HOW JUDY ANN SANTOS WON HER TAX EVASION? HOW TO PREPARE A VALID RECONSIDERATION OR A REINVESTIGATION

HOW JUDY ANN SANTOS WON HER TAX EVASION?

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Accused was charged for violation of Section 255 of the National Internal Revenue Code -for filing a false and fraudulent Income Tax Return ("lTR") for taxable year 2002. The offense being attributed to the accused is willful failure to supply correct and accurate information, which resulted to income tax deficiency. According to the Court, the essential elements of the said offense are as follows:

1) That a person is required to supply correct and accurate information;

2) That there is failure to supply correct and accurate information at the time or times

required by law or rules and regulations; and

3) That such failure Lo supply correct and accurate information is done willfully.

The element of willful failure to supply correct and accurate information must be fully established as a positive act or stale of mind. It cannot be presumed nor attributed to mere inadvertent or negligent acts. The prosecution was able to prove that the accused failed to supply correct and accurate information in her ITR for the year 2002. However, it is well settled that mere understatement of a tax is not itself proof of fraud for the purpose of tax evasion. Based on the records of the case, the accused denied the signature appearing on top of the name "Judy Anne Santos" in the ITR for taxable year 2002 presented by the prosecution, and that the Certified Public Accountant, who's participation is limited to the

preparation of the Financial Statements attached to the return, likewise, denied signing the return on behalf of the accused.

Further, the working papers, i.e., the Balance Sheet andIncome Statement, as well as the value-added tax returns, Income Tax Return for year 2002, quarterly tax return, schedule of input taxes and creditable tax certificates, were all provided by the Manager of the accused. The Court, therefore, finds the records bereft of any evidence to establish the key element of willfulness on the part of the accused to supply the correct and accurate information on her subject return. The burden of proof is on the prosecution to prove beyond reasonable doubt that accused willfully failed to supply correct and accurate information. Staled differently, the prosecution must prove that the accused, a Filipino citizen residing in ti1e Philippines, is required not only to file an income tax return on income from all sources, on or before the fifteenth (15th) day of April of each year, covering the income for the preceding taxable year, but also to supply correct and accurate information thereof, and that any failure thereof is done willfully. The Court, however, only finds the accused negligent; and such is not enough to convict her in the case at bench.

Negligence, whether slight or gross, is not equivalent to the fraud with intent to evade the tax contemplated by the law. Fraud must amount to intentional wrongdoing with the sole object of avoiding the tax. In all criminal cases, mere speculations cannot substitute for proof in establishing the guilt of the accused. In sum, the Court finds the failure of the prosecution to establish the guilt of the accused beyond the required reasonable doubt. (People of the Philippines vs. Judy Anne Santos y Lumagui, CTA Crim. Case NO. O-012, January 16, 2012)