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SC issues guidelines on prosecution of criminal acts for tax law

The Supreme Court has ruled that an assessment for deficiency taxes is not required for the collection of an accused’s civil liability for unpaid taxes in a criminal tax case.

In a 43-page decision, the SC en banc said that a prior assessment is not required when a criminal action for violating the tax laws is filed.

The court also said that a final assessment is not a precondition to the collection of delinquent taxes in the criminal tax case. It said the criminal action is deemed a collection case.

According to the SC, the government must prove the guilt of the accused by proof beyond reasonable doubt and prove the accused’s civil liability for taxes by competent evidence. 

“If before the institution of the criminal action, the government filed (a) a civil suit for collection, or (b) an answer to the taxpayer’s petition for review before the CTA, the civil action or the resolution of the taxpayer’s petition for review shall be suspended before judgment on the merits until final judgment is rendered on the criminal action,” it said.

“However, before judgment on the merits is rendered on the civil action, it may be consolidated with the criminal action. In such a case, the judgment in the criminal action shall include a finding of the accused’s liability for unpaid taxes relative to the criminal case,” it added.

The court laid down the guidelines as it granted the petition for review on certiorari filed by the Office of the Solicitor General assailing the non-imposition of civil liability against Joel Mendez, an individual who was found guilty of violating the National Internal Revenue Code (NIRC).

The Court of Tax Appeals (CTA) found Mendez guilty of violation of Section 255 of the NIRC for not filing his 2002 income tax return and for willfully failing to supply correct and accurate information in his 2003 income tax return.

The CTA, however, held that an assessment by the Commissioner of Internal Revenue is required before the taxpayers can be held liable for deficiency taxes.

Meanwhile, the Supreme Court denied Mendez's petition that challenged the decision that found him guilty and affirmed his conviction. — BM, GMA Integrated News