BIR Ruling [DA-093-96]

February 28, 1996 BIR RULING [DA-093-96] Hon. Teofisto T. Guingona, Jr. Chairman, National Council on the Administration of Justice Department of Justice Padre Faura, Manila S i r : This refers to your request for information as to whether or not this Bureau has been implementing a system of rewards and incentives to informants on tax evasion, tax fraud and other related offenses and the problems encountered in the implementation thereof and the solutions adopted to address and resolve the said problems. In this connection, please be informed that this Office has been implementing a system of rewards to informants on tax evasion or tax frauds and other violations of the internal revenue laws. This is expressly provided for under Section 281 of the Tax Code, as amended by P.D. No. 1773, the full tax of which is quoted hereunder, viz.: cdtech "SEC. 281. Informer's reward to persons instrumental in the discovery of violations of the National Internal Revenue Code and in the discovery and seizure of smuggled goods. "(1) For violations of the National Internal Revenue Code .Any person, except an internal revenue official or employee, or other public official, or his relative within the sixth degree of consanguinity, who voluntarily gives definite and sworn information, not yet in the possession of the Bureau of Internal Revenue, leading to the discovery of frauds upon the internal revenue laws or violations of any of the provisions thereof, thereby resulting in the recovery of revenues, surcharges and fees and/or conviction of the guilty party and/or the imposition of any fine or penalty, shall be rewarded in the sum of equivalent to fifteen per centum of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected. The same amount of reward shall also be given to an informer where the offender has offered to compromise the violation of law committed by him and his offer has been accepted by the Commissioner and in such a case, the fifteen per centum, reward fixed herein shall be based on the amount agreed upon in the compromise and collected from the offender. Provided, that should no revenues, surcharges, or fees be actually recovered or collected, such person shall not be entitled to a reward: Provided, further, that the information mentioned herein shall not refer to a case already pending or previously investigated or examined by the Commissioner or any of his deputies, agents or examiners, or the Secretary of Finance or any of his deputies or agents. Provided, finally, that the reward provided herein shall be paid under regulations issued by the Commissioner of Internal Revenue with the approval of the Secretary of Finance. "(2) For discovery and seizure of smuggled goods. To encourage the public and law-enforcement personnel to extend full cooperation in eradicating smuggling, a cash reward equivalent to fifteen per centum of the fair market value of the smuggled and confiscated goods shall be given to persons instrumental in the discovery and seizure of such smuggled goods. (As amended by PD 1773)." To effectively implement the aforequoted section of the Tax Code, we have promulgated Revenue Memorandum Order No. 12-93 which provides for the guidelines in the filing of confidential information and investigation by authorized revenue officers. However, the payment of reward to the qualified informer is subject to the approval of the Secretary of Finance, pursuant to Section 15 of Finance Regulations No. 1. cdll Finally, please be informed that so far, this Office has not encountered any problem regarding the granting of reward to any informer. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue