#AskTheTaxWhiz: Are you afraid of the BIR?

Mon Abrea
#AskTheTaxWhiz: Are you afraid of the BIR?
The Philippine Tax Whiz explains why taxpayers should not be afraid of the Bureau of Internal Revenue

I have heard a lot of horror stories involving Bureau of Internal Revenue (BIR) examiners. They call you any time of the day or night. Sometimes even your accountant or bookkeeper will convince you to settle already if you don’t want the BIR to audit previous years. You’re correct when you said, “Once you bribed, it won’t stop.” That’s exactly what’s happening to us being regularly audited by the BIR. But what’s really the mandate of the BIR? Are examiners authorized to visit our office or store any time? They claim it’s part of their tax mapping operations. Can they apprehend or confiscate our books of accounts or accounting records? Please explain the purpose and scope of tax mapping.

The mandate of the BIR is to assess and collect all national internal revenue taxes, fees, and charges, and to enforce all forfeitures, penalties, and fines.

However, a Revenue Officer (or a BIR examiner) is not authorized to visit your office or store any time unless there is a Mission Order issued and signed by the Regional Director pursuant to the BIR’s Tax Compliance Verification Drive (or Tax Mapping). The Mission Order must state the names of Revenue Officers included in the Tax Mapping Team, the area covered, and the date or time of operation.

Tax Mapping aims to verify compliance with registration, invoicing, and bookkeeping requirements, such as displaying of original copies of business registration documents in a conspicuous area, issuing registered invoices or receipts for sale of goods or services, and updating or maintaining books of accounts in the business’ registered address at all times.

If the authorized Revenue Officer decides to apprehend or confiscate any of a business’ accounting records, an apprehension slip indicating the details of the records apprehended must be signed and issued by him or her.

Make sure any violations and/or penalties being charged as a result of the tax mapping are explained clearly before signing any document. Instead of fearing or bribing the examiner/s, comply with the tax rules and regulations to avoid unnecessary penalties and compromises.

For free tax assistance, you may subscribe to the Tax Whiz Application here. 

You have been asked before if there is a way to pay taxes without compromises. It’s a common sentiment among taxpayers that even if we pay the right taxes, the BIR will still find a way to collect more taxes, plus penalties and compromises. Every year, they issue the same assessment from unsupported purchases to disallowed expenses and input tax for non-withholding of taxes. BIR examiners usually issue a table or informal assessment to start the negotiation even without actual audit. If we don’t cooperate or agree with their demands, such as total assessment with official receipts which is sometimes less than 10% of the total payment they demand, they threaten us with the issuance of a subpoena duces tecum. Is this correct? How long really is an audit investigation? Are they not supposed to assist us and help us pay our taxes correctly? Does the BIR commissioner know what his “corrupt” examiners are doing to harass taxpayers?

No. Unfortunately, this has been the practice of BIR examiners. This is actually favorable to non-compliant taxpayers as their books or records will not be audited. But for those who are paying the right taxes and for some reasons failed to comply with all BIR requirements, this is an added cost.

Ideally, a BIR examiner is allowed only 180 days from the date of receipt of a Letter of Authority by the taxpayer to conduct an audit and submit the required report of investigation. If a BIR examiner is unable to submit his final report of investigation within the 180-day period, he must submit a Progress Report to his Head Office, and surrender the Letter of Authority for revalidation.

Obviously, this is no longer followed but I still subscribe to this protocol for accountability on the part of BIR examiners.

Yes, BIR examiners must assist us and help us comply but during the regular audit this has a price. Every violation or non-compliance is subject to penalties and compromises.

If we want to stop corruption, we have to stop bribing BIR examiners. BIR Commissioner Caesar Dulay already appealed to the taxpaying public to pay the right taxes on time, and not hand over money to corrupt BIR personnel.

If you think you are being harassed, call citizens’ complaint hotline 8888 or you may email Commissioner Dulay directly at caesar.dulay@bir.gov.ph to raise your concern. Best if you can sign an affidavit of what transpired during your encounter with any BIR examiner/s or personnel. Let the Commissioner act on it.

As of June 2017, the BIR has received 730 complaints via the 8888 hotline, 70% of which have been resolved. A total of 379 Revenue Officers were called to explain due to taxpayer complaints received by Commissioner Dulay.

We want to pay the right taxes. We support the campaign of BIR Commissioner Dulay to pay the right taxes, especially for the rehabilitation of Marawi City. However, we are still afraid of BIR examiners. How can we help promote a culture of integrity and honesty if we are at the mercy of “corrupt” examiners? I also have an apprehension with RMC 60-2017 announcing the launch of the Seal of Honesty (SOH) Certification Program. What happens to those who will apply and get the SOH certification after the term of Commissioner Dulay? Help us restore our peace of mind and be part of the reform we want to see in the government.

If we want a better Philippines, we need to be better citizens, better taxpayers. Each of us has to make a sacrifice in doing the right thing, in paying the right taxes to stop corruption in the BIR and in all sectors of our society.

Per RMC 60-2017, the SOH Certification Program aims to promote a culture of integrity and honesty in paying taxes. It helps taxpayers improve their voluntary compliance and ultimately pay the right taxes without the threat of BIR audit and investigation.

At the end of the day, Commissioner Dulay can only do so much. We need to help ourselves. We need to pay the right taxes to protect our businesses and our family from any fear, anxiety, or harassment brought by the corruption embedded in our tax system.

Let’s be part of the positive change! – Rappler.com

Mon Abrea, popularly known as the Philippine Tax Whiz, is one of the 2016 Outstanding Persons of the World, a Move Awards 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), an Asia CEO Young Leader of the Year, and founder of the Abrea Consulting Group and Center for Strategic Reforms of the Philippines (CSR Philippines). He currently serves as Adviser to the Commissioner of Internal Revenue of the Philippine government on tax administration reform in promoting inclusive growth. Follow Mon on Twitter (@askthetaxwhiz) or visit his Facebook page. You may also email him at consult@acg.ph.

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