010)

[ Source: SC Benchmark Online May 2010 ]

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BIR mulls schemes to ease delinquent estate tax payment

2010-04-28T15:43:00.000-07:00

Posted on 10:22 PM, April 28, 2010 [ BusinessWorld Online ]

THE BUREAU of Internal Revenue (BIR) is considering schemes to facilitate the payment of delinquent estate taxes on properties of deceased loved ones.

Internal Revenue Commissioner Joel L. Tan-Torres said in an interview Wednesday night that the agency is mulling reducing penalties for those who would avail of the agency’s Rest in Peace (RIP) project.

"These are long and unpaid taxes so the problem of the heirs is that they don’t have money to pay given penalties. We are looking if we can reduce penalties or allow them to pay on installment basis or even allow them to sell their properties on the condition they will pay taxes," he said.

Project RIP was launched last February as part of the efforts to improve revenue collection. The project was launched as estate tax returns filed for the past years have been low.

BIR statistics showed only 29,198 estate tax returns were filed in 2007 with tax collections amounting to P649.9 million, 29,863 filed in 2008 with tax collections worth P854.9 million and 26,811 estate tax returns filed in 2009 with collections amounting to P876.8 million.

Data from the National Statistics Office, however, showed that there were 415,271 deaths in 2005 and 389,081 in 2006.

Mr. Tan-Torres said with the project in place, the BIR would be able to monitor or determine cases or records of death from sources of information such as civil registry, cemeteries, obituaries, funeral parlors and hospitals.

"Using that information, we will be the one to approach them [heirs] because in our experience in the past, even though there’s a death, the heirs do not file the returns so we will be the one to remind the heirs that they have to do this," he said.

In some cases, Mr. Tan-Torres said, the estate taxes have not been filed and paid for ten years so the tax due would be costly.

He noted that the nonpayment of estate taxes has a 25% surcharge and 20% interest per year.

"Depending on the feedback from our offices, we will look at how we can do this [scheme]," he said, adding only the penalties could be dropped but the estate taxes due would still have to be paid.

Asked how much the BIR expects to lose from condoning the penalties, he said that the agency has yet to come up with an estimate.

Mr. Tan-Torres earlier said the agency expects to collect P10.7 billion from Project RIP.

The BIR, he added, may issue a memorandum on the subject sometime in April.

The BIR is tasked to collect P830 billion this year. The agency’s collections as of the first quarter totaled P173.9 billion, exceeding its P157.7 billion goal for the period. -- Louella D. Desiderio

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BIR issues guidelines for designation of private appraisers

2010-04-27T16:59:00.000-07:00

BIR issues guidelines for designation of
private appraisers

The BIR has issued the policies and guidelines in the recruitment and designation of private appraiser members to the Regional Executive and Technical Committees on real property valuation.

Under Revenue Memorandum Order No. 40-2010, dated April 23, 2010, the BIR issued the procedures and guidelines on the involvement of private real estate appraisers to the Regional and Technical Committee which also prescribes the responsibilities of the Committee Chairmen to secure a list of realty service organizations such as, but not limited to, the following:

Philippine Association of Realty Appraisers (PARA);
Institute of Philippine Real Estate Appraisers, Inc. (IPREA);
Philippine Association of Realtor Board, Inc. (PAREB);
Chamber of Real Estate Builders Association, Inc. (CREBA);
Philippine Council of Real Estate Educators, Inc. (PHILCORE); and
Other associations recognized by the Realty Service Council of the Philippines (RESCOP) as the consultative body of the Department of Trade and Industry (DTI).

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BIR Identifies In-House Experts

2010-04-19T17:55:00.001-07:00

BIR Identifies In-House Experts

Quezon City, 06 April 2010 – In order to improve the voluntary tax compliance and enhance the taxpayer servicing and enforcement capability of the Bureau of Internal Revenue (BIR), a program called the “Industry Champion Program” has been implemented through the issuance of Revenue Memorandum Order (RMO) No. 24-2010.

Under the program, several task forces were formed to provide BIR Revenue Officers or so-called Industry Champions with in-depth expertise and specialization that will enable them to better identify tax issues affecting the taxability and compliance of said industries.

