Strict guidelines holding up tax amnesty availment

BY JUDY T. GULANE, BusinessWorld Senior Reporter STRICT GUIDELINES regarding the Bureau of Internal Revenue’s tax amnesty program are discouraging taxpayers from signing up, a tax expert claimed. Joel L. Tan-Torres, a tax partner at SGV & Co., said taxpayers regard some of the tax bureau’s guidelines, contained in Revenue Memorandum Circular (RMC) 69-2007, as overstepping the bounds of Republic Act 9480 or the Tax Amnesty Act of 2007. Two of these are the tax bureau’s decision to exclude assessments, particularly covering banks’ special savings accounts, and taxpayers who are in deficit position, from coverage. Lilian B. Hefti, the tax chief, has decided to exclude banks’ special savings accounts from the amnesty scheme based on a Supreme Court decision. "Since there is already a final resolution to the issue that has been applied to at least one instance, the same treatment should be accorded to all other instances similarly situated," she said in Revenue Memorandum Circular 70-2007. The high court ruled in April that special savings accounts were subject to documentary stamp tax (DST). Also excluded from availing of the amnesty scheme are taxpayers in deficit position who declare additional assets but still end up in a deficit position. "Only companies reflecting positive net worth can avail of the tax amnesty law," the tax bureau said in RMC 69-2007. The tax amnesty law is silent on special savings accounts, merely saying that assessments not covered by final and executory judgments by the courts are eligible. It also says that taxpayers who have filed statements of assets, liabilities and net worth or balance sheets together with their 2005 tax return are also covered, as long these taxpayers declare additional assets and pay an amnesty tax based on the increase in net worth. Mr. Tan-Torres said taxpayers have pointed out that the Supreme Court decision on special savings accounts is specific to particular cases, while the tax amnesty law does not exclude those in a deficit position but have complied with the requirement to show an increase in net worth. "I spoke with the commissioner, and she said collections from the tax amnesty program amount only to P200-P300 million so far, which is not much," he claimed. Ms. Hefti, meeting the comptrollers and accountants of banks last week, reiterated the exclusion of cases already decided by the high court from coverage of the amnesty scheme. "Again to clarify these concerns, cases previously decided by the court with finality are no longer covered by the tax amnesty law considering that the issues have already been ruled by the Supreme Court with finality and [the ruling] has been applied to other cases under similar circumstances," she said in a statement. The meeting was arranged to ask banks to pay more taxes. Meetings in the coming days have been arranged with the insurance and other financial institutions, manufacturing, real estate and trading, utilities and transportation, and other services sectors. Ms. Hefti realigned the regular division of the Large Taxpayers Service (LTS) last month after collections slipped again in October. She formed six industry groups — insurance and other financial institutions, banks, manufacturing, real estate and trading, utilities and transportation, and other services — and assigned division chiefs to monitor the six. The LTS accounts for more than half of the tax bureau’s goal.