Well Known Lawyer is caught by RATE

He lawyered for popular politicians for cases covered by Election Laws. Now, he will have to defend himself for committing acts constituting violations of Section 254 and Section 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Facing criminal charges before the Department of Justice (DOJ) for willfully attempting to evade or defeat payment of taxes and for deliberately failing to supply correct and accurate information in his income tax return for taxable year 2010 is GEORGE ERWIN M. GARCIA. He is also being sued for the payment of deficiency taxes for the said taxable year in the aggregate amount of P37,944,528.12, inclusive of increments.

A lawyer by profession, Garcia is registered as a professional taxpayer at Revenue District Office No. 33, Intramuros-Ermita-Malate with office address/es at G/F Laiko Bldg., Cabildo St., Intramuros, Manila and Rm. 303 Peoples General Insurance Corporation Bldg., Magallanes St., Intramuros, Manila.

The investigation of Garcia was prompted by the information provided by a confidential informant that there is a pending civil case against him wherein he admitted in his Verified Answer that he purchased a condominium unit worth P53 million and described as Unit 43-B The Shang Grand Tower Condominium with three (3) allotted parking spaces at Podium III, Perea St., corner Dela Rosa St., Legazpi Village, Makati City.

Based on information and documents gathered during the investigation covered by a Letter of Authority, Garcia made several payments on the unit worth millions each from 2 February 2010 to 8 June 2010 as evidenced by Acknowledgment Receipts issued by a certain Crispina M. Pastores.

However, despite the acquisition of expensive condominium units, Garcia had declared minimal amounts of gross income in his Annual Income Tax Returns for the years 2004 to 2010, the aggregate amount of which is P4,450,150.00.

Using the Expenditures Method of tax investigation, the BIR ascertained that Garcia substantially underdeclared his income for taxable year 2010. This involves deducting all non-taxable sources of funds and the reported taxable income from total expenditures. Thus, a comparison of Garcia’s reported income of P1,380,000.00 for the year 2010 and his total expenditures in 2010 of P53,348,030.00 yielded a difference of P51,968,030.00 or an underdeclaration of more than 30%.

Under the Tax Code, an underdeclaration of taxable income of more than 30% is considered as substantial underdeclaration and constitutes prima facie evidence of fraud tantamount to tax evasion.

The case against GEORGE ERWIN M. GARCIA is the sixty-fifth (65th) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.