The Industry Champions are expected to know the taxpayers/stakeholders comprising the industry or sector, and also other relevant factors such as clientele/suppliers/associations of taxpayers in the industry; government offices regulating the taxpayers in the industry/sector; industry developments and its work environment; and industry strengths, weaknesses, opportunities and threats/risks.

The Industry Champions shall be the principal BIR officials who shall be responsible for the development and dissemination of expertise and issues on identified industries and sectors. They shall also be tasked to work with experts from the private sector, other government regulators, and industry players/associations; monitor industry events and developments; establish industry benchmarks and standards to be used in the Bureau's administration and enforcement activities; come up with reports on audit issues/inputs for the communication of tax issues and developments to stakeholders; conduct training of BIR personnel; and organize task forces to conduct selective industry audit and investigations on a need basis as approved by the Commissioner of Internal Revenue.

In the process, Industry Champions will be responsible in addressing outdated revenue issuances and rulings that need modification through issuance of new regulations and guidelines.

The initial list of industries included in the program are Banking and Insurance, Telecommunications, Power, Petroleum, Cement, Shipping, Fishing, Health Maintenance Organizations, Semiconductors, Business Process Outsourcing, Mining, Real Estate, Education/Training Institutions, Show business and Entertainment, Travel and Tourism, Foundations, Enterprises enjoying tax incentives, and Professionals (including lawyers, doctors, Certified Public Accountants and architects).

(original signed)
Please refer to: REYMARIE T. DE LA CRUZ, Chief, TIED, 9243245
(original signed)
Approved for Release: AIDA S. SIMBORIO, OIC-Assistant Commissioner, TAS

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2010-03-24T10:53:00.000-07:00

DOF DEVOLVES PROCESSING AND APPROVAL OF ZONAL VALUES

The Department of Finance by virtue of Department Order (DO) 6-2010 dated March 12, 2010 revised the composition of the various Committees involved in the zonal valuation process in the BIR.

Previously, a centralized Committee consisting of senior people in the DOF and the BIR was involved in the zonal valuation process. This structure resulted in a tedious and long processing and approval of real properties zonal valuations, which have not been revised for over 5 years.

With DO 6-2010, the processing and approval has been devolved to the Regional Director (RD) and the Revenue District Officers (RDO). The BIR Committees consist of the Executive Committee on Real Property (ECRPV) chaired by the Regional Director; Technical Committee on Real Property Valuation (TCRPV) chaired by the Assistant Regional Director and the Sub-TechnicalCommittee on Real Property (STCPRV) chaired by the Revenue District Officer (RDO) and co-chaired by the Assistant RDO.

The members of the Executive Committee are officials from various external agencies like the Housing and Land Use Regulatory Board (HILURB), Bureau of Local Government Finance (BLGF) and 2 licensed and competent appraisers from a reputable association/organization of realty appraisers. Consultants are officials from the Land Registration Authority (LRA), National Tax Research Center (NTRC),

National Mapping and Resource Information Authority (NMRIA) and the National Housing Authority (NHA). For the Technical Committee their members are from HLURB, Provincial /City Assessor and 2 licensed and competent appraisers from reputable association/organization or realty appraisers and consultants are representatives from LRA, NTRC, NMRIA and NHA.

The Sub-Technical Committee members are from the Municipal/Assistant City Assessor, Local Development Officer from the Office of the Mayor and 2 licensed and competent appraisers from a reputable association/organization of realty appraisers.

The Executive Committee will study and approve the proposed Schedule of Zonal Values prepared by the Sub-Technical Committee as reviewed by the Technical Committee. They will also deliberate and resolve cases referred by the Technical Committee.

The Technical Committee has a more extensive task of studying and reviewing the proposed Schedule of Zonal Values prepared by the Sub-Technical Committee and recommendation of the same to the Executive Committee; attending of public hearings relative to the establishment/revision of the Schedule of Zonal Values; deliberation and resolution of appealed cases or controversies as to valuation issues in the Regional and RDOs; assignment of zonal values of properties not listed/included in the approved Schedule of Zonal Values and the endorsement to the Executive Committee unresolved appealed cases for resolution.

The Sub-Technical Committee is tasked to study and prepare the schedule of recommended zonal values of real properties under the jurisdiction of the Revenue District Office (RDO) and conduct public hearing on the proposed zonal values.

