The Bureau of Internal Revenue (BIR) today filed with the Department of Justice (DOJ) a complaint against lawyer DANILO P. CARIAGA (CARIAGA) for willful attempt to evade or defeat taxes, willful failure to supply correct and accurate information in his Income Tax Return (ITR), and failure to file his Value-Added Tax Returns (VAT Returns), all for taxable year 2007, in violation of Section 254 and Section 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).
A resident of Block 3, Lot 1, Villa Aurora Townhomes 2, Aurora Blvd., Quezon City, CARIAGA received in 2007 from the Metropolitan Waterworks and Sewerage System (MWSS) the amount of P2.43 million as payment for his legal services as stated in the letter of the Acting Manager of the Finance Department of MWSS, together with the pertinent disbursement voucher and check.
A check of the ITR of CARIAGA for taxable year 2007 revealed, however, a declaration of total income of only P220,456.22 which clearly showed that he failed to supply correct and accurate information in his ITR for 2007 by more than 30%.
Under Section 248 of 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.
For his failure to declare all his income for 2007, CARIAGA was assessed deficiency income tax for 2007 in the aggregate amount of P1.39 million, inclusive of surcharges and interests.
Under the Tax Code, payments for performance of services not exceeding P1.5 million is exempt from VAT. In this case, the income received by CARIAGA amounting to P2.43 million is in excess of the said threshold amount, making him liable to VAT. However, he failed to file his VAT returns for 2007 and to pay the taxes due thereon in the aggregate amount of P557,036.25, inclusive of surcharges and interests.
Total tax liability of CARIAGA was pegged at P1.95 million.
The case against DANILO P. CARIAGA is the sixty-ninth (69th) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise a RATE case of Revenue Region No. 7, Quezon City.