CIR POWER

VI.
A. Co., a Philippine corporation, is a big manufacture of consumer goods and has
several suppliers of raw materials. The BIR suspects that some of the suppliers are not
properly reporting their income on their sales A Co. The CIR therefore:
. Issued an access letter to A. Co. to furnish the BIR information on sales
and payments to its suppliers.
!. Issued an access letter to a ban" #C$ Ban"% to furnish the BIR on deposits
of some suppliers of A Co. on the alleged ground that the suppliers are committing ta&
evasion.
A Co., X Ban" and the suppliers have not been issued by the BIR letter of
authority to e&amine. A Co. and X Ban" believe that the BIR is on a 'fishing e&pedition(
and come to you for counsel. )hat is your advice* #+,%
SUGGESTED ANSWERS:
I will advise A Co. and X Co. that the IR that the IR is !"sti#ied
onl$ in %ettin% in#o&'ation #o&' the #o&'e& ("t not #&o' the latte&. The IR is
a"tho&i)ed to o(tain in#o&'ation #&o' othe& *e&sons othe& than those whose
inte&nal &even"e ta+ lia(ilit$ is s"(!e,t to a"dit o& investi%ation. -oweve&. this *owe&
shall not (e ,onst&"ed as %&antin% the Co''issione& the a"tho&it$ to in/"i&e into
(an0 de*osits. 1Se,tion . NIRC2.
CIR POWERS
VII.
Can the Commissioner of Internal Revenue in-uire into the ban" deposits of a
ta&payer* If so, does this power of the Commissioner conflict with R... /+0 #1ecrecy of
Ban" 2eposits 3aw% 40,5
Suggested Answer:
The Co''issione& o# Inte&nal Reven"e is a"tho&i)ed to in/"i&e into the (an0
de*osits o#:
132 a de,edent to dete&'ine his %&oss estate4
152 an$ ta+*a$e& who has #iled an a**li,ation #o& ,o'*&o'ise o# his ta+
lia(ilit$ ($ 'eans o# #inan,ial in,a*a,it$ to *a$ his ta+ lia(ilit$ 1Se,. 6172. NIRC2.
The li'ited *owe& o# the Co''issione& does not ,on#li,t with R.A. No. 389:
(e,a"se the *&ovisions o# the Ta+ Code %&antin% this *owe& is an e+,e*tion to the
Se,&e,$ o# an0 De*osits ;aw as e'(odied in a late& le%islation.
7"&the&'o&e. in ,ase a ta+*a$e& a**lies #o& an a**li,ation to ,o'*&o'ise the
*a$'ent o# his ta+ lia(ilities on his ,lai' that his #inan,ial *osition de'onst&ates a
,lea& ina(ilit$ to *a$ the ta+ assessed. his a**li,ation shall not (e ,onside&ed "nless
and "ntil the waives in w&itin% his *&ivile%e "nde& R.A. No. 389:. and s",h waive&
shall ,onstit"te the a"tho&it$ o# the Co''issione& to in/"i&e into the (an0 de*osits
o# the ta+*a$e&.