In addition, for those with no available private appraisers in the locality; and/or if there is failure of any member of the Sub-Technical Committee to attend meetings; and/or there is failure of any of the member/s to submit their recommended values within 10 days from the date of the concluding meeting, the chairman of the said Committee shall execute an Affidavit and proceed with the establishment/revision of the Schedule of Zonal Values.

The establishment or revision of the Schedule of Zonal Values should be based on the average of the 2 highest recommended values or best data/documents available.

All provincial, city and municipal assessors are required to render assistance to the above Committees in the determination of real properties in their in their respective areas of jurisdiction. Likewise, the Committees are authorized to avail of the services of the DOF and the Bureaus and offices under it.

Commissioner Joel L. Tan-Torres said that DO 6-2010 "will now expedite the updating of all zonal valuations of real properties in the country would correspond to increase in taxes collected from transactions of these properties. All Revenue District Offices throughout the Philippines have been mandated to complete their updating of their zonal valuation not later than June 30, 2010".

The zonal value of a real property is the basis for the computation of capital gains tax and transfer taxes for sellers of real properties not used in business.

Please refer to : REYMARIE T. DE LA CRUZ, Chief, TIED

Approved for Release : AIDA S. SIMBORIO, OIC-ACIR, TAS

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Retroactivity of OSD rules to 2009 [ Let's Talk Tax ]

2010-03-15T14:52:00.001-07:00

Posted on 09:26 PM, March 15, 2010 [ BusinessWorld Online ]

Let’s Talk Tax -- Roy N. Relato

The deadline for the filing of the annual income tax return (ITR) for taxpayers using the calendar year method for the taxable year 2009 is in less than a month.

As we all know, taxpayers have the option to use either the itemized deduction scheme or the Optional Standard Deduction (OSD) in computing the taxable income in the annual ITR. Whereas there are no limits on the amounts of deductible ordinary and necessary expenses in the itemized deduction scheme, the OSD is limited to 40% of an individual’s gross sales or receipts, or 40% of a corporation’s gross income.

Moreover, unlike in the itemized deduction scheme, a taxpayer under the OSD regime is not required to substantiate the amount of deduction with official receipts and other adequate records.

The Bureau of Internal Revenue (BIR) recently issued Revenue Regulations (RR) No. 02-2010, which amended the rules laid down by RR 16-2008 on the choice to claim the OSD or the itemized deductions. Under RR 16-2008, a taxpayer may use either the itemized deduction or the OSD in the quarterly ITR, and the taxpayer’s choice must be indicated in the annual ITR. Under RR 02-2010, however, the decision to use either the OSD or the itemized deductions must be signified in the ITR filed for the first quarter of the taxable year. Once the choice is made, the same type of deduction must be consistently applied for all the succeeding quarterly ITRs and in the annual ITR. Failure to indicate the choice to avail of the OSD in the first quarter ITR or failure to file the first quarter ITR shall mean that the taxpayer chose to avail of itemized deduction for the taxable year.

Subsequently, the BIR issued Revenue Memorandum Circular (RMC) No. 16-2010, which prescribes the rules for the disclosure of the taxpayer’s decision to avail of the OSD for the taxable year 2009. Under RMC 16-2010, taxpayers choosing to avail of the OSD are required to check the appropriate box in the first quarter ITR (BIR Form No. 1702Q) of the taxable year 2009, regardless of whether such taxpayer is adopting the calendar or fiscal year method of reporting. Failure to indicate the election to avail of the OSD in the first quarter ITR or failure to file such return shall mean that the taxpayer chose to avail of the itemized deduction for the taxable year 2009. The election to avail of the OSD or itemized deduction is irrevocable for the taxable year 2009 and such irrevocability is not affected by any amendment by the taxpayer of his first quarter ITR.

The main issue that needs to be resolved in the issuance of the RMC is whether RR 02-2010 may be given retroactive application for the taxable year 2009. In general, any revocation, modification, or reversal of any of the rules and regulations or any rulings or circulars promulgated by the BIR Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial to the taxpayers (Section 246, Tax Code). As previously mentioned, the RMC requires that the decision to use the OSD be made known by the taxpayer in his first quarter ITR for the taxable year 2009. It must be noted, however, that at the time the RMC was issued, most of the taxpayers have already filed their first quarter ITR since under the Tax Code, the deadline for filing the said return is 60 days from the close of the taxable quarter. This means that for taxpayers using the calendar year as accounting period, the last day for filing was last June 1, 2009. Thus, it would be impossible to comply with the RMC since the taxpayers have already filed the first quarter ITR.

