At the height of the issues on the controversial Revenue Memorandum Circular No. 97-2021 on taxation of any income received by social media influencers, the news about rewards for tips on alleged tax evaders generated buzz.
Is it true that the Bureau of Internal Revenue (BIR) will give a P1-million reward to informers? I only heard about it and I’m not sure if it’s verified. May I know the basis or reference for this reward?
Yes, it is true. It is pursuant to Section 282 of the National Internal Revenue Code (NIRC) of 1997 and Revenue Regulations No. 16-2010.
Since the implementation of the Run After Tax Evaders (RATE) program in 2005, the BIR has been receiving information from concerned citizens about taxpayers – individuals or corporate entities – who have allegedly violated NIRC provisions.
Who is qualified to be an informer? Are there any disqualifications?
An informer voluntarily provides definite and sworn information which the BIR does not yet know, or which is not a matter of public knowledge. This information must then lead to discovery of NIRC violations and subsequently the recovery of revenues, surcharges, and fees, and/or the conviction of the guilty party, who may be penalized with a fine.
But not all are qualified to get an informer’s reward. The following are disqualified:
- A BIR official or employee or any other incumbent public official or employee
- Relative within the sixth civil degree of consanguinity of a BIR official or employee, or other public official or employee
- Though already retired or otherwise separated from service, BIR officials or employees or other public officials who acquired the information in the course of the performance of their duties during their incumbency
What are the common violations which can be reported to the BIR? What substantial evidence is required to be provided by the informer?
Informers can report errant taxpaying individuals or companies to the BIR for the following violations:
- Attempt to evade or defeat tax (Section 254 of the NIRC, as amended)
- Failure to file return, supply correct and accurate information, pay tax, withhold and remit tax, and refund excess taxes withheld on compensation (Section 255 of the NIRC, as amended)
- Failure or refusal to issue receipts or sales or commercial invoices, and violations related to the printing of such receipts, invoices, or other violations (Section 264 of the NIRC, as amended)
- Unlawful pursuit of business (Section 258 of the NIRC, as amended);
- Use of multiple tax identification number/s (TINs)
- Making false entries, records, or reports, or using falsified or false accountable forms (Section 257 of the NIRC, as amended)
- Other violations of the NIRC
Meanwhile, informers should provide these documents as substantial evidence required by the court to prove allegations:
- BIR certificate of registration
- Income tax returns
- Deed of absolute sale
- License to operate business in the Philippines, issued by the Securities and Exchange Commission (SEC)
- General information sheet obtained from the SEC
- Audited financial statements
- Other relevant documents
How much would the reward be for the informant? Is the cash reward subject to tax?
In case a company or person is proven guilty of tax evasion, informants may receive a sum equivalent to 10% of the revenues, surcharges, or fees, or possibly the fine imposed and collected, or P1 million per case – whichever is lower.
The reward shall be subject to a final withholding tax of 10% under Section 282 of the NIRC.
More questions about rewards for tax evasion cases are answered in BIR IN ACTION Live on Monday, August 30, on the official Facebook page of the BIR and the TaxWhizPH YouTube channel.
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Mon Abrea, CPA, MBA, is the co-chair of the Paying Taxes-EODB Task Force. With the TaxWhizPH mobile app as his brainchild, he was recognized as one of the Outstanding Young Persons of the World, an Asia CEO Young Leader, and one of the Ten Outstanding Young Men of the Philippines because of his tax advocacy and expertise. Currently, he is the chairman and CEO of the Asian Consulting Group and trustee of the Center for Strategic Reforms of the Philippines – the advocacy partner of the Bureau of Internal Revenue, Department of Trade and Industry, and Anti-Red Tape Authority on ease of doing business and tax reform. Visit www.acg.ph for more information or email him at firstname.lastname@example.org and download the TaxWhizPH app for free if you have tax questions.