"The income tax law is a lot of bunk. The government can't collect legal taxes from illegal money."
--Attributed to Al Capone
With the announced groundwork by the Bureau of Internal Revenue of the proper charges against movie actor Richard Goma Gomez, and lately, against Asia’s songstress Regine Velazquez, for alleged violations of the tax laws, questions arise on what exactly Goma and Regine violated and their prospects if found liable.
BIR is now presumably in the process of filing the appropriate administrative, civil, and criminal charges against the actor and the singer, for non-filing of their income tax returns and therefore non-payment of taxes. The Bureau has announced that Gomez failed to pay his income taxes for the years 2001, 2002, and 2003, notwithstanding high profile professional engagements in television, movies, and advertisements. The same is true with Regine.
First off, the actor might be of the impression that he has no tax liability anymore with the government since his professional fees or talent fees were already subjected to value-added tax withheld at source. His mother studios, tv and movie producers, and advertising agencies are technically withholding agents of the BIR. The withheld professional taxes are remitted as soon as practicable and within the taxable year. Non-payment of taxes is easy to prove yet easy likewise to escape by the facility of evidence fabrication if the taxpayer is in cahoots with the tax investigator. Remember the manner by which taxpayers file their returns come deadline date? The returns are just placed in boxes never to be revisited anymore, unless, the taxpayer is denounced by a whistle-blower or his lifestyle is just simply too conspicuous, as in the case of Gomez. In other words, this is a simple battle of documentary evidence. Gomez crime is tax evasion.
Tax evasion is illegal, whereas tax avoidance is allowed. Tax evasion has been defined as an illegal practice whereby an individual intentionally avoids paying their true tax liability. Anyone caught evading taxes are generally subject to criminal charges and substantial penalties. Malice or bad faith is attendant in tax evasion. However, malicious intent may be overlooked or rendered immaterial in proving non-payment of taxes as tax laws are generally penal laws that are in the category of mala prohibita (prohibited acts by reason of policy). Considering the rule in mala prohibita cases, the only inquiry is whether the law has been breached. Criminal intent becomes unnecessary where the acts are prohibited for reasons of public policy, and the defenses of good faith and absence of criminal intent are unavailing (FELIPA B. CUEME, vs. PEOPLE OF THE PHILIPPINES, G.R. No. 133325 June 30, 2000). From the looks of it, the actor shall be prosecuted under Sec. 255 of REPUBLIC ACT NO. 8424 also known as TAX REFORM ACT OF 1997, which says:
Failure to File Return, Supply Correct and Accurate Information, Pay Tax
Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation. - Any person required under this Code or by rules and regulations promulgated
thereunder to pay any tax make a return, keep any record, or supply correct the
accurate information, who willfully fails to pay such tax, make such return,
keep such record, or supply correct and accurate information, or withhold or
remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to
other penalties provided by law, upon conviction thereof, be punished by a fine
of not less than Ten thousand pesos (P10,000) and suffer imprisonment of not
less than one (1) year but not more than ten (10) years (emphasis ours).
There is a difference however, between tax minimization (or avoidance) and tax evasion. Any taxpayer has the right to reduce the amount of taxes he pays as long as it is by legal means.
The actor is in deep trouble if he could not produce his income tax returns and other reports of his accountant. His woes are exacerbated by his political inclination. Any sympathetic bureaucrat in the BIR may not be of any help as no less than the Commisssioner has made some preliminary announcements. In other words, they already have the goods against Gomez. If Gomez is in the process of fabricating some reports, as advised by some fixers in the BIR, forget it or he hastens his ruin.
Remember Al Capone? During the Prohibition period, he built a formidable criminal organization in Chicago. He was brutal in his pursuit of dominance, killing seven members of a rival gang in the St Valentine’s Day Massacre of 1929. The Federal government could not pin him down for his criminal activities, such as moon shining, racketeering, and murder. During the trial, the prosecution documented Capone's lavish spending, evidence of a colossal income. The government also submitted proof that Capone was aware of his obligation to pay federal income tax but failed to do so. After nearly 9 hours of deliberation, the jurors found Capone guilty of three felonies and two misdemeanors, relating to his failure to pay and/or file his income taxes between 1925 and 1929. Judge Wilkerson sentenced Al Capone to serve 11 years in prison and to pay $80,000 in fines and court costs. He was imprisoned from 1931 to 1939 for income-tax evasion, the only charge that could be sustained against him (source: www.tiscali.co.uk/reference/encyclopaedia).
While Commissioner Willy Parayno generally enjoys the trust of the public in this recent endeavour, his campaign must be directed not only to perceived foes of the administration, but to its associates as well.
A serious tax collection directed at private individuals must be done in parallel with unrelenting prosecution of grafters in government. The Ombudsman must in tandem with the BIR bring to court top bureaucrats, local government officials and legislators who are charged with corruption. By effecting the arrests and convictions of government functionaries charged with fraudulent disbursement of public funds, will the public be satisfied that indeed the Arroyo administration is serious in its crusade. The conviction record of the Ombudsman is dismal, thus it sends the signal that in these parts it pays to spend public monies recklessly.
In Quezon alone, for the last seven years, the provincial government has embarked on unchecked lavish projects. Remember the most expensive Convention Center in the Philippines? Thanks to SM, the people were given a comparison on the construction costs. While SM spent a measly P100M in its SM Lucena, Quezon spent P500M in the erection of the Enverga Convention Center. The province has been pockmarked with overpriced E-type school buildings. Why the Sangguniang Panlalawigan has let this pass is still a puzzlement. Instead of focusing its resources to Northern Quezon, devastated by recent calamities, the provincial government has inaugurated a P700M Quezon Medical Center, the source of funding thereof is still a mystery to the Sangguniang Panlalawigan. Various criminal charges have been filed against the provincial sitting official together with his cohorts, and stories have it that the public relations men of the local officials have visited the graft investigators to sit on the cases. A fun has been going around the province that the sitting official has gone on erection spree to the consternation of his wife.
The local BIR Regional District Officer is urged to look into the allegation that a sitting official has knowingly failed to settle the estate tax of his ascendant which translates into millions of pesos in fraudulent machination. The RDO may start on the certification issued by his predecessor, the former spouse of a city official that no estate tax has been paid by the heirs of the former government official. If the entire family of General Carlos Garcia is now the object of a criminal prosecution for Plunder, this Quezon leading family should also be accorded the same scrutiny.
Unless of course the RDO has been settled already. This matter shall be followed up with unusual zeal by the Sentro ng Gabay Legal sa Quezon. The sitting official must be reminded that spending tax money goes with it the responsibility of paying it.