Hence, the retroactive application of the RMC to the first quarter ITR of taxable year 2009 should not be allowed because it would be prejudicial to taxpayers.

Moreover, the RMC provides that even if the taxpayers file an amended ITR for the first quarter of taxable year 2009, such amendment will not change the irrevocability of the decision of the taxpayer in the originally filed return. In effect, the RMC does not give the taxpayers a chance to exercise their right to avail of the OSD and instead deprives them of such right by judging their choice of method of deduction on the basis of a return filed prior to the release of the RMC. Such provision runs violates the due process clause of our Constitution. Hence, in addition to being prejudicial to taxpayers, the validity [Windows X1] of the RMC should also be challenged because it violates the taxpayer’s right to due process.

Then, what should the taxpayers do in the meantime? Taxpayers who failed to elect the use of the OSD in the first quarter ITR for 2009 have the option to either question the validity of the RMC before the courts or simply accept the RMC. On the other hand, since the first quarter of the current year is about to end, it would be prudent for taxpayers to evaluate the method of deduction that is beneficial to them and to signify their decision in the 2010 first quarter ITR.

(The author is a tax manager at Punongbayan & Araullo, a member firm within Grant Thornton International Ltd. Readers may e-mail Roy.Relato@pna.ph or call 886-5511 for comments or inquiries.)

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Condo buyers to lose tax breaks, incentives

2010-03-14T13:48:00.000-07:00

March 12, 2010

by Elaine R. Alanguilan

[ manilastandardtoday.com ]

INTERNAL Revenue has revoked the tax breaks and incentives to so-called build-your-own real estate developers in a bid to collect P500 million more in revenue.

In a build-your-own project, the developer manages the construction of a condominium or property, while funds contributed by individual investors are treated as investments in a joint venture and pooled in a bank. Previously, such projects were considered non-taxable as the developed units were treated as transactions to return investors’ capital contributions.

But Internal Revenue Commissioner Joel Tan-Torres said this practice deprived the government of value-added and income taxes, saying that five or six such projects now being built could bring in as much as P500 million more into the national coffers.

He cited the joint venture transactions of Meridien East Realty & Development Corp. and Century Properties Inc.

The two companies are part of businessman Jose E.B. Antonio’s Century Properties Group, the largest privately-owned real estate company, with 40 projects in its portfolio, including Essensa East Forbes and South of Market in Fort Bonifacio.

“There are about five to six ongoing projects being developed under the same scheme,’’ Tan-Torres said.

“Under the previous [Internal Revenue] ruling, developers of these projects were only required to pay the document stamp tax and were exempted from paying VAT and income tax.”

The agency has since rectified its June 2005 ruling and now treats such projects as a form of pre-selling that is not tax-exempt.

Tan-Torres said the Housing and Land Use Regulatory Board also rejected the build-your-own scheme as being contrary to the policy behind a presidential decree that protects subdivision and condominium buyers.

“These build-your-own developers can also be seen as traditional developers and should be subject to taxes. So the tax breaks and incentives [previously granted to them] are now repealed,” Tan-Torres said.

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2010-03-14T13:46:00.001-07:00

CTA Sustains BIR, Orders Arrest of President of Realty Corporation
Quezon City, 15 March 2010 –

The Court of Tax Appeals (CTA) has ordered the arrest of Jacqueline P. Marzan after finding that probable cause exists for the issuance of a Warrant of Arrest against her in the case filed by the Bureau of Internal Revenue against her for tax evasion.

The latest Resolution by the CTA in the said case again gave the BIR’s Run After Tax Evaders (RATE) program another reason to celebrate after securing convictions in at least four (4) cases including the case against Kintanar and the Pajero Lady. Jacqueline P. Marzan, allegedly a sibling of a high city hall official, was charged by the BIR in Court in her capacity as President of 8M Realty Corporation with business address located at 1633 Craig St., Sampaloc, Manila for the alleged failure of her realty company to pay deficiency income, withholding, and business taxes for the taxable year 1999 despite repeated demands made upon her by the bureau to do so.

In the Resolution rendered by the said court on February 24, 2010, the accused was charged for violation of Section 255 in relation to section 253(d) and 256 of the 1997 Tax Code , as amended.

The charges stemmed from willful, unlawful and felonious failure, refusal and neglect of Ms. Marzan to pay the deficiency income tax, VAT and final withholding tax in the amounts of P409,385.88, P745,975.68 and P439,332.84 respectively due from said corporation for the taxable year 1999 in the total amount of P1,594,694.40 under BIR Assessment Notice No. 32-99.

Records of the investigation showed that the accused made no formal protest or appeal despite notice of assessment served and repeated demands by the Bureau.

After filing of the complaint or information by the BIR, a Resolution dated November 18, 2009 was approved by the City Prosecutor of Manila and other documents on the preliminary investigation in support of the information.

On February 15, 2010, in compliance, the prosecution submitted true copy of the required written authority from the Commissioner of Internal Revenue.

Based on the information and supporting documents, the CTA found probable cause exists for the issuance of a Warrant of Arrest against the accused.

“This order validates the merits of the case filed by the BIR against tax evaders. Eventually , the long arm of the law will catch up with them,” BIR Legal & Inspection Group Deputy Commissioner Gregorio V. Cabantac said.

(Original Signed)
Please refer to: REYMARIE T. DE LA CRUZ
Chief, TIED

(Original Signed)
Approved for Release: GREGORIO V. CABANTAC
Deputy Commissioner, Legal & Inspection Group

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Bureau of Internal Revenue to lose P6 billion due to optional deduction

2010-03-11T13:44:00.000-08:00

By Iris C. Gonzales (The Philippine Star) Updated March 12, 2010 12:00 AM

MANILA, Philippines - The Bureau of Internal Revenue (BIR) expects to lose up to P6 billion this year from the Optional Standard Deduction privilege allowed under RA 9504 or the Minimum Wage Law.

OSD allows corporations and individuals a 40-percent maximum deduction on gross sales or gross receipts in the case of self-employed and professionals and a standard deduction of not more than 40 percent on gross income for corporations. The deduction would result in a reduction in income tax obligations to the BIR.

The system was put in place, supposedly to simplify the filing of income-tax returns and benefits for professionals and micro, small and medium entrepreneurs. It was also designed to encourage businesses in the underground economy to pay taxes.

However, according to the BIR, the revenue losses of P6 billion would leave a huge dent on state coffers. As such, the BIR is pushing for an amendment in the reduction of OSD for corporations from 40 percent to 10 percent.

The P6 billion estimated foregone revenue is higher than the previous estimate of P4.1 billion.

As part of the implementation of the OSD provision, the BIR issued Revenue Memorandum Circular 16-2010 to remind taxpayers of the requirement to disclose their option to avail of the 40 percent OSD provision for taxable year 2009 which is due to be filed or paid for this year.

BIR Commissioner Joel Tan-Torres said that if the taxpayer decides to use OSD it should be used for the succeeding quarterly returns and in the final ITR for the taxable year. The decision to avail of the OSD as signified in the return shall be irrevocable for the taxable year 2009, he also said.

He also said that taxpayers who choose to avail of the OSD are required to indicate whether they are adopting a calendar or fiscal period. Furthermore, Tan said, failure to indicate the decision to use OSD would be considered as having availed of the Itemized Deduction or the other option in computing gross sales and receipts.

Newly-registered taxpayers should also disclose their election to avail of the OSD in their initial quarterly income tax return which is required to be filed for the taxable year 2009.

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BIR eyes P10.7 billion from real estate tax collections

2010-02-10T10:10:00.000-08:00

By Iris C. Gonzales (The Philippine Star) Updated February 11, 2010 12:00 AM

MANILA, Philippines - The Bureau of Internal Revenue (BIR), the government’s main revenue earner, expects to raise P10.7 billion from its so-called Project Rest In Peace (RIP) which intends to step up collections from estate taxes.

BIR Commissioner Joel L. Tan-Torres said as another measure to boost collections, the agency would increase the awareness of the public on the proper payment of estate taxes.

Project RIP is intended to let the legal heirs know that after the death of a loved one, follows the responsibility to comply with the laws of the government, he said.

