Amusement Tax Liability of Gumaca Elementary School

September 29, 1958 BIR RULING NO. 530-58 The Regional Director Regional District No. 5 San Pablo City S i r : With reference to your letter dated April 23, 1958, requesting advice and instructions regarding the amusement tax case of the Gumaca Elementary School, Gumaca, Quezon, you are informed as follows: LLpr There is no question that, for having held a benefit ball on March 2, 3 and 4, 1956, the aforenamed school is liable for the corresponding amusement tax. And having failed to pay said tax up to the present, it is further liable for the 25% surcharge and compromise penalty. The only question, therefore, to be resolved in this case is, as you have posed, whether or not this Office can distrain the property purchased by the school out of the proceeds of the benefit ball, considering that the latter is a public institution of learning. There is no doubt that had the Gumaca Elementary School paid the tax in question, the same should have become part of the general fund of the government, the proper use and enjoyment of which could have been shared by the national government and the provinces, cities and municipalities in the amount and manner prescribed by law therefor. Therefore, when the school, instead of paying the tax, used all of the proceeds it realized from the benefit ball for its own exclusive benefit, it virtually enriched itself at the expense of others who equally have a right to the benefit which may be derived from the tax allotment due them. Moreover, being legally possessed with the power to assess and collect the tax due from said school, that power would be an empty one if the Commissioner of Internal Revenue would be left without the complementary power to effect collection of his assessments. However, it may be stated that receipts derived from the sales of ballots in connection with beauty contests are not taxable. If the case be that the basis of the present assessment includes the receipts of the school from its sale of ballots in connection with the popularity contest held, proper revision of the assessment should be made by basing it exclusively on the amount realized from the sale of admission tickets. Should a physical segregation of the amounts paid for the tickets from those paid for the ballots be impossible, steps must be taken to determine how much can be reasonably allocated as receipts for the tickets. In view of the foregoing, you are instructed to make the necessary revision of your assessment, if such is warranted by the circumstances, and thereafter to give another chance to the Gumaca Elementary School to pay the amount due from it. Should it again fail to pay, steps should be taken to prosecute the individuals who managed the benefit ball. prll Please be guided accordingly. Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue