#AskTheTaxWhiz: Tax frustrations voiced online

From the PICPA-Philippine Institute of Certified Public Accountants Facebook Page: I received a Letter of Authority (LOA) for taxable years 2012, 2013, and 2014. LOA 2012 is settled already.

I am now negotiating for 2013 and 2014. I thought taxpayers can only be audited for two (2) consecutive years. Is there a way for me to ask for the invalidation of the 2014 LOA? How? 

Yes. Per Revenue Memorandum Order (RMO) 19-2015 issued on September 15, 2015:

III. 4. : “If the taxpayer has been audited for the last two (2) years and has been again selected for audit on the current or 3rd year, the RDO/LTD/LTAD shall submit a written explanation to the Commissioner, copy furnished the DCIR-OG for Regional cases, as to why such taxpayer shall be subjected to audit for three (3) succeeding years, unless the RDO/LTD/LTAD has established that such taxpayer has an under declaration of sales/income or overstatement of expenses/deductions by at least 30% (prima facie evidence of fraud). Cases selected under this policy shall have a Selection Code of “FRD.” 

If you do not have an under declaration of sales/income or overstatement of expenses/deductions by at least 30%, you can write the Commissioner – copy furnish the DCIR for Operations Group – to inquire why you are being audited for the 3 consecutive years. 

From the Abrea Consulting Group (ACG) Facebook Page: We appreciate all your help and support to small businesses. Inasmuch as we want to be brave like you, our horrible experience with BIR examiners made us decide to just compromise and set aside a budget every year to avoid tax evasion cases.

In fact, some BIR examiners would even rush the settlement because they have more than 30 ongoing investigations and so that they can replenish to get new TP (taxpayers).

Is that true? Can BIR examiners handle more than 30 tax audits at the same time?

That’s probably the reason why they never do their job to audit and help taxpayers comply with so many regulations. They always come out with huge assessments without even reviewing the documents we submit. What a waste of time dealing with the BIR!

No. The electronic Letter of Authority (eLAs) for assignment to each RO-Assessment shall be a maximum of 30 cases, not counting mandatory cases, at a given time subject to replenishment upon the submission of the report of investigation/closure of each case.

However, no RO shall be given the maximum workload of 30 cases if there are other ROs who have not been assigned the same number of cases. 

I understand your dilemma and I am hoping that now things will slowly change.

Commissioner Caesar “Billy” Dulay already set up a special disciplinary committee to investigate and hear cases of revenue officers who have been asked to submit or have already submitted written explanations of what appear to be violations or substantial lapses or departure from existing issuances in the conduct of tax audit/investigations. 

From Mon Abrea’s (Ask the Tax Whiz) Facebook Account: Is it true that if I decide to close or retire my small business which is not profitable, the BIR will still investigate and make an assessment even if I did not make any profit?

No. Taxpayers who are retiring from business with gross sales/receipts amounting to P1,000,000.00 and below or gross assets not exceeding P3,000,000.00 shall no longer be verified or investigated. 

From @KwonGZel: Am I qualified for a tax refund if I’m working under a job order in the city hall and taxes are being withheld from my monthly pay?

No. Whether you are employed or self-employed including as an independent contractor or job order worker like yourself, you are subject to income tax by way of withholding. 

From @joshua_belmonte via Twitter: What can you say about the proposed tax reforms?

I honestly believe that the comprehensive tax reform presented by Finance Secretary Carlos Dominguez III is pro-growth and geared towards an equitable tax system – simple, fair and efficient.

It is imperative for all of us to take part and support this initiative as the last comprehensive tax reform was 30 years ago. This is long overdue already.

However, it is equally important to consider tax administration reform to support the tax policy reforms proposed by the Department of Finance. Admittedly, I am biased to cut first personal income tax rates before adjusting other taxes, and for this to happen, taxpayers must help the government, particularly the BIR, to collect the right taxes.

The main constraints for the Philippines to adopt an efficient tax system are the very high tax rates and narrow taxpayer base aggravated by complicated and costly tax compliance discouraging voluntary compliance.

In view of this, we are organizing A Dialogue on Tax Reform for Inclusive Growth on Wednesday, September 28, at the Ateneo Graduate School of Business. Our aim is to provide an avenue for both the government and private sector to solicit insights and support from each other and to unify and consolidate all our efforts in pushing for genuine tax reform which should ultimately benefit small businesses and ordinary employees. – 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 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.