Through the project, the agency will monitor proper payment of the estate tax which the BIR for so many years has not given much attention to.

Citing data gathered from the National Statistics Office, the BIR said there were 403,191 number of deaths in 2004; 415,271 in 2005; and 389,081 in 2006.

However, based on BIR records, only 29,198 estate tax returns were filed in 2007; 29,863 in 2008; and 26,811 in 2009.

This statistics revealed a very low number of estate tax returns filed. Collections amounted to P649.9 million in 2007, P854.9 million in 2008 and P876.8 million in 2009.

“From the statistics gathered, it clearly indicates that there is a large potential to increase the number of estate tax returns filed, once these tax potentials are tapped. Once we implement this project, we can target to increase tax return filing to 250,000 that can generate more than P10 billion in estate tax collection,” Tan-Torres said.

The BIR chief said through the issuance of Revenue Memorandum Order 10-2010, the BIR shall undertake courses of action to closely monitor potential estate tax cases such as establishing linkages with public and private institutions to access information about the decedent, communicate with the administrator or the decedent’s family the need to file the estate tax return and to conduct a public awareness campaign on Project RIP.

As provided for in the RMO, the Revenue District Office (RDO) shall be responsible for the pro-active monitoring of these cases by making linkages with civil registers, hospitals, memorial parks, cemeteries, funeral parlors, crematoriums, judicial clerks of courts, obituaries, life insurance companies and other financial institutions, to access and secure records of the decedents. All information gathered shall be submitted to the Audit Information Tax Exemption and Incentives Division (AITEID) for centralized data warehousing.

The RDO having jurisdiction over the decedent’s principal residence shall send notification letter to the decedent’s family informing them of the requirements and due dates for filing of notice of death, estate tax return and payment of estate tax.

If the decedent’s family failed to comply with their obligation in filing the said return and in paying the said tax, the RDO shall undertake the necessary action to determine the estate tax obligation of the decedent and to protect the interest of the bureau.

The BIR’s National Investigation Division is tasked to track obituaries in the newspaper. It would also prepare a list of names of the decedents with complete information and determining who among in the list are the “high potential” cases, which have substantial properties and potential for substantial estate tax payments.

The BIR is tasked to collect P830 billion this year, lower than the initial revenue goal of P875 billion. In 2009, the BIR collected P744.9 billion or P53.1 billion short of the revised target for last year of P798 billion.

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BIR NO-NOON BREAK

2010-01-26T17:59:00.000-08:00

BIR implements No-noon break Policy

The Bureau of Internal Revenue has issued its Revenue Memorandum Order No. 5-2010 which implements a no-noon break policy and schedule in order to serve the taxpayers.

read full text of RMO 5-2010, date January 19, 2010 > > > RMO 5-2010

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BIR reshuffles hundreds of key personnel nationwide

2010-01-08T09:27:00.000-08:00

Saturday, 09 January 2010 00:00 [ manilatimes.net ]

BY LAILANY P. GOMEZ REPORTER

The Bureau of Internal Revenue (BIR) said on Friday that it has transferred hundreds of personnel in key positions in an effort to boost revenue collections this year.

In a statement, BIR Commissioner Joel Tan-Torres said the agency has already reshuffled 283 personnel in key positions since it started its revamp last month.

“This reshuffle is crucial to the present thrust of the bureau of meeting its collection goal for this year. We have to obtain maximum operational efficiency of field officials starting this year in all Revenue Offices to effect the implementation of high-visibility public awareness programs on taxpayers service and enforcement campaigns of the bureau,” he said.

Last year, President Gloria Arroyo directed the Department of Finance to strictly implement the Lateral Attrition Law that sought to penalize tax collectors who failed to deliver promised revenues.

This law provides a system of rewards and punishment for personnel of the Bureau of Internal Revenue and of the Bureau of Customs to encourage them to hit targets. Those who fall short of their goal by at least 7.5 percent would be dismissed from service, while those who exceed the same would be given incentives, including cash.

The two revenue collection agencies—which contribute at least 80 percent to national coffers—often missed their monthly collection targets last year.

But the Tax agency said it was able to overshoot its December collection target of P60.03 billion after collecting P61.55 billion with the help of tax collection enhancement measures.

“The BIR will continue to evaluate the performance of all revenue officers based on certain key performance indicators and conduct periodic transfers of personnel to ensure that the over-achievers are rewarded and the non-performers placed in less responsible assignment,” Tan-Torres pointed out.

Besides reorganization, the Tax agency also said it would conduct a written comprehensive examination for all revenue officers, intelligence officers and special investigators who belong to the assessment group in a bid to improve their performance. Tan-Torres said the examination would also support the agency’s professionalization and career development program.

The exam, which will be held on January 24 should serve as a means through which the Tax agency could improve its training and skills enhancement programs and determine the most effective assignments for its personnel, the commissioner said.

The BIR said the government economic managers are set to lower the agency’s 2010 revenue goal to accommodate the effects of the tax-eroding measures and recent calamities on tax intake.

The commissioner said the Development Budget Coordination Committee is now finalizing the revision of the tax agency’s collection target from P875.1 billion to P830 billion.

Originally, the tax agency sought to lower its goal to only P800 billion.

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Tax chief sets BIR reshuffle

2009-12-17T12:51:00.000-08:00

Posted on 11:45 PM, December 17, 2009 [ BusinessWorld Online ]

BY ALEXIS DOUGLAS B. ROMERO, Reporter

CLOSE TO 60 SENIOR PERSONNEL will be reshuffled at the Bureau of Internal Revenue (BIR) next year, and its Large Taxpayers Service’s (LTS) complement increased, as part of a renewed effort to boost revenues.

The new assignments, BIR Commissioner Joel L. Tan-Torres said on Wednesday, would be based on performance assessments and were aimed at generating fresh strategies.

"We will implement a massive reshuffle effective next year. There was an understanding between the commissioner and regional directors that the KPIs (key performance indicators) will be the basis for reorganization," he told reporters.

"It’s good to have reorganization based on performance. It will infuse new ideas and initiatives ... The performers were given more responsible positions while underperformers were moved to districts with lower goals. It will take effect on January 1."

Reviewed were collection performance, number of delinquent establishments closed, number of tax campaigns for taxpayers and accountants, linkages with local governments and other sources of third party tax information, and taxpayer satisfaction.

The reshuffle will be the first under Mr. Tan-Torres’ administration. The bureau last implemented one in March under his predecessor, Sixto S. Esquivias IV who resigned in October after admitting that this year’s targets would not be met.

"They (revenue personnel) may slacken [if they are not moved] ... It will also keep them independent," Mr. Tan-Torres said.

More personnel will also be assigned to the LTS to intensify the monitoring of big businesses.

"We are beefing up the large taxpayers group. We will assign two assistant commissioners and will increase the audit divisions from four to eight. This will allow us to enhance our collection initiatives," Mr. Tan-Torres said.

"We will monitor better the compliance of large taxpayers if we increase our manpower. It this group collects around 70% of our taxes then we should put more resources there."

At present, the LTS, which oversees corporations and individuals with a net worth of at least P300 million, is headed by an assistant commissioner.

Orders dated December 14 and furnished to reporters yesterday showed the reorganization would involve 57 personnel ranging from assistant commissioners to revenue district officers.

The office of the assistant commissioner for LTS has been divided into two: an assistant commissioner for excise large taxpayers and another for regular large taxpayers or non excise taxpayers. LTS Assistant Commissioner Zenaida G. Garcia will handle the former while Nestor S. Valeroso, currently the regional director for San Pablo City in Laguna, will take the latter post.

Other ranking BIR personnel to be transferred are Marissa O. Cabreros, head revenue executive of the LTS administrative and enforcement group who will become assistant commissioner for legal service; assistant commissioner for legal service James H. Roldan, who will be moved to the enforcement group; assistant commissioner for human resources Leonor S. Villalon-Rogers, to the policy and planning group; assistant commissioner for policy and planning Carolina G. Pesayco, to the human resource group; assistant commissioner for inspection service Eufrocina S. Casasola, to the financial and administrative service; assistant commissioner for enforcement Margaret Mary C. Lauron, to the inspection group; and assistant commissioner for financial and administrative service Zenaida B. Chang, who was named special assistant to the deputy commissioner for resource management.

