Want P1 Million? Here’s how to report a tax evader

On the heels of the Bureau of Internal Revenue’s (BIR) reminder to social media influencers and online content creators of their tax responsibility, the so-called “informer’s reward” for reporting alleged taxpayers came to light.

The Section 282 of the National Internal Revenue Code of 1997 provides an “informer’s reward” to “persons instrumental in the discovery of violations of the National Internal Revenue Code and in the discovery and seizure of smuggled goods.”

Under the said provision, an informer shall be rewarded in a sum equivalent to 10% of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected or P1,000,000 per case, whichever is lower.

The Revenue Regulations No. 16-2010 also provides guidelines and procedures in the filing of confidential information and the investigation of cases of tax violations.

During an online interview on BIR In Action hosted by tax expert Mon Abrea, BIR chief of Prosecution Division Atty. Zeus Gamaliel Mendoza provided details on how an individual can report an alleged tax evader to the taxman as well as the requirements and qualifications to be entitled to the “informer’s reward.”

The BIR official noted that the taxman ensures that the identity of the informer is kept strictly confidential.

How to report

Mendoza said it it's not enough to tag or message the BIR through its social media pages to report an evading tax payer.

“Ang kailangang gawin ng gustong mag-report sa BIR is mag-execute sila at mag-file ng sworn affidavit of confidential information before sa Prosecution Division or sa Legal Division ng revenue region na may jurisdiction sa taxpayer na sinusumbong nila,” he said.

(What needs to be done by an informer is to execute a sworn affidavit of confidential information before the BIR’s Prosecution Division or to the Legal Division of the revenue region which has jurisdiction of the taxpayer being reported.)

Pursuant to Revenue Regulation No. 16-2010, the confidential informations against a denounced taxpayer shall be under oath and shall be personally executed and filed by the informer on the following violations:

• attempt to evade or defeat tax
• failure to file return, supply correct and accurate information, pay tax, withhold and remit tax and refund excess taxes withheld on compensation
• failure or refusal to issue receipts or sales or commercial invoices, violations related to the printing of such receipts or invoices or other violations
• unlawful pursuit of business
• use of multiple tax identification numbers
• making false entries, records or reports or using falsified or false accountable forms
• other violations of the National Internal Revenue Code of 1997

“In order for the informer to be entitled for the reward, the confidential information to be reported must lead to the discovery of fraud and must result in actual recovery of taxes,” Mendoza said.

The BIR official noted that reporting of alleged tax evaders is not exclusive to social media influencers as the law covers all forms of tax violations.

Requisites of a valid confidential information

Mendoza said that in order for confidential information to be treated as valid it must meet five requisites.

He said the first requisite is that an informer shall not be disqualified in order to avail of the reward.

An informer is disqualified to avail of the informer’s reward if:

• he/she is a BIR official or employee or any other incumbent public official or employee
• a relative within the sixth civil degree of consanguinity of a BIR official or employee, or any other public official or employee
• though already retired or separated from service, BIR official or employees or other public official who acquired the information in the course of the performance of their duties during their incumbencies.

“Pangalawang (the second) requisite, the confidential information must be supported by substantial evidence,” Mendoza said.

The following documents can be accepted used a “substantial evidence” to support a claim:

• BIR’s Certificate of Registration
• Income Tax Returns
• Deed of Absolute Sale
• License to Operate Business in the Philippines, as issued by the Securities and Exchange Commission
• General Information Sheet obtained from the SEC
• Audited Financial Statements
• Other relevant documents

The third requisite, Mendoza said, is that the information being reported is not yet in the possession of the BIR.

“For example, if it is already a public knowledge or already a subject in newspaper publication or television, radio broadcast,” he said.

The fourth requisite is that the said information does not refer to a case already pending or previously investigated or examined by the BIR or by the Department of Finance.

The last requisite is that the said information does not refer to or is not exactly similar to a previous information filed by another informer covering the same taxpayer describing the same scheme or information covering the same taxable year or period.

Payment of informer’s reward

The Revenue Regulations No. 16-2010 provides that upon receipt of the approval from the Secretary of Finance for the payment of the claim for informer’s reward, a disbursement voucher together with the supporting documents shall be prepared by the Enforcement Service and shall be forwarded to the Accounting Division for processing of the claim, subject to budgeting, accounting, auditing and other pertinent rules and regulations.

After processing the disbursement voucher and its supporting documents, the Accounting Division shall forward the same to the Financial Services for approval of payment.

After the approval of payment, the Financial Services shall forward the documents to the General Services Division for the preparation of the check.

“The reward shall come from the taxes actually collected as a result of the confidential information,” Mendoza said.

The informer’s reward is subject to income tax, collected as final withholding tax, at the rate of 10%. --NB, GMA News