Eagle Caught for Tax Evasion

The Bureau of Internal Revenue (BIR) today filed a complaint-affidavit with the Department of Justice against EAGLE’S FORTUNE, INC. (EFI) and its General Managers Messrs. WHANG ZHI ZIN and ALEX ONG for willfully failing to pay deficiency taxes for taxable years 2004, 2005 and 2006 despite demands and notices, in violation of Section 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).

EFI is engaged in the wholesale, buy and sell, and importation of papers, cartons, steel pulp, glass, pulp and other materials used in packaging with business addresses at 5/F Unit 507 S & L Building, corner Salas, Roxas Boulevard, Ermita, Manila and Block 6, Lot 6, Plastic City Industrial Park, Veinte Reale, Valenzuela City.

The case against EFI was triggered by a Ietter with attached receipts from a certain Larry Balmaceda who alleged that EFI is cheating on its tax obligations by using fake receipts.

A verification of the said receipts revealed that the alleged issuers had no reported income in 2004. Neither were they in business. Furthermore, third-party information from United Pulp and Paper Co. and Steel World Manufacturing Corp. unearthed millions of pesos worth of purchases from EFI.

The said discoveries led to the conclusion that EFI was not only simulating purchases to unjustifiably claim input taxes but was likewise concealing unreported income in millions of pesos to evade payment of taxes.

A check with the BIR’s Audit Information Tax Exemption and Incentives Division (AITIED) of EFI’s declaration of purchases in its Summary List of Purchases disclosed irreconcilable differences with its declaration of purchases in its Financial Statements. The noted discrepancies of P62.03M or 2,611% in 2004, P29.01M or 858.24% in 2005 and P40.19M or 7,529% in 2006 surpassed the 30% statutory fraud percentage of overdeclaration of purchases under Section 248(B) of the Tax Code.

EFI was assessed a total amount of P162.82M in deficiency income tax and VAT for taxable years 2004 to 2006. EFI, however, willfully failed to pay the said amount in spite of repeated demands and notices (Notice of Informal Conference, Preliminary Assessment Notice, Formal Letter of Demand and Final Demand Letter).

The case against EAGLE’S FORTUNE, INC. and its General Managers Messrs. WHANG ZHI ZIN and ALEX ONG is the ninety-first (91st) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.