DOJ cuts rewards for tax informants

MANILA, Philippines - The Department of Justice (DOJ) has scaled down the monetary reward given to tax informants from fees collected by the Bureau of Internal Revenue (BIR) from tax evaders.

Justice Secretary Leila de Lima reversed an earlier legal opinion issued by former Secretary Raul Gonzalez that RA 2339 (An Act to Provide For Reward To Informers of Violations of the Internal Revenue and Customs) should prevail over the National Internal Revenue Code (NIRC) of 1997 in the application of monetary rewards for tipsters in government’s drive against tax evasion.

In her legal opinion, De Lima said rewards for tax informants should only be 10 percent of the collected fines – not 25 percent as earlier declared by Gonzalez.

She stressed that the incentive should also not exceed P1 million, affirming the position of BIR Commissioner Kim Jacinto-Henares.

In a nutshell, De Lima explained that NIRC overrides RA 2339, which is an older law.

Sec. 282 of NIRC provides that any person, except internal revenue official or employee or other public official or employee, or his relative, who voluntarily gives information leading to the discovery of frauds upon the internal revenue laws “shall be rewarded in a sum equivalent to 10 percent of the revenues, surcharges or fees imposed and collect or P1 million per case, whichever is lower.”

The BIR sought the opinion of DOJ due to the unnumbered opinion issued by Gonzalez on a request by tax informer Danilo Lihaylihay. Gonzalez ruled that Sec. 1 of RA 2338 still prevails over Sec. 282 of the NIRC.

Gonzalez’ opinion also stated that the 25 percent monetary reward as provided for under Sec. 1 of RA 2338 shall be the legal basis of the government in computing the payment of informer’s reward.

However, De Lima said Gonzalez’ unnumbered opinion “is off tangent and untenable.”

De Lima noted that RA 2338 had been totally repealed by the 1997 NIRC in view of the provision of Sec. 36.