Tenth part
There are other structural changes that can be effected to further enhance the Bureau of Internal Revenue and taxpayer engagements, especially in terms of tax audit interactions. Problems abound in these engagements such as the quarrelsome discussions on the tax issues and interpretations, pressure on taxpayers on unanticipated financial requirements to settle the tax assessments of the BIR, and the temptation to come up with quick solutions to end the disputes by accommodating the extortion attempts of corrupt BIR examiners or the taxpayers themselves offering bribes to settle the BIR audits.
The problems between the BIR and taxpayers generally arise because of lack of awareness of taxpayers on their tax compliance laws and rights. Confused and ignorant taxpayers oftentimes commit mistakes in the computation of their taxes. These errors are the focus of the audits of the BIR examiners when the tax returns of these taxpayers are selected for investigation. It is the responsibility of taxpayers to know their tax compliance rules and keep abreast of tax developments.
However, the BIR should constantly strive to enhance their communication and taxpayer education programs. The BIR’s ongoing information activities can be supplemented by using common layman materials that are easy-to-understand. The BIR should also be open to communicating to the public the most common mistakes and issues encountered in tax audits, with information being disseminated by industry issues, expense related matters and revenue topics. The Securities and Exchange Commission has such an initiative in place of communicating information on common mistakes encountered in the preparation of financial statements to serve as guide to their stakeholders. This can be replicated by the BIR to address commonly encountered tax audit issues.
The BIR has a publication on Taxpayers Bill of Rights (https://www.bir.gov.ph/images/bir_files/public_information_and_education/taxpayer_bill_of_rights/Taxpayer-Bill-of-Rights-2018.pdf). This provides information on procedures and remedies of taxpayers on the BIR tax audit process. However, this dwells more on the technical side of the process, and does not address the substantive concerns of taxpayers on effective interaction with the BIR and the underlying mindset of BIR in providing effective taxpayer service. The United States Internal Revenue Service has long adopted a system of having an independent Taxpayer Advocate addressing taxpayer issues on hurdles on their tax compliance. This should be the way the BIR administers its taxpayer related services. This approach can definitely provide relief to resolving acrimonious BIR-taxpayer engagements.
The BIR has issued zillions of guidelines and rules to govern the implementation of the Tax Code and its compliance by taxpayers. These issuances can be categorized into Revenue Regulations, Revenue Memorandum Orders, Revenue Circulars, and others. Taxpayers referring to these will have to undertake a tedious and complex research process. If they are incapable of doing these, they may have to resort to hiring those expensive tax consultants and professionals to provide them with information. The BIR should initiate a codification of all these issuances categorized into easily referred to topics. This codified manual of revenue issuances should be made easily available to taxpayers in downloadable electronic format. With this in place, this aspect of tax administration of providing service and information to taxpayers will be enhanced.
It is worthwhile to note that an enlightened taxpayer will be a better partner of the BIR in its tax financing mandate for any handicapped or bankrupt state.
To be continued.
Joel L. Tan-Torres is the Dean of the University of the Philippines Virata School of Business. Previously, he was the Commissioner of the Bureau of Internal Revenue, the chairman of the Professional Regulatory Board of Accountancy, and partner of Reyes Tacandong & Co. and the SyCip Gorres and Velayo & Co. He is a Certified Public Accountant who garnered No. 1 in the CPA Board Examination of May 1979.
This column accepts articles from the business and academic community for consideration for publication. Articles not exceeding 600 words can be e-mailed to jltantorres@up.edu.ph.