(Article published in the Dec 7,2005 issue of Manila Standard Today)
liked them all “_APs”, first the ERAP (Economic Recovery Assistance
Program), then the VAP (Voluntary Assessment Program, and soon thereafter
the NAP (No Audit Program). Now
we are offered once again, the EVAP (Enhanced Voluntary Assessment
Program) under Revenue Regulations No. 18-2005, and I like it too.
because I am deaf to the grumblings of the self-righteous that programs
like these tend to reward tax evasion.
I too consider that making all tax evaders pay for their crime is a
consummation devoutly to be wished. And
I wish even more devoutly that there was a mechanism in the system that
could unerringly just catch, even if not always convict, some of them in
the first place.
But I nevertheless support these “administrative amnesties” (in quotes since only Congress, and not the Executive, can grant tax amnesties) because, they, at bottom, involve a romantic mix of trust and betrayal, not unlike the deadly play between prey and predator before the Messiah is come to make the lion sleep with the lamb.
The ERAP, VAP, NAP and, now the EVAP, is premised on the sorry fortune of living in a time and place where government is dependent on taxes paid by the people. Sad to admit, paying the right amount of tax, per se, does not save one from the unwelcome visits of the government’s tax collector. Only St. Thomas More, who lived in a far away land in a bygone age, is said to have claimed to being the safest man from the monarch since he violated no law. History recorded otherwise, unfortunately, even for him. And much more so today, in the Philippines and elsewhere, you need to have a bit more than bare compliance with tax law in order to achieve that elusive state called “peace of mind.”
of mind, and nothing more, is what my classmates Secretary of Finance Gary
Teves and BIR Commissioner Jojo Buñag want to offer with the EVAP in
exchange for the extra tax payments they want you to make between now and
30 December 2005. The amounts
do not appear prohibitive and the process of availing oneself of the
privilege is quite simple. Everything boils down to precisely what you
will be getting in exchange for your money. Just what can the EVAP, like
the other “_APs” before it, offer?
you will not be getting absolution from your tax sins under Revenue
Regulations No. 18-2005. Not
only has the Church pulled indulgences out of the market; but also,
Congress alone can give you that and at this time Congress is, as Garci
knows, not in a forgiving mode.
the EVAP offers is a promise, or, if you will, a commitment from the
Commissioner of Internal Revenue that, with respect to you, generous and
compliant souls going into the EVAP, he will exercise with utmost caution
a discretion given to him by the National Internal Revenue Code (“Tax
Code”). Section 6(A) of the
Tax Code provides that “after a return has been filed … the
Commissioner or his duly authorized representative may
authorize the examination of any taxpayer and the assessment of the
correct amount of tax.” And
to include in his net the far more dishonest ones who do not bother to
file a return, the law further states that “failure to file a return
shall not prevent the Commissioner from authorizing the examination of any
taxpayer.” This section is
considered authority for the Commission to audit some and not necessarily
all taxpayers. Selective
audit, tax people call it.
the Commissioner is thus saying is that, given the power of selective
audit, he promises not to audit those who avail themselves of the EVAP.
If that is Gary and Jojo’s message, why don’t they say so?
Because saying what they mean that clearly might be interpreted by
the jealous legislators as a practical circumvention of what the executive
department could not do in theory, i.e. grant tax amnesties.
Hence, the resort to textual finesse to massage factual reality.
term used for the promise of peace of mind, is “last priority” in
audit. In fairness to Gloria
Macapagal Arrroyo, that less than candid phrase was not invented during
her tenure. It was, in fact,
in currency even before the term of the similarly transparency-challenged
tenure of Erap Estrada.
Janus, the term “last priority”has two faces: first, “priority”
assures Congress that the tax authorities are not, in any way, abdicating
their duty to audit and collect the right tax but are in fact asserting it
albeit selectively; and “last” is a knowing wink at the taxpayer
saying that, really, if any shooting were to start, he will be placed in
the last row of those in the line of fire.
far behind the front row facing the rifle squad will the EVAP taxpayer be? “Last” does not mean, despite its common connotation,
that the EVAP taxpayer is “last in line”, i.e. that he will be audited
only after all the others have been audited.
It is more akin to “hard” or “hardly” as in “hardly
priority means, as explained by Section 2 of Rev. Regulation No.
18-2005, that "a taxpayer who has availed (insert "himself"
there guys: otherwise our Jesuit teachers in High School English will give
you post) of the EVAP shall not be audited except upon prior authorization
and approval of the Commissioner of Internal Revenue when there is strong
evidence or finding of understatement in
the payment of a taxpayer’s correct tax liability by more than thirty
percent (30%) as supported by a written report of the appropriate office stating
in detail the facts and law on which such finding is based…”
break that mouthful up into its component elements.
In the first place, as in the previous administrative amnesties,
only the Commissioner, and not any of his subordinates, can pierce the
armor of protected granted to the EVAP taxpayer.
Secondly, the EVAP disclosure of tax due must substantially miss
the correct amount. An
excusable mistake is tolerated. To be precise, the discrepancy between the
right and the wrong ought to be by thirty percent (30%) or more, before
the Commissioner will take notice.
thirty percent (30%) benchmark is a pick-up from Section 248 of the Tax
Code that provides that “failure to report sales, receipts or income in
an amount exceeding thirty percent (30%) of that declared per return, and
a claim of deductions in an amount exceeding thirty percent (30%) of
actual deductions” constitutes prima facie evidence of a false or
fraudulent return. In effect, the EVAP availment must be fraudulent.
this finding must be in a written report of the appropriate office. And fourthly, the report must state in detail the facts
and law on which such finding is based.
short, the practical likelihood of a reasonably honest taxpayer availing
himself of the EVAP being audited is ninety-nine point ninety-nine percent
even if the point zero one percent (.01%) were to happen, Revenue
Regulations No. 18-2005 contains comforting words for the taxpayer.
Says Section 3: “it is to be noted, however, that EVAP availment
is not an admission on the part of the taxpayer of erroneous payment of
the tax as well as of failure to file returns and pay the required tax.” In order words, availing one’s self of the EVAP will be
considered by the BIR like the “I am sorry” for the Hello Garci, an
apology for nothing. Furthermore,
should the audit of the EVAP taxpayer result in the liability to pay more,
than what was paid, Section 2 assures us that “any EVAP payment should
be allowed as a tax credit against the deficiency tax due, if any, in case
the concerned taxpayer has been subjected to tax audit.”
It is as if the EVAP taxpayer simply made an advance payment.
At the end of the day, however, EVAP’s promise of peace of mind is only as strong as the promisors’ will to keep it. But bearing in mind that Gary and Jojo were accepted into college on the basis of genuine high school diplomas, not fake certifications; and that the EVAP is unlike the NAP which was founded on an Executive Order No. 339 of Gloria Macapagal Arroyo, I think it is safe to put your money on it.