BIR sues accountant and lawyer for under declaration of income

To the accountants who took time to comment on my article titled ‘Lawyers, unlike accountants are bound by client confidentiality’, this article below,written by William L. Beltran  and published on Saturday 14th of April 2012 under the Philippine Information Agency, might be of interest.

CITY OF SAN FERNANDO, April 14 (PIA) — The Bureau of Internal Revenue (BIR) scored anew on its Run After Tax Evaders (RATE) program after it filed Thursday (April 12, 2012) a criminal complaint against a lawyer and his CPA for tax evasion.
The BIR filed with the Department of Justice (DOJ) a criminal complaint against a certain lawyer for wilful attempt to evade or defeat tax and deliberate failure to supply correct and accurate information for taxable years 2009 and 2010 pursuant to Sections 254 and 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).
Likewise charged was a certified public accountant (CPA) who certified the Financial Statements of the lawyer for 2009 and 2010, in violation of Section 257 of the Tax Code.
An evaluation of the Alpha List of Income Payments submitted by the aforementioned banks together with BIR Form 1604E (Annual Information Return of Creditable Income Taxes Withheld) revealed that the lawyer received income payments of P6.24 million and P8.40 million in 2009 and 2010, respectively.
Furthermore, the Bank of Philippine Islands (BPI) certified that it paid the lawyer P2.83 million in 2009 and P4.56 million in 2010. Likewise, the Banco de Oro certified that for 2009 and 2010, the lawyer was paid P3.08 million and P3.73 million, respectively.
Records show that compared against his gross income declaration with the BIR of P3.41 million in 2009 and P4.67 million in 2010, he under declared his income by P2.83 million (83 percent) in 2009 and by P3.73 (80 percent) million in 2010.
Investigation also disclosed that although the lawyer filed his VAT returns for 2009 and 2010 (first two quarters), there were no payments made.
The lawyer was assessed a total deficiency tax liability of P6.63 million, inclusive of surcharges and interests, broken down into: Income Tax – P1.72 million (2009) and P2.03 million (2010); and VAT – P1.30 million (2009) and P1.58 million (2010).
The accountant, on the other hand, was included in the charge sheet for issuing an unqualified opinion in her certification of the 2009 and 2010 audited financial statements of the accused lawyer despite knowledge of the existence of such income payments/under declarations.
The case against the lawyer and the accountant is the 102nd filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. (WLB/BIR)


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