Tax Evasion and Failure To Supply Accurate and Correct Information Charges To Filed Against Carlota Cristi M. Tan

07 May 2013

In a Resolution dated 30 April 2013, the Task Force on Bureau of Internal Revenue (BIR) Cases from the National Prosecution Service (NPS) found probable cause to charge CARLOTA CRISTI M. TAN for two counts of violation of Section 254 in relation to Sections 51 and 74, and for two counts of violation of Section 255 of the National Internal Revenue Code (NIRC).

The case arose from a complaint filed by the BIR charging Tan of willful and deliberate substantial underdeclaration of income from her dealings with the Philippine Amusement and Gaming Corporation (PAGCOR) for taxable years 2003 and 2004, which deficiency income tax, according to the BIR, amounted to Php59, 000,781.32, inclusive of the 50% surcharge and interests up to the year 2011.

Respondent Tan denied all accusations and raised the defense of lack of knowledge on taxation laws and accounting principles.

On the issue of attempting to evade or defeat tax, the Task Force found that Tan, as a single proprietor with business names of "Carmona Race Track" and "Promolabels Specialty Shop" (Promolabels), willfully evaded or defeated taxes when she underdeclared her income with respect to the income earned by Promolabels as coffee concessionaire of PAGCOR in its casinos. The Certifications issued by PAGCOR show that Tan received Php36, 724,513.13 for taxable year 2003 and Php70, 244,083.67 for 2004 but only declared Php16, 064,523.15 and Php25, 816,926.38, respectively, for the subject taxable years as her sales. The Task Force pointed out that Tan's intent to defraud is evident from her substantial underdeclaration of sales, to wit, 128.61% for the year 2003, and 172.09% for the year 2004. Considering that the underdeclaration made by respondent Tan exceeded 30% of the actual sales of Promolabels for the years 2003 and 2004, the Task Force found that there is probable cause to believe that Tan willfully and deliberately attempted to evade taxes in the said years, relying on Section 248(b) of the NIRC as basis.

As to the violation of failure to supply accurate and correct information, the Task Force found that there is prima facie evidence that Tan willfully failed to supply the correct and accurate information in her income tax returns (ITRs) for the years 2003 and 2004. As pointed out by the complainant BIR, for the taxable years 2003 and 2004, respondent earned a deficiency income tax of Php19,672,712.93 and Php39,328,o68.39, respectively. The Task Force anchored its findings on the case of  Commissioner of Internal Revenue vs. Hon. Gonzales, Secretary of Justice, whereby the Supreme Court held that the substantial underdeclared income in the returns filed by LMCEC, in amounts equivalent to more than 30%, constitute prima fade evidence of fraudulent returns under Section 248(B) of the NIRC. In the instant case, the deficiencies in the ITRs of Tan are overwhelming. Accordingly, the Task Force found that such act constitutes prima facie evidence of fraudulent return and, therefore, the failure of Tan to supply the correct and accurate information in her ITRs was willful.

With respect to the argument of respondent Tan that she merely relied on the information of her managers and her hired auditors, the Task Force ruled that Tan, as a taxpayer and business owner, has the duty to verify the information given to her by her employees. The contention raised by Tan is a meagre refutation that is best examined in a full-blown trial.

Pursuant to said findings, the Task Force recommends that the corresponding Informations be filed against Tan.

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