Regional officers given new posts were Manila director Arnel S. Guballa who will be reassigned to Caloocan, Makati’s Alfredo V. Misajon who will be transferred to Manila; his post will be given to Caloocan’s Jaime B. Santiago.

Cebu director Rodita B. Galanto will be reassigned to San Pablo City, Laguna while Zamboanga director Glen A. Geraldino will be moved to Iloilo. Tacloban director Araceli L. Francisco will be transferred to Bacolod while Bacolod director Jose N. Tan and Iloilo director Albert B. Alocilja will be moved to Cebu and Tacloban, respectively. Rozil Lozares, who serves as technical assistant to the Deputy Commissioner for Operations has been appointed as Zamboanga regional director.

Olivia O. Lao, head revenue executive assistant (HREA) of the LTS-excise taxpayers, has been designated HREA of the BIR programs and compliance group while Valenzuela revenue district officer Artemio D. Aquino has been appointed chief of the excise taxpayers regulatory division. Conrado C. Lee, chief of the large taxpayers audit and investigation division, has been named assistant regional director for Cebu.

The rest consist of revenue district officers and assistant regional directors who were reassigned to other local offices.

The BIR missed its P810-billion target last year, collecting only P778 billion.

It is tasked to collect P798.5 billion this year and P875.1 billion next year. Officials have admitted that this year’s goal would be missed due to various tax cuts and a slower economy and have urged economic managers to review the 2010 target.

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BIR circularizes approval of Socialized Housing Ceiling from P300,000 to P400,000

2009-06-08T16:55:00.000-07:00

RMO 30-299 circularizes the relevant portions of HUDCC Resolution No. 1, Series of 2008, approving the adjustment of the price ceiling for socialized housing, as per HUDCC Resolution No. 1, Series of 2008 promulgated on December 11, 2008.

Under HUDCC Resolution No. 1, Series of 2008 promulgated on December 11, 2008increasing the socialized housing loan ceiling of Low Cost Level 1-A had been increased from P300,000 to P400,000.

The newly adjusted price ceiling shall apply to all sales of real properties utilized for socialized housing, as defined under RA No. 7279 otherwise known as "Urban Development and Housing Act", and other related laws such as RA No. 7835 otherwise known as the "Compreshensive and Integrated Shelter Financing Act of 1994" and RA No. 7863 otherwise known as the "Home Guaranty Act of 2000", beginning January 1, 2009.

Read full text of RMO 30-2009 > > >

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BIR sets venue for large firms’ property-related taxes

2009-05-28T16:48:00.000-07:00

Friday, May 22, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]

THE BUREAU of Internal Revenue (BIR) has designated revenue district offices (RDOs) as the venue for the filing of returns and payment of taxes due on transactions involving the property of large taxpayers.

The directive is embodied in Revenue Regulations (RR) No. 5-2009, uploaded on the bureau’s Web site last May 13.

The issuance amended RR 4-2008, which designated the Large Taxpayers’ Service (LTS) offices as the venue for the payment of tax dues on real estate deals sealed by large taxpayers.

RR 4-2008, however, retained RDOs as venue for the payment of real estate taxes of non-large taxpayers.

The latest revenue regulation effectively restored the set-up before Revenue Regulations 4-2008 was implemented.

Confusion

BIR noted that RR 4-2008 caused confusion among taxpayers since some of them were removed from or have just been incorporated into the LTS.

"During the implementation [of RR 4-2008] and with the recent delisting and enlisting of taxpayers who are to be classified as large taxpayers, it has been recognized that such differing rule has caused confusion to those who have been declassified as large taxpayers, as well as those who have to be recently enlisted as such," BIR said.

"The venue for the filing of tax returns and payment of taxes due on real properties is reverted to concerned RDO where the property is located."

The tax code defines large taxpayers as firms with value-added tax paid or payable of at least P100,000 for any quarter of the preceding taxable year; firms with excise tax paid or payable of at least P1 million for the preceding taxable year; firms with annual income tax paid or payable of at least P1 million for the preceding taxable year; or firms with withholding tax payment or remittance of at least P1 million for the preceding taxable year.

The tax bureau said the new regulations should provide uniformity in processing of real-estate transactions since this would cover both large and non-large taxpayers.

It added that the new set-up would enable the BIR to conduct "expedient" ocular inspection on the real properties involved. — Alexis Douglas B. Romero

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