State auditors want the Bureau of Internal Revenue (BIR) to recover P304.476 million in value added taxes that the revenue agency refunded despite alleged violations of the National Internal Revenue Code of 1997.
The Commission on Audit said BIR must explain why it granted the refund despite the belated filing of the claim for refund which is beyond the 120-day period allowed under the NIRC.
“Analysis shows that even if the maximum period of two years plus 120 days is counted, the grant of tax refund is still belated,” COA said in its 2019 annual audit report for BIR that was released the Thursday.
State auditors stressed that the regulation on the 120-period for filing of claims has been upheld by the Supreme Court as essential and necessary for claims for tax credit or refund “to prosper.”
The COA observation was released by COA Director Cora Lea de la Cruz to BIR Commissioner Caesar Dulay.
The P304.476 million in unauthorized refunds consist of six claims by various taxpayers that were part of the 16 random sampling of tax refunds examined by auditors.
COA noted that aside from the late filing of the refund claim, the BIR also apparently ignored the failure of the claimants to comply with the NIRC requirement for submission of all documentary and evidentiary requirements provided in Section 112 of the NIRC and the related implementing policies and procedures on documentary and approval requirements prescribed by COA Circular No. 2012-03.
In Revenue Region 8, COA discovered that VAT refund claims amounting to P46.533 million were not supported with official receipts, but by acknowledgement receipts which is not in consonance with COA Circular No. 2004-006.
This deficiency has cast doubts on “whether the funds disbursed were actually received by the payee to extinguish any liability arising therefrom.”
“The non-submission of the ORs as proof of receipt for the disbursed funds precludes the Agency from establishing that these have been received by the payee so that any liability arising from the claim has indeed been extinguished,” the audit report stated.
“We recommended and the Management agreed to require the seven taxpayers/claimants to submit the ORs totaling P46.533 million,” said COA.
In the same audit report, the state audit agency disclosed that the BIR has failed to “recognize 182 FPAs (forfeited properties/assets) valued at P431.037 million” while making an erroneous recognition of 13 FPs with total book value of P7.060 million.
A total of 354 real properties, with a total area of 6,325,891 square meters, and considered FPAs are in the custody of the BIR.
At least 138 more FPS are for consolidation but BIR is already given the authority to regulate access of the properties and have enforceable claims over the resources.
COA said there are 182 FPAs valued at P431.037 million are under the ownership of the government but are not yet recognized in the books. The agency said BIR must recognize these FPA items.
Responding to the adverse audit observation, the BIR management said the Forfeited Assets Management Unit (FAMU) has sent memoranda to concerned Regional Revenue offices to take “physical jurisdiction over” the said properties and have them titled under the name of the Republic of the Philippines.