BIR Ruling [DA-336-04]

June 21, 2004 BIR RULING [DA-336-04] Hon. Juanita T. Amatong OIC-Secretary of Finance Manila M a d a m : We are forwarding herewith for your approval the herein claim for informer's reward of Ms. Charito Gonzales and Ms. Alex Flaminiano, both of Cubao, Quezon City, under Section 282(A) of the Tax Code of 1997, including the entire docket relative to the internal revenue tax case of Jewelcraft Pawnshop, Inc. for the taxable years 1997 to 1999. The records show that on August 28, 2000, an affidavit which was recorded as Confidential Information No. 52-2000 was filed by the above-named informers denouncing Jewelcraft Pawnshop, Inc. for issuance of unregistered invoices/receipts resulting to non-payment of value-added tax and documentary stamp taxes on loans. On the basis of said confidential information and documents submitted by the informers, Letter of Authority No. 29102 dated October 30, 2000 was issued by this Office to a group of Revenue Officers of the Tax Fraud Division to investigate all internal revenue tax liabilities of Jewelcraft Pawnshop, Inc. for the years 1997, 1998 and 1999. It was ascertained in the investigation that Jewelcraft Pawnshop, Inc. had, indeed, committed the violations as averred by the informers and such other tax evasion practices stated as follows: (1) unreported interest income realized from various client-pawner extracted from booklets of original unregistered invoices; (2) excess claims of taxes and licenses as deductions; unreported sales of pawned items and/or auction items not subjected to value-added tax; and (3) non-payment of documentary stamp taxes on loans Accordingly, and on the basis of the recommendation of the investigating examiners contained in their Memorandum-report dated March 7, 2002, there were found taxes due from Jewelcraft Pawnshop, Inc. the total amount of P2,080,548.72 representing deficiency income, value-added tax and documentary stamp taxes, inclusive of surcharge and interest, for the years 1997 to 1999. However, the total amount actually paid by Jewelcraft Pawnshop, Inc. as of date are as follows: Kind of Tax Year Involved Amount Income tax 19971999 P287,681.00 Value-Added tax 19971999 1,713,466.84 Documentary Stamp tax 19971999 77,400.88 TOTAL P2,078,548.72 ========= which was certified by the Chief, Revenue Accounting Division that the Collections listed were verified and found included in the Makati RDC data file as representing payment of taxes as remitted per CRDC and Central Bank Credit Advice. The records further show that the information furnished by the informers was in writing and under oath; that it was not yet in the possession of the Bureau of Internal Revenue 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 informers are, 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 Mesdames Charito Gonzales and Alex Flaminiano 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 they be paid the amount equivalent to 10% of P2,078,548.72 or the amount of P207,855.00 as informer's reward pursuant to Section 282(A) of the 1997 Tax Code, the law applicable herein. The said reward shall be subject to the 10% final tax imposed under Sec. 2.57.1(K) of Revenue Regulations No. 2-98. DCcHIS Very truly yours, (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue