BIR Ruling [DA-351-05]

August 16, 2005 BIR RULING [DA-351-05] Hon. Margarito B. Teves Secretary of Finance Manila S i r : We are forwarding herewith for your approval the herein claim for informer's reward of Mr. Perfecto F. Lacuesta, of No. 28 Thailand St., Better Living Subdivision, Paraaque City, under Section 282(A) of the Tax Code of 1997, including the entire docket relative to the internal revenue tax case of Citifinancial Corporation (formerly Associates Finance, Inc.) for the taxable years 2000 to 2002. The records show that on March 10, 2003, an affidavit which was recorded as Confidential Information No. 38-2003 was filed by the above-named informer denouncing Citifinancial Corporation for non-payment of correct tax liabilities particularly income tax, fringe benefits tax, expanded withholding tax, and documentary stamp tax. On the basis of said confidential information and documents submitted by the informer, Letters of Authority Nos. 00016345 to 00016347 were issued by the Revenue Region No. 8, Makati City to a group of Revenue Officers of the Special Investigation Division to investigate the income, withholding and business tax liabilities of Citifinancial Corporation for the years 2000, 2001 and 2002. It was ascertained in the investigation that Citifinancial Corporation had, indeed, committed the violations as averred by the informer. Accordingly, and on the basis of the recommendation of the investigating examiners contained in their Memorandum-report dated January 15, 2004, there were found taxes due from Citifinancial Corporation the total amount of P 59,391,672.62 representing deficiency income, expanded withholding, fringe benefit, withholding tax on compensation and documentary stamp taxes, for the years 2000 to 2002. The total amount actually paid by Citifinancial Corporation are as follows: Kind of Tax Year Involved Amount Income tax P44,833,736.33 Expanded Withholding tax 134,642.90 Fringe Benefit tax 14,311,390.77 Withholding tax-compensation 25,000.00 Documentary Stamp tax 86,902.62 TOTAL P59,391,672.62 ========== 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. DACcIH The records further show that the information furnished by the informer 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 informer is, 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 Mr. Perfecto F. Lacuesta 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 P59,391,672.62 but not to exceed ONE MILLION PESOS (P1,000,000.00) 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 Sec. 2.57.1(K) of Revenue Regulations No. 2-98, as amended. For the record, we will be issuing commendation to our officers and employees who were involved in the investigation of the taxpayer. TDAcCa Very truly yours, (SGD.) JOSE MARIO C. BUAG OIC-Commissioner of Internal Revenue