Lawyer & CPA sued under BIR RATE

The Bureau of Internal Revenue’s Run After Tax Evaders (RATE) program, headed by Com. Kim Jacinto-Henares again exercised its shrewdness as they file a case last mid-April 2012 against Atty. L, under Sec. 254 or the Attempt to Evade or Defeat Tax and Sec. 255 which is the Failure to File Return, Supply Correct and Accurate Information, Pay Tax, Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation, both of the National Internal Revenue Code of 1997.

Atty. L  was caught off the hook by the BIR when an evaluation of the Alpha List of Income Payments were submitted by his bank clients,(BPI, BDO, AUBC, and HSBC among others,) together with the BIR Form 1604E, that shows Atty. L received income payments of P6.24 million for 2009 and P8.40 million for 2010.

Bank of the Philippines Islands, as one of Atty. L’s clients certified that they paid him P2.38 million in 2009 and P4.56 million in 2010. In BDO’s case, they certified that Atty. L’s revenue from them was P3.08 million and P3.37 million, respectively.

The alleged under declared income by Atty. L was P2.38 million in 2009 and P4.67 million in 2010. Thorough Investigations revealed that although Atty. L filed his VAT returns for 2009 and 2010, but no payments were made.

In line with Atty. L’s case, an independent Certified Public Accountant was accused of the infringement of SEC. 257 of the Tax Code or the Penal liability for making false entries, records or reports, or using falsified of fake accountable forms. The accused CPA certified Atty. L’s Financial Statements for 2009 and 2010, where the discrepancies of income payments were dated.

Reference: BIR RATE updates from BIR website.


The discovery of the above alleged under-declaration is brought about by third party information, the bank clients. Under this, the tax returns and reports of bank clients pointing its purchases of services of Atty. L were aggregated and compared to the revenue declarations of Atty. L and it there appeared to be a material discrepancy. While it may not be an outright conclusion as to tax evasion, Atty. L will still enjoy his right to justify.

What is more pressing for us is the implication on the CPA who certified the financial statements of Atty. L. It appears that the Bureau of Internal Revenue (BIR) is really serious on its efforts for collection enforcements. Let this be a stern warning for CPA practitioners that they be vigilant in the conduct of certification of the financial statements.

This is the 102nd case filed under RATE and counting. We would expect more cases are lined up for filing and we strongly encourage taxpayers to comply. Educate themselves with the tax rules, and regulations and have them applied accordingly to avoid headaches.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may also please send mail at info(@), or you may post a question at Tax and Accounting Center Forum and participate therein.

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