BIR Ruling

August 25, 1970 Mr. Virgilio E. Gumera 113 P. Jacinto St. Caloocan City S i r : This refers to year letter dated July 27, 1970, requesting information as to whether or not the Bureau of Internal Revenue has the right to collect internal revenue taxes and other charges from importers who removed their goods from the Bureau of Customs under fake receipts even if BIR examiners have already examined the books of accounts of these importers without detecting the falsity of the receipts of payment made by the importers to the Bureau of Customs. You would like also to have our opinion as to whether bonding companies which put up surety bonds for the removal of the goods are still liable although the bonds are already cancelled or terminated, as the case may be. In reply, I have the honor to inform you that by virtue of Section 3 of the Tax Code which provides: "The powers and duties of the Bureau of Internal Revenue shall comprehend the collection of all national internal revenue taxes, fees and charges, and the enforcement of all forfeitures, penalties, and fines connected therewith" this Office clearly has the power to collect internal revenue taxes and other charges from importers who were able to remove imported goods from the Bureau of Customs under fake receipts. The collection shall be done after the books of accounts of the importer are re-examined by internal revenue officers. The re-examination is legally justified although an examination of the importer's books of accounts has already been made during which the BIR examiners failed to detect the falsity of the receipts. This Office has already ruled that internal revenue officers, when duly authorized by their superiors can re-examine the books of accounts of a taxpayer where subsequent to a previous examination, information is received indicating fraud, malfeasance, concealment or misrepresentation of material facts. (BIR Ruling No. 315 s. 1960) Moreover, pursuant to Section 337 of the Tax Code, as amended by Republic Act No. 6110, books of accounts of taxpayers may be subjected to another examination and inspection in cases of fraud, irregularity or mistake. aisadc With reference to the second query, it should be noted that one of the conditions of the surety bonds is that the sureties shall be released from liability only upon the lawful payment of the tax which they have guaranteed to be paid to the government. In the instant case, the taxes guaranteed by the bonds were not paid since the alleged payments were covered by fake receipts. Consequently, even if the surety bonds were cancelled, the liability of the surety will subsists. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue