Revenue officials summoned over deceptive policy

Finance Secretary Cesar Purisima and Revenue Commissioner Kim Jacinto-Henares have been subpoenaed to explain before a congressional inquiry their alleged deceptive efforts to impose additional requirements on taxpayers.

The subpoena was issued on Tuesday by the House committee on ways and means chaired by Rep. Hermilando Mandanas after the revenue officials revived the disclosure requirement on taxpayers in an about-face from their promise not to add to the taxpayers’s burden.

Rep. Magtanggol Gunigundo I of Valenzuela initiated the motion to issue the subpoena.

Most of the House committee members supported the issuance of the subpoena against Purisima and Henares who both failed to attend Tuesday’s hearing on the disclosure requirement as spelled out in Revenue Memorandum Circular 40-2011 issued by the BIR on Sept. 5, 2011.

“I will ask BIR to explain why the commitment given earlier to the committee on ways and means to withdraw this requirement for additional information is again being demanded,” Mandanas said.

Purisima informed the lawmakers that he had to leave for Busan, South Korea to attend the High Level Forum on Aid Effectiveness from Nov. 29 to Dec. 1, 2011.

“Secretary Purisima should appear before the committee and defend the actuations of Commissioner Henares regarding RMC 40-2011,” Gunigundo told the panel.

Cagayan de Oro City Rep. Rufus Rodriguez warned Henares and Purisima of contempt should they fail to attend the Dec. 3 hearing.

In a letter addressed to the Mandanas panel, Purisima said there will be an “optional” disclosure of the additional detailed information such as income subjected to final withholding tax as well as benefits not classified under gross income in the revised income tax return.

“The option wording is deceptive, not really an option. Revenue Circular Memorandum is defective legally and detrimental to businesses that provide employment and pay taxes,” Mandanas said.

According to the House panel members, such requirement is a violation of individual’s rights to privacy.

RMC 40-2011 prescribes the use of revised Income Tax Returns forms for self-employed, businesses and corporations starting with taxable year 2011, entitled as the “Information Return-Annual Income Tax Return.” The deadline of filing of ITRs is due in April 2012.

Rodriguez said, “being optional does not cure the constitutional defect of the memorandum circular.”

BIR Forms 1700 and 1701 require disclosure of additional information such as income subjected to final tax (interest, royalties, prizes and other winnings; cash and property dividends; capital gains from the sale of stocks not traded on the stock exchange; and capital gains from the sale of real property), income exempt from tax, and exclusions from gross income under Section 32(B) of the Tax Code.

Form 1700 is intended for individuals earning purely compensation income, while Form 1701 is for the self employed individuals, estates and trusts. Form 1702 is for corporations, partnerships and non individual taxpayers. –Maricel Cruz, Manila Standard Today