Quezon City, 10 March, 2010- The Bureau of Internal Revenue will see to it that taxpayers, with substantial wealth, conspicuous spending or lifestyle but pay only small amount of tax, declare their right income and not reduce their income tax payments.Through the issuance of Revenue Memorandum Order No. 19-2010, the Bureau has drawn the policy on how to exhaust all means to determine the individual’s income. This includes the conduct of investigation on the lifestyle and assets of individuals to properly determine their tax compliance.
According to Commissioner Joel L Tan-Torres an individual taxable income may be established when there is direct evidence like maintaining of books and records, whenever available.
He said that indirect method on the other hand, can be used when one or more of the conditions, such as, the taxpayer maintains inadequate, unavailable or no books and records, or withholds them from investigation, prevail.
He added that, although the taxpayer’s books and records reflect the figures on the income and business tax returns, this however, does not prevent the use of the indirect method of proof.
“But the revenue officer can still look beyond the `self-serving declaration’ in the taxpayer’s books and records and use any evidence to contravene their accuracy so, in this case the provisions of RAMO No. 1-2000 will then be followed and the BIR will rely on RMC No. 23-2000 in making deficiency tax assessments, based on the Best Evidence Obtainable’,” Commissioner Tan-Torres said.
The Commissioner also said that the Bureau will also establish linkages with various agencies for authority to secure information /documents on individual.
He continued saying that the Bureau will access records of the Land Transportation Office for new car purchase; Bureau of Immigration and airlines and shipping companies for travel records; power utilities like Meralco for high electric bills; Land Registration Authority and Registry of Deeds for landholdings; resort, resort membership and golf club share ownership; homeowners associations; and real estate companies for property purchases and ownerships; and credit card companies for goods purchases.
“This lifestyle check is authorized under Section 71 of the Tax Code and the BIR has been doing this in the past so we are not violating any right of any person to privacy since we only refer to public documents” Commissioner Tan-Torres explained.