CTA disallows BIR from imposing stiff fines unless taxpayers agree in writing

Published August 8, 2018, 7:42 PM

by Roel Tibay

By Jun Ramirez

The Court of Tax Appeals (CTA) said the Bureau of Internal Revenue (BIR) cannot impose fines higher than what its regulations prescribed unless the taxpayer agrees to pay the compromise settlement in writing.

Court of Tax Appeals Photo credits: cta.judiciary.gov.ph | Manila Bulletin
Court of Tax Appeals
(Credit: cta.judiciary.gov.ph | Manila Bulletin)

The court’ Second Division issued the ruling as it ordered the BIR to return more than P5 million in penalties imposed against Frankfort Inc., a restaurant based in Pasig City.

Court records showed the BIR slapped the eatery P5.6 million in penalties for alleged failure to present books of accounts, official receipts and a number of point-of-sales (POS) or cash register machines during the inspection.

Frankfort agreed to pay P5.6 million as a compromise settlement with then Quezon City Revenue Regional Director Jonas Amora apparently to avoid closure but subsequently questioned the stiff penalties before the CTA.

The court said the penalties should not go beyond P50,000 for each violation or a total of P150,000 as prescribed under Revenue Memorandum Order No. 19-2007.

The court said the P5.6 million fines could be considered valid if the taxpayer agreed in writing to pay the assessment.

However, The court noted the BIR did not present such evidence during the trial.