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Applied

Research on Tax
Avoidance and
Tax Evasion

Marchel D. Perez

INTRODUCTION

"Nothing in this world
can be said to be
certain, except death
and taxes.”- Benjamin
Franklin once said.

) what are tax evasion and tax avoidance? .INTRODUCTION (Cont.

Sy .) Tax avoidance "Taxpayers are allowed to avoid taxes by structuring their transactions.INTRODUCTION (Cont.“ says Atty. within the bounds of the law. to minimize tax payments.

" Atty. .) “Tax evasion occurs when the taxpayer goes beyond the bounds of the law in structuring his transactions in order to minimize tax payments.INTRODUCTION (Cont. Sy added.

and RUBY ONG MANLY” .INTRODUCTION (Cont. COURT OF APPEALS. SPOUSES ANTONIO VILLAN MANLY.) “BUREAU OF INTERNAL REVENUE vs.

-He is also engaged in rental business. SHORT SUMMARY Respondent s are: Antonio Villan Manly (Antonio) -is a stockholder and the Executive Vice-President of Standard Realty Corporation. . Ruby Ong Manly -his wife. a family-owned corporation.

010. 2005.00.BIR officer issued a letter to respondent spouses requiring them to submit documentary evidence to substantiate the source of their cash purchase of a 256-square meter log cabin in Tagaytay City worth P17. . SHORT SUMMARY Petitioner: BIR as represented by its officer June 6.511.

. however. failed to comply with the letter. SHORT SUMMARY Respondent spouses.

SHORT SUMMARY (Cont. 2005- BIR officer filed affidavit.) June 23. showing table of the respondent spouses cumulative income for taxable years 1998-2003: .

) .SHORT SUMMARY (Cont.

SHORT SUMMARY (Cont. .00 in the year 2000. evidenced by a Deed of Absolute Sale dated October 24.010. 2000.) 1) a luxurious vacation house in Tagaytay City valued at P17.511.

2001.350. SHORT SUMMARY (Cont. evidenced by a Sales Invoice dated June 28.00 in 2003.000. evidenced by a Deed of Sale dated July 9.) 2) a Toyota RAV4 for P1.000. and 3) a Toyota Prado for P2.00 in the year 2001. . 2003.000.

) The revenue officers concluded that respondent Antonio’s Income Tax Returns (ITRs) for taxable years 2000. . 2001. and 2003 were under declared.SHORT SUMMARY (Cont.

SHORT SUMMARY (Cont. petitioner recommended the filing of criminal cases against respondent spouses for failing to supply correct and accurate information in their ITRs for the years 2000. 2001. and 2003.) Thus. .

.SHORT SUMMARY (Cont.) But the respondent spouses denied the accusation and alleged that they used their savings for the past 24 years to purchase such a luxurious properties and that the officer of the BIR petitioner failed to issue a deficiency assessment against them.

SHORT SUMMARY (Cont. favored against the respondent spouses .) The ruling of the State Prosecutor in this case.

.) while the Secretary of Justice and Court of Appeals denied petitioner’s reconsideration.SHORT SUMMARY (Cont.

ARGUMENT Like the rulings of the Supreme Court I also disagree with the rulings of the Secretary of Justice and the Court of appeals that there was no probable cause to charge respondent spouses as petitioner allegedly failed to state their exact tax liability and to show sufficient proof of their likely source of income. .

) .ARGUMENT (Cont.

ARGUMENT (Cont.) .

ARGUMENT (Cont. respondent spouses is liable under NIRC Sections 254 and 255.) And since the under declaration is more than 30% of respondent spouses’ reported or declared income. because as stated in Section 248(B) of the same code: .

receipts or income in an amount exceeding thirty percent (30%) of that declared per return. . receipts or income or for overstatement of deductions. shall render the taxpayer liable for substantial under declaration of sales.) That failure to report sales. as mentioned herein. and a claim of deductions in an amount exceeding thirty percent (30%) of actual deductions.ARGUMENT (Cont.

ARGUMENT (Cont.) It is also true that petitioner shows the computation of the tax liability of the respondent spouses together with the percentage of under declaration. .

it is true that.CONCLUSION Thus. Sec 254 and 255 of the NIRC should be provided in this case. And also with the support of Sec 248(B) of NIRC .

I was also convinced that there is probable cause to indict respondent spouses for tax evasion as petitioner was able to show that a tax is due from them. .) After the rulings of the Supreme Court.CONCLUSION (Cont.

The End. .