BIR Ruling

January 2, 1973 Carlos J. Valdez & Co. Certified Public Accountants 1130 Perez St., Paco Manila S i r : This refers to your letter dated November 16, 1972 requesting information on Revenue Regulations No. 8-72 implementing Presidential Decree No. 23 dated October 16, 1972, which proclaims the amnesty. cdt In connection with Section 4, of said Regulations, you would like to be advised on the following points: "a. In instances where the deficiency assessment is partly due to the under-declaration of taxable income or omission of a taxable income and partly due to disallowance of deductions claimed, may the taxpayer avail of the amnesty provisions on the omitted or underdeclared income to relieve him from further liability thereon? "b. In instances where the deficiency assessment is wholly due to an alleged underdeclared or omitted taxable income but the taxpayer does not agree to portions of the assessment and is protesting the same, can the taxpayer avail of the amnesty provisions on those aspect of the assessment acceptable to him? "c. In the abovecited instances, how would you apply the proviso "the taxpayer must declare . . . as his 'previously untaxed income' the whole amount of net income in the notice of deficiency assessment"? "d. How would the provisions of this amnesty affect 1) notices of deficiency assessments issued after the promulgation of these regulations? 2) investigations of taxpayer's liability? In reply, I have the honor to inform you as follows: Section 4 of Revenue Regulations No. 15-72 dated December 11, 1972 reads as follows: Sec. 4. Who may not avail of the amnesty . All taxpayers, natural or juridical, against whom a valid information under Republic Act No. 2338 has been filed or a notice of deficiency assessment has been issued by the Bureau of Internal Revenue prior to the effectivity of Revenue Regulations No. 8-72, as amended, may not avail of the immunity provided for in Presidential Decree No. 23 as amended by Presidential Decree No. 67. The above-quoted provision repeals Section 4 of Revenue Regulations No. 8-72. Accordingly, in the above instances a, b, and c where there are deficiency assessments, the immunity provided under Presidential Decree No. 23, as amended by Presidential Decree No. 67 cannot be availed of. Tax cases with notices of deficiency assessments issued after the promulgations of Revenue Regulations No. 8-72 are not also covered by the immunity provided in Presidential Decree No. 23, as amended. However, taxpayers currently being investigated may come forward and avail of the immunity provided under said Decree by filing a notice and return on or before March 31, 1973 as long as our assessment of his tax liability based on said investigation has not yet been issued. As regards the points raised by you in connection with Section 5(c) and (d) of Revenue Regulations No. 8-72, please be informed as follows: a. If the "previously untaxed income" consists of cash deposited in the Philippine bank whether in the form of current deposits, savings deposits, bankers acceptance or in the money market, the taxpayer need only to file a return declaring therein said cash deposits and pay the 10% tax due thereon. b. If the "previously untaxed income" consists of properties, real or personal, here or abroad, or if such income is already spent, the taxpayer need only to file a return declaring therein the value of said properties and pay the 10% tax due thereon. c. Your treatment of "previously untaxed income", or part thereof, consisting of hoarded cash is correct only if the cash is hoarded abroad. (See Sec. 5(c), Revenue Regulations No. 15-72 dated December 11, 1972) If the cash is hoarded in the Philippines, said Section 5(c) of Revenue Regulations No. 15-72 does not apply. In such case the taxpayer need only to file a return declaring said hoarded cash in the Philippines and pay the 10% tax due thereon. acd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue