#AskTheTaxWhiz: The BIR’s RATE for tax evaders

Dear Mr. Tax Whiz:

The Bureau of Internal Revenue (BIR) issued RMC 89-2016 lifting the suspension of audit for RATE cases in late August.

Can you please discuss what is RATE and its difference with the regular audit of the BIR? A lot of us in our industry started receiving a Letter of Authority (LOA) for RATE this year. Does this mean we are guilty of tax evasion?

What is really tax evasion? It seems everyone is guilty of it anyway.

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RATE stands for Run Against Tax Evaders. It is a program initiated by the Department of Finance and BIR to investigate and prosecute individuals and/or entities engaged in tax evasion and other criminal violations of our tax laws and regulations.

Unlike the other revenue measures of the BIR, the RATE program aims to investigate, prosecute, and convict tax evaders and violators.

If you received an LOA for the RATE program, it means you have violated our tax laws. Here are some of the fraudulent activities which you may have done:

A. Offenses relating to income: 

• Failure to file tax return/s
• Failure to pay taxes
• Deliberate underdeclaration of income by more than 30%
• Hiding or transferring of assets or income
• Non-remittance of withholding taxes

B. Offenses relating to deductions:

•  Deliberate overstatement of expenses by more than 30%
• Claiming personal expenses as business expenses
• Claiming false deductions

C. Others

•  Use of fake Certificate of Authorizing Registration (CAR), Tax Clearance Certificate (TCC), or other accountable forms
• Failure to register with the BIR
• Keeping more than one (1) set of books of accounts
• Making false entries in books and records

Tax evasion or tax fraud is the use by the taxpayer of illegal or fraudulent means to defeat or lessen the payment of tax. Unfortunately, ignorance of the law will not exempt you from being charged with tax evasion. As we always remind our taxpayers when it comes to taxes, “What you don’t know will hurt you more!”

Know more about taxes and the game-changing strategy to avoid unnecessary penalties and compromises. You have a choice!

You may enroll at the Ateneo Graduate School of Business for an elective course – Tax Management (TAXMAN) – or attend our tax seminars organized by or in partnership with the Tax Academy of the Philippines. For details, email us at consult@acg.ph or call (02) 622 7720. – Rappler.com

Got a question about taxes? #AskTheTaxWhiz! Tweet @rapplerdotcom or email us at business@rappler.com.

Mon Abrea is a former BIR examiner and an advocate of genuine tax reform. He serves as chief strategy officer of the country’s first social consulting enterprise, the Abrea Consulting Group, which offers strategic finance and tax advisory services to businesses and professionals. Mon’s tax handbook, Got a Question About Taxes? Ask the Tax Whiz! is now available in bookstores nationwide. Follow Mon on Twitter:@askthetaxwhiz or visit his group’s Facebook page. You may also email him at consult@acg.ph.