REPRINTED FROM TODAY IN MANILA
Article by a disgusted Tax Examiner
The issue I am raising is bigger than PDAF. It’s about the corruption in the BIR. Indeed, corruption through PDAF is just the tip of the iceberg. I would like to share how corruption works at the BIR. I want everybody to understand and feel its gravity to our life. This is bigger than PDAF because the accumulated amount is enormous. Continuous pain is worst than short time severe pain.
Voluntary payments, withholding taxes, and investigation of taxpayers—these are the ways of collecting taxes by the BIR. An example of voluntary payment is the filing of an annual income tax return. This is the one we rush to pay every April 15. Withholding tax on compensation—deducted by the employers from the employees together with the pag-ibig, sss, and other deductions monthly—is an example of a withholding tax. The case of Manny Pacquiao is an example of audit of taxpayer.
Corruption transpires during the investigation of businesses by the revenue officers. Examiners, supervisors (assessment section), assistant RDO, Revenue District Officers (RDO), Directors, and some commissioners—these are the specific revenue officers involved to the scheme. No examiners, supervisors, RDOs, & Directors can claim that he was never been involved in this scheme. Is there any policeman who has never touched a gun? Is there any fisherman who has never tasted the fresh or sea water? Every year the BIR conducts tax examinations to most business establishments. Initially, the BIR issues letter of investigation.
Letter of Authority (L.A.), Tax Verification Notice (T.V.N.), and Letter Notice (L.N.)—these are the letter of investigations issued by the BIR, although the L.N. is not actually used for thorough investigation. The LA is used for regular audit. The TVN is used when LA is inappropriate. This includes closure of small businesses. Another used of TVN is when transferring the ownership of real property by inheritance.
The LN is used for some circumstances. When the BIR found a discrepancy between the information submitted by a taxpayer and the information gathered by the BIR from another taxpayer outside the formal audit, an LN is issued. This happens usually between a distributor and a whole seller. Both of them submit information to the BIR. Considering their relationship, the former being the buyer and the latter being the seller, the information are compared based on the records submitted to the BIR. Any discrepancy will lead to the issuance of LN. As a consequence, the taxpayer can pay the tax if he agrees; otherwise, he can explain why such discrepancy occurred.
The main source of corruption is the LA because this is the normal way of authorizing the audit. In the eyes of the revenue officers, LA means money. With LA, revenue officers are like stockholders of every corporation. In some case, when a revenue officer received a LA, he is already borrowing money for casino because he is sure that on or before 120 days he has money, specifically from that LA.
