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Unexplained sources of income BIR RATE program

The Bureau of Internal Revenue (BIR)  filed a criminal complaint with the Department
of Justice against RAYMOND ARROYO BABST (BABST) for

A.  Willful Attempt to Evade or Defeat Tax,and
B.  Deliberate Failure to File Income Tax Returns for taxable years 2009, 2010, and 2011, in
violation of Sections 254 and 255 of the National Internal Revenue Code of 1997, as amended (Tax
Code).

Respondent BABST is registered with the BIR with registered addresses at 22 King Christian
St., Kingspoint Subd., Brgy. Bagbag, Novaliches, Quezon City and No. 140 Libra Street, Cinco
Hermanos Subd., Marikina City.

Based on information and documents gathered during the investigation,
BABST purchased
1.  a Rockwell Condominium worth P2.9 million in 2006 and paid the corresponding Documentary
Stamp Tax (DST) thereon in the amount P54,645.00.
2.   In 2007, he sold the same property for the
same amount and paid the Capital Gains Tax (CGT) thereon amounting to P218,526.00.
3. In 2009,
he purchased a parcel of land and residential house in Marikina City for P3.16 million and paid the
DST thereon in the amount P47,400.00. Despite these acquisitions, he did not declare any income
for the said years.
4..In 2009, BABST started his distributorship agreement with Pepsi Cola Products Philippines,
Inc (Pepsi Cola, Inc).

As certified to by Pepsi Cola Inc., BABST made the following acquisitions
a. amounting to P3.53 million (2009),
b. P20.09 million (2010) and
c.  P17.12 million (2011).
d. In 2010, he
paid various BIR taxes with an aggregate amount of P4,464.85.
e. In 2011, he sold his Vernida
Condominium for P4.8 million and paid the CGT thereon in the amount of P288,000.00.

Using the expenditure method of investigation, investigators determined that BABST
committed substantial underdeclaration of income as he was able to make the aforementioned
purchases despite no record of income from any source. His net income for the past several years
combined was in fact considerably short vis-à-vis his property acquisitions and stocks in trade from
Pepsi Cola.

As a consequence of his acts and omissions, BABST was sued for an aggregate income tax
liability amounting to

 P23.82 million, inclusive of surcharges and interests, broken down into: 2009
– P3.05 million: 2010 – P13.32 million; and 2011 P7.45 million.

The case against RAYMOND ARROYO BABST is the 320th filed under the RATE program of
the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise a RATE case
of the National Investigation Division.

Bar Code on the Upper Right Corner of the BIR Income Tax Return



Most people filed their income tax return on 2014 but did not notice or don't know the purpose of a Bar code on the upper right corner of the BIR Income Tax Return.

The goal of BIR is to have a readable tax return.  A scanner will just scan the income tax return and it will automatically get all the information in the income tax return and save all the information in the BIR database

Having an updated database, BIR can just use a Computer Aided Audit Tools (CAATS) to generate audit findings of all taxpayers.




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