Internal Revenue Commissioner Kim Jacinto-Henares said she cannot act on ?feelers? sent by boxing icon and Sarangani Rep. Manny Pacquiao to settle a disputed P2.26-billion tax assessment.
?We cannot act on feelers, he has to file something formal that we can start with,? Henares said, on whether Pacquiao sought a compromised settlement on deficiency tax levied against him from prizefights he had in 2008 and 2009.
The Court of Tax Appeals (CTA) already ordered the Bureau of Internal Revenue (BIR) and Pacquiao?s lawyers to submit their arguments on Pacquiao?s petition to lift the warrants of distraint and levy issued against several of his bank accounts to ensure payment of his tax deficiencies. The court will decide on whether to grant Pacquiao?s petition to lift the warrants of distraint and levy issued against his bank accounts.
The BIR and Pacquiao earlier forged a court-approved ?gentleman?s agreement,? preventing the BIR from applying Pacquiao?s deposits as payment for his tax deficiencies, pending the resolution of Pacquiao?s motion to lift the warrants of distraint and levy.
But once the court decides on the issue of whether to lift the warrants or dismiss Pacquiao?s petition altogether, and the court refuses to grant Pacquiao?s motion to lift the warrants or the BIR?s motion to dismiss is granted, the BIR would already be free to apply the bank deposits as payment for Pacquiao?s tax deficiency. It would then be more difficult for Pacquiao to get a refund even if his petition before the CTA questioning the tax-deficiency assessment is granted in the end.
BIR Revenue Officer Cynthia Catolico testified during one of the hearings before the CTA that this would be the logical move of the BIR in case the CTA does not issue the preliminary injunction as asked for by Pacquiao?s lawyers while his main petition questioning the legality of the tax-deficiency assessment remains unresolved.
The BIR?s lawyer in the case, Felix Velasco, said the BIR?s motion to dismiss is anchored on the argument that Pacquiao?s appeal before the CTA was filed beyond the 30-day period prescribed for perfecting the appeal, hence the final decision on disputed assessment (FDDA) issued against him had already become final and unappealable at the time Pacquiao?s lawyers filed the appeal before the CTA.
The BIR claims that the FDDA was ?constructively served? through personal service made by the BIR at Pacquiao?s office at the House of Representatives on May 20, 2013; while Pacquiao?s lawyers filed the appeal before the CTA only in August 2013, or more than 30 days after the ?constructive service.?
Henares earlier said that even if Pacquiao would formally ask for a compromise settlement on his tax deficiencies, it would still be the call of the Evaluation Board, of which she is chairman, whether his offer would be good enough for the BIR to accept.
Henares explained that for Pacquiao to be able to ask for a compromise settlement on his tax deficiencies, he would have to prove that his case falls under the circumstances wherein the commissioner of Internal Revenue is allowed to compromise a tax-deficiency assessment.
Under Section 204 of the National Internal Revenue Code, the commissioner may compromise a tax-deficiency assessment only when ?a reasonable doubt as to the validity of the claim against the taxpayer exists,? or ?when the financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.? The amount of the compromise settlement must also not go below 40 percent of the tax deficiency assessed.
The commissioner may also abate or cancel a tax liability altogether ?when the tax or any portion thereof appears to be unjustly or excessively assessed.?
