Acquittal in tax case doesn't erase tax obligation — SC

The Supreme Court (SC) reiterated that being acquitted in a criminal tax case does not automatically exempt an individual from paying unpaid taxes.

“The taxpayer’s obligation to pay the tax is created by law; it does not arise from the offense of tax evasion,” the SC said in a 15-page decision.

“Accordingly, an acquittal of the accused or the dismissal of the criminal case for tax law violation will not result in the extinction of their civil liability for deficiency taxes,” it added.

The SC issued the remark as it affirmed the dismissal of criminal cases against a company, and its treasurer due to lack of evidence.

They were charged by the Office of the Solicitor General before the Court of Tax Appeals (CTA) for failing to file the company’s income tax return and pay income and value-added tax.

According to the court, the CTA dismissed the cases due to insufficient evidence.

In its appeal, the OSG argued that the company should still pay the tax regardless of the acquittal.

However, the SC said that the company was not required to pay the assessed tax due to an invalid tax assessment.

“All told, the assessment for deficiency income tax and VAT for taxable year 2006 against E & D is void for having been issued without a valid LOA,” it said.

“Consequently, [the company] cannot be held liable for the payment of deficiency taxes assessed therein. Hence, the dismissal of the case against [it] is in order," it added.

The decision, penned by Associate Justice Mario Lopez, was promulgated on January 24. — Joahna Lei Casilao/RSJ, GMA Integrated News