The Philippine Charity Sweepstakes Office (PCSO) owes the government at least P3.6 billion in unpaid taxes from 2007 to 2009, according to documents furnished the Inquirer.
The unpaid taxes cover, among others, the 5-percent tax on the total prize fund, 10-percent documentary stamp tax on sweepstakes and lotto tickets, withholding tax on compensation, and tax on miscellaneous income, the documents showed.
Computed to include penalties, interest and surcharge, the total tax deficiency of the PCSO during that period in the Arroyo administration could go as high as P5 billion.
PCSO Chair Margarita Juico told the Inquirer that her office had appealed to the Bureau of Internal Revenue (BIR) “for a compromise payment.”
“This came as a surprise to us,” Juico said.
In an interview, Revenue Commissioner Kim Henares said the bureau had continuously been pursuing payment of the PCSO’s unsettled tax obligations.
“I don’t know the exact amount, but it’s in the billions,” she said.
Henares cited the PCSO’s failure to pay the documentary stamp tax on tickets for its various games, such as the lotto.
“There is a 10-percent documentary stamp tax on each lotto ticket,” she said.
But Henares quoted Juico as saying that the new PCSO management was trying to clean up its books, including paying the government what it owed.
Henares said that each of the two agencies had to do what needed to be done, and that the BIR would continue pursuing receivables from the PCSO.
Sept. 12 letter
Juico said that as early as January, the PCSO started paying back taxes for the year 2010, thinking all along that the other taxes had been paid.
But in a letter dated Sept. 12, the BIR invited the PCSO to a conference over unpaid taxes in 2007, 2008 and 2009, she said.
Juico said there were indications that taxes from 2002 to 2006 had also been unpaid. She said she and other officials were waiting for an official report from the BIR.
In the Sept. 12 letter signed by Alfredo Misajon, the acting commissioner of the BIR’s Large Taxpayers Service, the PCSO was informed that it failed to pay P1.166 billion in 2007.
The amount covered the documentary stamp tax, withholding tax on compensation, final tax on the prize fund, withholding value-added tax on government money payments, expanded withholding tax, value-added tax on miscellaneous income, and fringe benefit tax.
There were also unpaid taxes of P31 million in 2007, the BIR said in an itemized computation attached to the letter.
The PCSO, then headed by Rosario Uriarte, also failed to pay the withholding tax on the salaries, wages and benefits of its employees, for an annual total of P204 million, according to the letter, which also stated that the agency had 1,237 employees.
The unpaid prize fund tax in 2007 was pegged at P319 million, the letter showed.
More amounts due
In the same letter, the BIR also informed the PCSO that in 2008, the total unpaid taxes amounted to P1.299 billion, covering the income tax, withholding tax on compensation, expanded withholding tax, withholding value-added tax, fringe benefit tax and final tax on the prize fund, among others.
The unpaid final tax on the prize fund was P411 million, and the unpaid withholding tax on compensation was P206 million, the letter showed.
The computation attached to the letter also included the amount of P189 million described as “various deficiency.”
The BIR likewise said in the letter that the PCSO failed to pay a total of P1.151 billion in 2009.
It said the amount included P652 million in documentary stamp tax and P483 million in final tax on the prize fund.
It also said the PCSO had failed to pay income tax and value-added tax on miscellaneous income.
Legal suit not likely
Asked if these tax obligations on the part of the PCSO could lead to legal action against its former officials, Henares said this was unlikely.
“We prosecute cases such as [those involving] local government officials not remitting taxes withheld on employees’ salaries because that constitutes estafa,” she said. “That is not the case with unpaid documentary stamp taxes.”
Henares said that for government entities failing to pay their taxes, the worst case was for the BIR to seize and liquidate assets.
“But that is generally something that we don’t like to do because seizing a government agency’s assets can compromise its ability to dispense service to the public,” she said.
Under Henares’ predecessor, Joel Tan-Torres, the BIR in 2010 took steps to freeze the assets of Makati City Hall, particularly an account with the Land Bank of the Philippines that held P1.15 billion.
In a decision dated Dec. 16, 2009, the Court of Tax Appeals ordered the Makati government to pay the BIR P1.05 billion in deficiency taxes for the period 1999-2001 and P217.8 million for the period 2002-2004.
Based on a BIR assessment, which Makati City Hall protested, the amounts covered unpaid withholding tax on salaries, value-added tax, and withholding tax on value-added tax.
First posted 1:29 am | Sunday, September 18th, 2011