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Questions and Answers
What is the main difference between tax evasion and tax avoidance?
What is the key element in establishing tax fraud?
What is the primary goal of a tax fraud investigation?
What is the distinction between fraud and negligence in tax cases?
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What is the purpose of classifying evidence in a tax fraud case?
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What is the penalty for tax evasion?
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What is the main purpose of ghost companies?
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What is the purpose of the Run After Fake Transactions (RAFT)?
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What is an example of tax evasion?
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What is the purpose of fictitious receipts/invoices?
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Study Notes
Tax Fraud and Tax Evasion
- Tax fraud: an intentional act to evade taxes, with an actual evil motive or intent to evade taxes legally due to the government.
- Negligence: an omission or act that a reasonable person would not do, or not doing something a reasonable person would do.
- Fraud: a generic term for deceit, deception, or trickery to induce someone to surrender something of value.
Distinction between Tax Evasion and Tax Avoidance
- Tax evasion: the elimination or reduction of tax liability by fraudulent means, criminally punishable with a fine of not less than P500,000 and imprisonment of not less than 6 years.
- Tax avoidance: an attempt to minimize tax liability by lawful means, not criminally punishable.
Examples of Tax Evasion
- Omitting to report income
- Understatement of income done intentionally
- Overstatement of deductions done improperly and intentionally
- Issuance of fictitious receipts/invoices to claim false deductions/expenses and input VAT
- Claiming false personal exemptions
Ghost Companies and RAFT
- Ghost companies: fake companies issuing fraudulent receipts/invoices for clients to claim false deductions.
- RAFT (Run After Fake Transactions): a national task force created by the BIR to stop the selling of fake receipts and/or invoices and conduct audit and enforcement activities against taxpayers claiming fake transactions.
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Description
Learn about the principles of tax fraud, identification of sources, and stages of fraud investigation. Understand the standard of proof required in criminal and civil cases.
