SM Supplier caught for tax evasion

The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against YEARFULL FASHION ENTERPRISES, INC. (YEARFULL), its President IRENE C. CHAN and Treasurer CHARLIE C. CHAN for one (1) count of willful attempt to evade or defeat payment of Income Tax, one (1) count of willful attempt to evade or defeat payment of Value-Added Tax (VAT), one (1) count of deliberate failure to supply correct and accurate information in its Income Tax Return (ITR) and four (4) counts of deliberate failure to file to supply correct and accurate information in its VAT Returns, all for taxable year 2010, in violation of Section 254 and Section 255 in relation to Section 253 and Section 256 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Yearfull is a domestic corporation registered with the Securities and Exchange Commission engaged in the business of retail and wholesale of garments with office address at Unit 25 Anaconda Compound, No. 88 Amang Rodriguez Avenue, Santolan, Pasig City.

Investigation conducted by the BIR revealed that Yearfull willfully underdeclared its reported sales for taxable year 2010. A perusal of the 2010 ITR of Yearfull showed that its declared sales amounted to P29.85M. However, Third Party Information (TPI) obtained by the BIR from the SM Group of Companies disclosed that Yearfull had sales with the said companies amounting to P66.35M during the same year.

A comparison of the sales declared by Yearfull in its ITR with its sales to its customers obtained from TPI showed that it substantially underdeclared its sales for 2010 by 122% in the total amount of P36.50M.

Under Sec. 248 (B) of the Tax Code, an under-declaration of taxable income by more than 30% of what was declared constitutes prima facie evidence of a false or fraudulent return or fraud tantamount to tax evasion.

As a result of its scheme to underdeclare its gross receipts in its ITR, Yearfull evaded the payment of its correct income tax and VAT due from its correct taxable sales.

Considering the discovered under-declarations, the BIR assessed Yearfull deficiency Income Tax of P3.46M and deficiency VAT amounting to P7.47M, inclusive of surcharges and interests, both for taxable year 2010, for a total tax liability of P10.93M.

The case against YEARFULL FASHION ENTERPRISESS, INC., its President IRENE C. CHAN and Treasurer CHARLIE C. CHAN is the ninety-eighth (98th) 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.