BIR fails to collect P300B

Internal Revenue Commissioner Kim Henares. INQUIRER FILE PHOTO

Tax collection appears to have worsened under the Aquino administration as the Bureau of Internal Revenue’s (BIR) delinquent accounts have nearly tripled to almost P300 billion, according to the Commission on Audit (COA).

“The balance of delinquent accounts [of the BIR] increased by 188 percent in 2012 from that of 2011, from P103.757 billion to P298.981 billion, although the monitoring of delinquent accounts was one of the bureau’s priority thrusts for the year, thus adversely affecting its collection efficiency,” the COA said in a report released last month.

But  Revenue Commissioner Kim Henares, who has been on the job for the past three and half years, claimed that the delinquent accounts included bad checks that date back to before the Aquino administration took over.

“This is a result of our cleaning up and improvement of the record-keeping of our delinquent accounts. These are old, delinquent and dishonored checks (more than five years old) that were not reported and/or properly recorded. That is why for the past weeks we have been filing criminal cases against taxpayers for failure to pay delinquent accounts,” she said.

The delinquent accounts are roughly equivalent to three months’ worth of revenue collections.

The Aquino administration’s efforts to collect more revenue by waging a campaign against tax evasion and corruption in the collection process helped the country win investment grade ratings this year from all three major credit rating agencies—Fitch Ratings, Standard & Poor’s and Moody’s Investors Service.

Henares declined to state categorically if the delinquent accounts were from the previous Arroyo administration.

“I think it is enough to say that these are that old,” said Henares who served as deputy commissioner for special concerns at the BIR during the Arroyo administration.

She said the BIR had put in place an account receivable management system to track the delinquent accounts and collect on them.

The bureau has also created a centralized arrears management system for Metro Manila, as almost 70 percent of the delinquent accounts are in Metro Manila, she said.

Intensify collection efforts

In 2011, the COA urged the  BIR to look into P412.037 million worth of delinquent accounts and accounts receivable made up of 1,227 dockets and 1,985 cases that grew by 29.86 percent, from P312.207 million in 2010.

“We recommended that  management intensify collection efforts on delinquent accounts to increase revenue for government projects and programs; and determine the delinquent accounts which have lawfully prescribed and effect the necessary adjustment in the records of delinquent accounts,” the COA said.

The COA noted that delinquent accounts amounting to P438.078 million in the BIR’s Regional Office 1 (Ilocos Norte, Ilocos Sur, La Union and Pangasinan provinces) were not disclosed in the BIR’s financial report. It urged the BIR to properly disclose these data in its compliance report for “transparency.”

The COA said a key contributor to the swelling delinquent accounts was the rising inventory of delinquent checks that had reached P358 million at the end of 2012.

Sue transgressors

The audit agency said the BIR should encourage taxpayers to pay in manager’s or cashier’s checks instead of personal checks and consider allowing individual taxpayers to pay through credit card or through the agency’s checkless payment system.

Also, the COA suggested that a list of taxpayers who issued the dishonored checks should be disseminated nationwide to alert collectors not to accept their checks and that estafa charges and violations of the antibouncing checks law be filed against the transgressors.

After the tax assessment becomes  final,  the government can file civil and criminal charges against the delinquent taxpayer and seize his assets for sale. Delinquent accounts  should be collected within three years from date of assessment or up to five years for cases involving fraud.

Another factor cited by the COA for the bulging delinquent accounts was the BIR’s failure to make full use of the P370.651 million in its budget allotted for its computerization program.

The BIR returned P326.258 million of these funds to the government in 2012.

This was a “loss of opportunity to improve the bureau’s information technology structure geared ultimately at enhancing the process of tax administration,” the COA said.

“We recommended that management see to it that funds intended for specific projects are utilized and that projects to be undertaken are subjected to critical and careful studies to ensure that the amount spent therefor will benefit the public,” the report said.

Just being prudent

Henares explained that the BIR was being prudent in implementing the IT project.

“What we did initially was to make sure we reengineered processes first before we computerize the same; otherwise, it is garbage in and garbage out and we will be wasting money,” she said.

“Second, we have to follow a stringent procurement procedure. Third, a lot of our IT projects are going to be funded by the compact grant of MCC (Millennium Challenge Corp.),” Henares said.

(MCC is a US foreign aid agency aimed at fighting global poverty by providing countries that meet certain performance criteria  with large-scale grants to fund country-led solutions for reducing poverty through sustainable economic growth.)

In the 2012 report, the COA gave an “adverse opinion” on the BIR’s balance sheet primarily because of the P2.613-billion discrepancy between its accounting and property records. The BIR had booked its property, plant and equipment assets at P5.272 billion which the COA said “could not be relied upon.”

The other deficiencies cited by the COA were the BIR’s failure to record assets worth P107.448 million and failure to explain the P1.859 billion it marked in the books as “reconciling items.”

November target missed

Meanwhile, the BIR released yesterday data on its November collections, which was 3-percent short of its target for the month despite a 14-percent increase from collections in November 2012.

The BIR collection target for November was P130.6 billion.

The agency said it collected P126.46 billion in tax revenues in November, which was P15.69 billion, or 14.2 percent, more than collections made in the same month last year.

From January to November this year, collections reached P1.12 trillion, exceeding the entire 2012 figure of P1.06 trillion.

An additional P130 billion must be collected in December for the BIR to meet its full-year 2013 target of P1.25 trillion.

The government wants to narrow its budget deficit to 2 percent of gross domestic product (GDP) this year, from 2.3 percent of GDP in 2012, and keep it at that level until President Aquino steps down in 2016. With a report from Reuters