New developments show Pacquiao tax case could drag on

THE Bureau of Internal Revenue (BIR) may be open to a settlement on the tax deficiencies of boxing icon Manny Pacquiao, but it appears that Pacquiao’s corner is more bent on working to lift the warrant of distraint issued against his bank accounts and slug it out in the Court of Tax Appeals (CTA) on whether the tax agency is correct in assessing a P2.2-billion tax deficiency.

Internal Revenue Commissioner Kim Jacinto-Henares said on Monday the BIR has not received any indication from the lawyers of Pacquiao that the boxing icon is willing to compromise on the P2.2-billion tax deficiency that was assessed against him for 2008 and 2009.

“Before the hearing last week, his lawyer came to us asking for the lifting of the warrant of distraint,” Henares told the BusinessMirror. “But there’s no proposal from them yet [regarding a settlement].”

For now Pacquiao appears to be more focused on the lifting of the warrants against his bank accounts, and has sought another forum for this issue.

He has filed an urgent motion to lift the warrants before the CTA, which heard the case last week but reset the hearing to January 16 without acting on the motion.

Pacquiao’s camp has reported that he could no longer withdraw from the bank accounts which were subject to the warrant of distraint and levy issued by the tax agency.

Henares said even if Pacquiao would ask for a compromise settlement on his tax deficiencies, it would still be up to the evaluation board, which she leads, whether his offer would be good enough for the BIR to accept.

Henares explained that for Pacquiao to be able to ask for a compromise settlement on his tax deficiencies, he would have to prove that his case falls under the circumstances wherein the commissioner of internal revenue is allowed to compromise a tax deficiency assessment.

Under Section 204 of the National Internal Revenue Code, the commissioner may compromise a tax deficiency assessment only when “a reasonable doubt as to the validity of the claim against the taxpayer exists,” or “when the financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.” The amount of the compromise settlement must also not go below 40 percent of the tax deficiency assessed.

The commissioner may also cancel a tax liability altogether, “when the tax or any portion thereof appears to be unjustly or excessively assessed.”

source:  Businessmirror