Doctor fails to file ITR and Income

The Bureau of Internal Revenue (BIR) today filed a complaint affidavit with the Department of Justice against DR. SALVADOR GUNDAYAO AUSTRIA (DR. AUSTRIA) for willful attempt to evade or defeat tax, deliberate failure to file Income Tax Returns (ITRs) for taxable years 2002, 2003 and 2005; deliberate failure to supply correct and accurate information in his ITRs for taxable years 1999, 2000, 2001 and 2004; and deliberate failure to file VAT Returns for taxable years 1999 to 2005, all in violation of Sections 254, 255 and 275, in relation to Sections 24, 74(A), 105, 108, 114 and 236 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Dr. Austria is doctor by profession with addresses at 14 Gordon Avenue, New Asinan, Olongapo City and No. 68 Fendler St., East Tapinac, Olongapo City.

Based on information and documents gathered, Dr. Austria is engaged in the business of buying, selling, renting, leasing and operation of dwellings and is not registered with the BIR as a VAT taxpayer. Documents also showed that Dr. Austria owns several real properties in Tomas Morato, Quezon City and Olongapo City, including a real property covered by Transfer Certificate of Title (TCT) No. 90108 issued by the Register of Deeds of Quezon City which he leased to HUBB Manufacturing incorporated at P180,000.00 per month for ten (10) years starting 1999 as indicated in the annotation to the said TCT.

A comparison of the income declared by Dr. Austria in his ITR as against the details of the Contract of Lease annotated on the aforementioned TCT disclosed that he underdeclared his income by P1,514,320 (234.53%) in 1999, P1,609,500 (292.37%) in 2000, P2,039,870 (1,698.05%) in 2001 and P2,050,499.50 (1,872.59%) in 2004. Dr. Austria likewise failed to declare his income of P2.16 million in each of taxable years 2002, 2003 and 2005 when he failed to file his ITR with the BIR for the said years. 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 Filipino citizen, Dr. Austria is mandated under the Tax Code to declare not only his income from the practice of his profession as a doctor but also his income from his rental business, file his ITRs and pay the correct taxes.

Also, it was mandatory for Dr. Austria to register as a VAT taxpayer since he expected to realize P2.16 million in 1999 based on the lease contract, an amount exceeding the applicable VAT threshold of P550,000.00 .

For his failure to declare all his income for the period 1999 to 2005, Dr. Austria was assessed a total income tax deficiency amounting to P8.97 million and deficiency VAT in the aggregate amount of P4.72 million, for a total tax liability of P13.69 million.

The case against DR. SALVADOR GUNDAYAO AUSTRIA is the 101th 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. 4, Pampanga.