CTA affirms cancellation of Derek Ramsay’s P18-M tax billing

The Court of Tax Appeals (CTA) has affirmed the withdrawal of an P18.23-million demand on Derek Arthur Ramsay, one of the country’s leading celebrity taxpayers, on procedural grounds.

In a 19-page decision dated June 22, the CTA sitting en banc unanimously voted to deny the Commissioner of Internal Revenue’s (CIR) appeal on the CTA Third Division’s Sept. 17, 2015 decision in favor of Ramsay.

The tax court said the Bureau of Internal Revenue (BIR) violated the actor’s right to due process because it only served a formal letter of demand (FLD), but not an assessment notice informing him of his tax liabilities for the years 2006 to 2009.

It found that the assessment notices in the BIR’s records were not actually attached to the FLD dated Jan. 4, 2012. There were also no dates on the assessment notices or any indication that Ramsay ever received it.

Even the final demand letter (FDL) dated Feb. 20, 2012 only stated the taxpayer received an FLD with the details of discrepancies, confirming that no valid assessment notice was sent.

The FLD itself was deemed void because it did not state a definite time for the payment of the supposed tax liabilities.

The letter, signed by then-Commissioner Kim Jacinto-Henares and Assistant Commissioner James Roldan, only stated the payment should be made “within the time shown in the enclosed assessment notice,” which the court said was not served on Ramsay.

The CIR argued the CTA should not have entertained Ramsay’s case because the FLD already became final, executory and demandable after the actor failed to file a timely protest.

But, the CTA said the assessment never ripened into a valid demand because it was riddled with procedural defects. Section 228 of the National Internal Revenue Code, which states that such an assessment would be void.

Ramsay, a resident of upscale Legaspi Village in Makati City, was assessed a deficiency income tax of P11.85 million, value-added tax of P6.38 million, and a P125,000 compromise penalty for the years 2006 to 2009.

He was consistently listed among the country’s Top 500 Taxpayers when the BIR disclosed the information from 2012 to 2014. He placed 68th, 157th, and 91st for those three years, having paid P16.70 million, P12.74 million, and P20.02 million in income taxes, respectively.

The actor became famous for starring in affair-themed films like No Other Woman, A Secret Affair and Trophy Wife. He is also known for a much-lampooned anti-piracy advertisement where he played a policeman who pointed a gun at a camcording suspect. JE