BIR “clothes” Vintage Fashion with tax evasion suit for willful failure to pay taxes

“Willful failure to pay taxes is not 
a fashion trend but a crime.”

This seemed to be the message aired to erring taxpayers by the Bureau of Internal Revenue (BIR) when it filed today a criminal complaint for tax evasion against a garments company at the Department of Justice for six (6) counts of willful failure to pay income tax for taxable years 1995, 1996, and 2000 to 2003 as defined and penalized under Section 255 of the National Internal Revenue Code of 1997, as amended.

Charged was VINTAGE FASHION, INC. (VINTAGE), formerly known as United Europe Asia Garment Corporation, a domestic corporation registered with the Securities and Exchange Commission for the purpose of carrying out an enterprise, business, trade or operation as manufacturer, distributor, exporter, importer, wholesaler, buyer, contractor, dealer, broker, commission merchant, agent, or representative for all kinds of garments, textile, embroidered products and/or clothing for men, women and children.

Also charged were MICHAEL TUNG LIM, ROSITA LU DY, NIDA CHAN, KELLY PASCUAL, AMOR DE LOS SANTOS, and BEATRICE RAMOS in their capacity as responsible corporate officers of the company in various taxable years.

The case against VINTAGE stemmed from a confidential information received by the BIR denouncing the former for substantial under-declaration of income which caused the issuance of a Letter of Authority (LOA) authorizing the examination of the books of accounts and other related accounting records of VINTAGE covering taxable years 1995, 1996, and 2000 to 2003. Three mandatory notices asking VINTAGE to present its books of accounts and other accounting records were also served. However, despite receipt of the LOA and the three notices as well as a Subpoena Duces Tecum, the subject company did not submit the requested documents.

VINTAGE was subsequently issued a Preliminary Assessment Notice (PAN). Failing to controvert the findings of the BIR, a Final Assessment Notice (FAN) and Formal Letter of Demand (FLD) were served asking VINTAGE to pay deficiency Income Tax (P46.71M), Expanded Withholding Tax (P105.44M) and Value-Added Tax (P258.42M) covering the six (6) taxable years in question.

Again, despite receipt of the FAN and FLD, VINTAGE failed to settle its tax liabilities thus making the said notice final, executory, unappealable and demandable. Accordingly, Preliminary Collection Letters and Final Collection Letters were prepared and served by the Run After Tax Evaders (RATE) program giving the corporation a last opportunity to finally settle its tax liabilities. Despite such demands and the lapse of a considerable length of time, VINTAGE still failed and adamantly refused to pay its deficiency tax liabilities.

The obstinate failure and refusal of VINTAGE to pay its long overdue deficiency tax assessments amounting to P410.57 million is construed as willful failure to pay taxes, a criminal violation of the Tax Code.

The case against VINTAGE FASHION, INC. and its responsible corporate officers is the sixty-second (62nd) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.