BIR Ruling [DA-304-05]

July 5, 2005 BIR RULING [DA-304-05] SEC 282 (A) Hon. Cesar V. Purisima Secretary of Finance Manila S i r : We are forwarding herewith for your approval the herein claim for informer's reward of SERAFIN MARQUEZ alias DINO SOLANO of 4035 Magnolia St. San Valley, Paraaque City under Section 282 (A) of the Tax Code of 1997, including the entire docket relative to the internal revenue tax case of RESOURCES & INVESTMENT CORPORATE HOUSE (RICH) for taxable years 1995 to 1996. The records show that on June 12, 2003, an affidavit which was recorded as Confidential Information No. 93-2003 was filed by the above-named informer denouncing Resources & Investment Corporate House (RICH for short) for non-payment of the correct percentage tax and value-added tax on its gross receipts. On the basis of said confidential information submitted by the informer, Letter of Authority No. 0087508 dated October 8, 2003 covering taxable year 2002 and unverified prior years for all internal revenue taxes was issued by this Office to a group of Revenue Officers of the Tax Fraud Division to investigate all internal revenue tax liabilities of Resources Investment Corporate House. It was ascertained that on October 30, 2003, or twenty (20) days after the Letter of Authority was served upon the subject, the subject availed of the Voluntary Assessment and Abatement Program (VAAP) as provided under Revenue Regulations Nos. 12-2002 as amended by Revenue Regulations Nos. 17-2002, 18-2002 and 23-2002 and paid the following taxes: TAX TYPE TAXABLE YEAR AMOUNT PAID 1. Value-Added Tax (VAT) 1999 P125,000.00 2. VAT 2000 125,000.00 3. VAT 2001 125,000.00 4. Documentary Stamp Tax (DST) 1999 618,750.00 5. Percentage Tax 1999 1,624,266.87 6. Percentage Tax 2000 922,784.49 7. Withholding Tax on Compensation 1999 546,535.44 8. Fringe Benefit Tax 1999 45,220.19 9. Fringe Benefit Tax 2000 45,220.19 10. Fringe Benefit Tax 2001 45,220.19 11. Income Tax 1999 62,500.00 Income Tax 2000 62,500.00 Income Tax 2001 1,437,840.37 TOTALS P5,785,840.37 ========== That the above payments were verified and certified to by the Chief, Revenue Accounting Division on August 23, 2004, September 10, 2004 and October 7, 2004, copies of which are found on pages 336, 319 and 308; That the taxpayer invoked immunity from audit and investigation for the taxable years 1999, 2000 and 2001 by virtue of its availment of the VAAP. Taxable transactions pointed out by the informer that should have been subjected to percentage taxes and/or value-added taxes were substantially if not entirely rectified when it availed of the VAAP on the aforesaid tax types. Likewise, for the taxable year 2002, this Office forewent the examination of the taxpayer's books of accounts because it had already filed tax returns on its taxable transactions subject to business taxes as evidenced by the Abstract of Quarterly VAT Returns, Abstract of Quarterly Returns and Summary of Monthly Percentage Tax Returns filed. As per ITS in 2002, the taxpayer paid VAT and percentage taxes in the amount of P1,760,807.96 and P277,251.81, respectively. The unpaid internal revenue taxes of the previous taxable years which have been settled through VAAP and voluntary payments have closely approximated if not exceeded the amount of P8 million to P10 million that was allocated for the purpose as alleged in the confidential information. Now the informer poses the query on whether or not he is entitled to the reward if the confidential information he furnished to this Office precipitated the collection of the taxes through the availment of VAAP by the taxpayer under investigation, to which we answer in the affirmative on the ground that Section 282 (A) of the Tax Code of 1997 as amended which took effect on January 1, 1998 provides that . . . 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 reward fixed herein shall be based on the amount agreed upon in the compromise and collected from the offender. cSaADC The records further show that the information was in writing and under oath; that it was not yet in the possession of the Bureau of Internal Revenue (BIR) nor is the aforesaid tax liability pending or previously investigated by any official or employee of this Bureau or by the Department of Finance; and that the informer, as represented, not related to any internal revenue official or employee or to any public officer within the sixth degree of consanguinity. It appearing that the information furnished by SERAFIN MARQUEZ alias DINO SOLANO was instrumental in the discovery of a violation of the internal revenue laws and in the recovery of taxes which otherwise would not have been effected, it is respectfully recommended that he be paid the amount equivalent to 10% of P5,785,840.37 or the amount of P578,584.03 as informer's reward pursuant to Section 282 (A) of the Tax Code of 1997, the law applicable herein. The said reward shall be subject to the 10% final tax imposed under Section 2.57 (1) of Revenue Regulations No. 2-98. Very truly yours, (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue