BIR: Non-issuance of ORs will lead to criminal raps

Posted at 09/15/2011 3:30 PM | Updated as of 09/15/2011 6:55 PM

MANILA, Philippines - The Bureau of Internal Revenue (BIR) has issued a warning to professionals and business establishments that do not issue official receipts (OR) for services rendered and goods sold: they will be made criminally liable once caught.

The warning was made by BIR Commissioner Kim Henares following the filing of tax evasion charges today against two physicians before the Department of Justice (DOJ) for failure to issue official receipts to clients.

Charged for violation of Section 264 of the National Internal Revenue Code(NIRC) on failure or refusal to issue receipts or sales or commercial invoices and violations related to the printing of such receipts or invoices were neurosurgeon Willy Go Lopez and dermatologist Sylvia Huang.

"I have instructions to the regional directors [and] the revenue district officers that since we started it already, that they should conduct this kind of operations and that they should escalate what we are doing from merely tax mapping to merely closure [of establishments] and surveillance to already file criminal cases under Section 264 for failure to issue receipts," Henares said.

This is the first time in so many years that the BIR has filed charges on the basis of this particular section of the NIRC. The offense is punishable by a fine of between P1,000 to P50,000 and imprisonment of 2 to 4 years.

Respondent Lopez practices at the Medical City, Makati Medical Center, and Cardinal Santos Medical Center while Huang has her own clinic in San Juan, Metro Manila.

Henares bared that the case against Lopez stems from a formal complaint by spouses Arestophanes and Josephine Salvador for non-issuance of official receipts.

Complainants alleged that on at least 4 occasions, they paid Lopez a total amount of P164,000 for professional services but were not issued official receipts.

Lopez was then placed under "observation and surveillance" operation by the BIR by virtue of a mission order.

One of Lopez's patients was subsequently interviewed by a BIR revenue officer in the former's clinic and it was found that no official receipt was given for payment of P1,000 in consultation fees.

As for respondent Huang, Henares said a BIR mission order was also issued for purposes of placing her clinic under surveillance following reports of non-issuance of official receipts.

2 BIR investigators posed as patients, made the necessary payment for services rendered, but were not issued official receipts.

The investigation bared that Huang only issues receipts to clients "only upon demand" despite the NIRC's mandatory requirement of issuance of official receipts or commercial invoices. 

The complaints against Lopez and Huang are only 2 of 67 tax evasion cases filed by the BIR under its revitalized Run After Tax Evaders(RATE) program under the Aquino administration.

Bazaars and on-line sale warned

The BIR also warned those planning on putting up bazaars and "tiangges" in time for the yuletide season to strictly comply with the issuance of official receipts for goods sold P26 and above. Only items sold P25 and below are not covered by the requirement.

"Since 2004 meron pong standing regulation and BIR with regard to the bazaar, tiangge. We collect an advance on their VAT per day and they report the collections at the end of the day," Henares said.

As for online selling, Henares said this is not exempt as well.

"For online business, whatever you are selling, you have to issue a receipt," she stressed.

"Everyone should just wait and see. Hopefully lang hindi sila yung mahuli. Yun yung warning -- dapat lahat tayo sumusunod. The best antidote is to follow the law, comply with all the requirements. If you do, you don't have to fear kung kayo yung kakasuhan," she said.

The BIR estimates that 43% of the economy constitutes transactions and services by informal and unregistered professionals and businesses who do not issue official receipts and commercial vouchers cost -- translating to billions of pesos in losses in terms of revenues from tax collections.