BIR asks showbiz couples to amend tax declarations

Internal Revenue Commissioner Guillermo Parayno warned showbiz personalities yesterday that they will be charged with tax evasion if they fail to amend their income tax returns by next week’s deadline.

"We were trying to convince them that it will be better for them to amend their declaration if they think they paid the wrong tax," he said.

"Otherwise, all possibilities for appeal and negotiation will disappear once we audit them. On top of paying their taxes, they will pay the penalties and they will face criminal charges."

Parayno said entertainers will have one more week before the Bureau of Internal Revenue (BIR) starts issuing letters of authority (LAs) and letters of notice (LNs) to initiate the procedure of auditing their income tax returns.

"There should no longer (be) any excuse for entertainers to fail in setting their tax returns aright," he said. "We have given time to meet and explain their tax obligation to them."

Parayno said the one-week ultimatum was the time estimated for the BIR to collate returns and other documentary evidence against showbiz personalities.

"Investigations into their accounts are continuing even now," he said. "We will not be remiss in performing our duty so, sorry, na lang kapag nakatanggap na sila ng LAs and LNs (sorry if they receive LAs and LNs)."

Parayno said when the BIR held a dialogue with showbiz personalities last month, they were briefed and apprised of their tax duties so that they could avoid tax evasion charges.

"During that dialogue, we learned that the most common misconception of entertainers was that their taxes withheld on their talent fees represented full settlement of their tax obligations," he said. "This is just advance payment and not full payment."

Parayno said entertainers and other professionals are required to file their annual income tax returns to consolidate and finalize all their income and tax liabilities for the year.

"Some pay small additional amounts but in most cases, less than one percent of gross income," he said.

Most entertainers are not paying any other taxes than those withheld at their source, he added.

Parayno said he directed revenue district officer Clavelina Nacar in south Quezon City to go the "extra mile" in reminding other showbiz personalities to correct their tax declarations.

Once letters of authority and letters of notice are issued, a taxpayer is no longer allowed to modify his or her income tax return, he added.

If they are found to be delinquent or understating their income in their returns, civil and criminal charges will be filed against them, Parayno said.

Already charged with tax evasion are actors Richard Gomez, Regine Velasquez and Judy Ann Santos.

Only these showbiz personalities have expressed their intention to amend their tax declarations: spouses Cesar Montano and Sunshine Cruz, sweethearts Claudine Baretto and Raymart Santiago and television show host Iya Villania, the BIR said.

Meanwhile, the BIR filed tax evasion charges yesterday before the Department of Justice against the owner of a herbal trading and manufacturer firm and two distributors of Forever Living products.

Charged were Gloria Tuyay, owner of Glo Herbal Trading and Manufacturing Co., and Benjamin and Gloria Kintanar, Forever Living products distributors.

Parayno said Tuyay failed to present her book of accounts and other accounting records despite being served a letter of authority and several notices by the BIR.

Tuyay has an assessed tax deficiency of more than P110.3 million for 2001 and P4.5 million for 2002, he added.

Parayno said Glo Herbal, a popular herbal concoction, generated millions of pesos in income for Tuyay who claimed to have earned only P24.7 million in 2001 and P5.8 million in 2002.

"Both accounts were underdeclaration of taxable income in violation of the National Internal Revenue Code," he said.

"The expenditures method is based on the theory that if a taxpayer’s expenditures during a given year exceed the reported income, and the source of such expenditures is unexplained, such expenditures represent unreported income. These expenditures were P157.5 million in 2001 and P12.5 million in 2002."

Using the expenditures method in reconstructing Tuyay’s income, the BIR discovered that she actually earned P132.8 million in 2001 and P6 million in 2002, he added.

Parayno said documents gathered by the BIR also showed that Tuyay had acquired numerous properties worth several millions of pesos in 2001 and 2002.

"Based on our investigation, Tuyay was found to have underdeclared her income for the year 2001," he said.

"The difference between the declared income per her annual income tax return and total amount of unreported income for 2001 had already constituted a substantial underdeclaration equivalent to more than 30 percent, which is considered as a prima facie evidence of a fraudulent return under Section 248 (B) of the National Internal Revenue Code of 1997."

Tuyay owns properties in Caloocan City and in San Miguel, Bulacan, he added.

On the other hand, Parayno said the Kintanars also failed to present their books of accounts and other accounting records to the BIR.

Based on the BIR’s assessment, the Kintanars had a total of P46 million in tax deficiencies for taxable years 1999 to 2001, he added.

Parayno said between 1999 and 2000, Benjamin Kintanar was listed as the No. 1 distributor of Forever Living products, while Gloria Kintanar was consistently ranked in the top five.

"Aside from several television appearances, Mr. Kintanar had also been featured in ‘Pipol,’ an ABS-CBN television program hosted by Ces Drilon as a successful rags-to-riches story," he said.

"He has a preference for luxury SUVs and cars like Ferrari, Lincoln Navigator and Mercedes-Benz. However, despite their receipt of substantial amount of income and extravagant lifestyle, respondents did not file any income tax return and they likewise failed to pay the corresponding correct taxes."

Records of Forever Living products from 1999 up to 2001 showed that Benjamin Kintanar had received income amounting to P58,554,069.88, while Gloria Kintanar received payments amounting to P20,110,729.09, Parayno said.