PNP Supplier and its CPA held for Tax Evasion

 

The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against ENVIROAIRE, INC. (ENVIROAIRE) and its President TYRONE N. ONG and Treasurer ARLENE CHUA for one (1) count of willful attempt to evade or defeat the payment of income tax and one (1) count of willful failure to supply correct and accurate information in its Income Tax Return (ITR) for taxable year 2007, in violation of Sections 254 and 255 in relation to Sections 253 and 256 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Charged likewise was SUSAN M. NACE (NACE), the independent Certified Public Accountant (CPA) who certified the Financial Statements of ENVIROAIRE for 2007 and 2008, pursuant to Section 257 of the Tax Code.

ENVIROAIRE is a domestic corporation primarily engaged in the business of emission testing and supply of equipment and other related products, including parts and accessories, with registered address at # 140 Shaw Boulevard, Bagong Silang, Mandaluyong City.

The case against ENVIROAIRE was prompted by a Subpoena Duces Tecum (SDT) issued by Atty. Leonor D. Boado, Director of the Fraud Audit Investigation Office of the Commission on Audit (COA), ordering the BIR to issue a certification as to whether or not the amounts of P85.18 million and P140.53 million covered by invoices issued in 2007 to the Philippine National Police (PNP) Finance Center were reported as part of gross sales by ENVIROAIRE to the BIR. The SDT was issued as part of COA’s investigation on the purchase of spare parts and maintenance of Light Armored Vehicles (LAVs) by the PNP.

The BIR certified that ENVIROAIRE had declared gross sales amounting to P27.59 million in its ITR for taxable year 2007 and that the questioned sales in the aggregate amount of P225.71 million were not included in the said ITR.

The BIR pursued its own investigation and found that ENVIROAIRE substantially underdeclared its sales by 89.1094%.

Under the Tax Code, an underdeclaration of sales or income of more than 30% constitutes prima facie evidence of fraud tantamount to tax evasion.

ENVIROAIRE was assessed a total deficiency income tax liability of P183.89 million, inclusive of surcharges and interests, covering taxable year 2007.

NACE, on the other hand, was also charged for issuing an unqualified opinion in her certification of the 2007 and 2008 audited financial statements of ENVIROAIRE despite knowledge of the existence of such income payments/underdeclarations.

The case against ENVIROAIRE, INC. (ENVIROAIRE), its President TYRONE N. ONG and Treasurer ARLENE CHUA and CPA SUSAN M. NACE is the 110th 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.