BIR “snapshots” fraud tale of proprietor of New Canary Photo

Photo Shop owner snap with tax evasion

A photo shop sole proprietor now faces a story he will never forget after the Bureau of Internal Revenue (BIR) filed today a criminal complaint for tax evasion against him at the Department of Justice for willful attempt to evade or defeat tax and deliberate failure supply correct and accurate information in his income tax returns (ITRs) for taxable years 2008 and 2009, in violation of Sections 254, 255 and 267 of the Tax Code of 1997, as amended.

Charged was MICHAEL L. CHAN (CHAN) of 8M St. Peter Street, Cubao, Quezon City. The registered owner of “New Canary Photo” under the jurisdiction of BIR Revenue District Office No. 40, Cubao, Quezon City, CHAN supplies cameras and photo equipment.

Initial verification made on the 2009 Alphalist Details Based on Third Party Information of CHAN revealed his sales amounted to P160.55 million. Copies of his ITRs for 2008 and 2009 showed that for taxable year 2009, he only reported an income of P55.23 million. Based on this initial findings, the BIR sent access letters to the SM Group of Companies that included, among others, Madison Shopping Plaza, Inc. and SM Mart, Inc.

After careful evaluation and comparison of the gross income declared by CHAN in his 2008 and 2009 ITRs against the sales he made for the same years as certified by his various customers, the BIR discovered that he deliberately failed to declare his correct tax base by substantially underdeclaring his income for two (2) consecutive years.

Documents showed that CHAN recorded sales amounting to P165.05 million in 2008 and P156.56 million in 2009. Despite earning such taxable income, he only declared in his ITRs P103.58 million for 2008 and P 55.23 million for 2009, thus grossly underdeclaring his sales by P61.47 million or 59.34% and P101.33 million or 183.46% in 2008 and 2009, respectively.

As a Filipino Citizen deriving income from within the Philippines, CHAN is mandated under the Tax Code of 1997, as amended, to declare all his income for each taxable year in his tax returns and to pay the corresponding taxes due thereon. Failing to do so, CHAN is liable for criminal prosecution for tax evasion and for the payment of civil liability in unpaid taxes.

The estimated aggregate tax liability of CHAN is P135.63 million, inclusive of surcharges and interests, broken down into Income Tax of P93.95 million (2008-P37.87M and 2009-P56.08M) and Value-Added Tax of P41.68 million (2008-P17.11M and 2009-P24.57M). 

The case against MICHAEL L. CHAN is the fiftieth (50^th) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.