BIR Ruling [UN-064-95]

February 14, 1995 BIR RULING [UN-064-95] Sta. Lucia Realty & Development Corporation Ground Floor, State Financing Center Bldg. Ortigas Avenue, Mandaluyong Metro Manila Gentlemen : This refers to your internal revenue tax case involving the amount of P463,605.45 representing deficiency income tax for the year 1989. Records of this case disclosed that on April 7, 1989 you sold your real property located at Capitol District, Quezon City covered by Transfer Certificate of Title No. 355688 of the Registry of Deeds of Quezon City in favor of Rosa Barcia, 10 Marang Street, Project 2, Quezon City for a consideration of P129,000.00; that the fair market value of the property per Tax Declaration No. B-067-15389 is P52,500.00; that on May 31, 1989 you likewise sold your real property located at Ugong Norte, Murphy, Quezon City covered by Transfer Certificate of Title No. 357500 of the Registry of Deeds of Quezon City in favor of spouses Roberto and Isabel Nazal for a consideration of P945,000.00; that the fair market value of the property per Tax Declaration No. B-126-03847 is P135,000.00; that the total consideration for the sale of the two parcels of land is P1,074,000; that the fair market value of the two parcels of land per their respective Tax Declarations is P187,500.00 which was considered by the Examiners as the acquisition cost of the properties for purposes of determining the gain which you have realized from the sale; that a verification made by then National Audit Review Division from the Revenue Computer Center disclosed that there is no record of your 1989 income tax return; that since there is no record of your 1989 corporate income tax return reflecting the gain which you have realized from your aforementioned sales, this Office issued Assessment Notice No. FAN-1-89-91-001890 dated May 13, 1991 involving the amount of P463,605.45 representing deficiency income tax for the year 1989; and that you have availed of the privilege of last priority in audit under RMC No. 93-90 covering the year 1989 and paid the amount of P2,729,578.60 under Confirmation Receipt No. B 1167530 dated December 10, 1990. The question for resolution in this case is whether your availment of the privilege of last priority in audit under RMC No. 93-90 has any effect on your aforementioned tax liability. RMC No. 75-90 whose deadline was extended by RMC No. 93-90 provides for the last priority in audit and investigation of 1988 and 1989 income tax, VAT and 2% percentage tax liabilities. Section 5(a)(i) of RMC No. 75-90) whose deadline was extended by RMC No. 93-90 provides in pertinent part as follows: SEC. 5. Conditions for the enjoyment of the privilege . In order to qualify for the privilege, the taxpayer shall (a) file a: (i) Voluntary Declaration form (Annex "A") which will serve as an amended return and pay the deficiency income tax, VAT and 2% percentage tax (hereinafter, referred to as "deficiency taxes") for both taxable years 1988 and 1989 determined in accordance with Section 6 of this Circular. . . . " "xxx xxx xxx" It appears that Letter of Authority No. 001315 dated August 13, 1990 has already been issued and served upon you by the Intelligence and Investigation Office for the investigation of your 1989 tax liabilities when you offered to avail of the privilege of last priority in audit and investigation on November 29, 1990. Your availment did not entitle you to "last priority" because the availment hereon cannot be considered as voluntarily made. It would appear that the availment and payment that came after the service of the letter of authority are stratagems to hide something rather than the genuine desire to help the government to increase its collection of taxes. This situation is not covered by the privilege of "last priority." In view thereof, you are requested to pay to the Collection Division, Revenue Region No. 7, Quezon Avenue, Quezon City the amount of P463,605.45 representing deficiency income tax for the year 1989 within fifteen (15) days from receipt hereof; otherwise, this office will be constrained to enforce collection thereof through the summary remedies prescribed by law. cd This constitutes the final decision of this Office on the matter. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue