Tax evasion is a serious crime in the Philippines, classified as the willful attempt to defeat or evade the payment of taxes. Unlike tax avoidance, which uses legal means to minimize liability, tax evasion involves fraud, concealment, or misrepresentation.

The primary legal basis for prosecuting tax evasion is the National Internal Revenue Code (NIRC) of 1997, as amended (often referred to as the Tax Code). Under the "Run After Tax Evaders" (RATE) program, the Bureau of Internal Revenue (BIR) actively encourages citizens to report illicit financial activities.

What Constitutes Tax Evasion?

Common practices that qualify as tax evasion in the Philippine jurisdiction include:

Underdeclaration of Income: Intentionally reporting less than what was earned.
Overstatement of Expenses: Claiming fictitious deductions to lower taxable income.
Non-issuance of Receipts: Business owners failing to provide official invoices or receipts.
Double Record-keeping: Maintaining two sets of "books"—one for the BIR and one for actual operations.
Non-filing of Returns: Deliberate failure to file required tax documents.

How to Report: The Step-by-Step Process

If you have credible information regarding an individual or a corporation evading taxes, you can initiate a report through several channels.

1. Identify the Subject

Gather as much specific information as possible. This includes:

Full name of the individual or registered business name.
TIN (Taxpayer Identification Number), if known.
Registered business address.
Specific nature of the fraud (e.g., they are selling goods online but refusing to issue receipts).

2. Choose Your Reporting Channel

The BIR provides multiple avenues for whistleblowers:

BIR WebChat: Accessible via the official BIR website.
eComplaint System: Use the "eComplaint" portal on the BIR website to file a formal report.
Walk-in: Visit the Revenue District Office (RDO) having jurisdiction over the taxpayer's location or the BIR National Office in Quezon City (specifically the Legal Group or the Prosecution Division).
Hotlines: Use the 8888 Citizens' Complaint Center or the BIR’s dedicated contact center numbers.

3. Provide Evidence

While anonymous tips are sometimes acted upon, reports backed by evidence are prioritized. Useful evidence includes:

Photocopies of unissued or fake receipts.
Financial statements or ledgers showing discrepancies.
Affidavits from witnesses.

The Informer’s Reward (Republic Act No. 2338)

The Philippine government incentivizes whistleblowing through a monetary reward system. Under Section 282 of the Tax Code:

Any person who voluntarily gives definite and sworn information, not yet in the possession of the BIR, leading to the discovery of frauds upon the internal revenue laws... shall be rewarded a sum equivalent to ten percent (10%) of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected OR One Million Pesos (PHP 1,000,000) per case, whichever is lower.

Important Note: This reward is subject to a final withholding tax of 10%. Furthermore, internal revenue officers, other public officials, or their relatives within the sixth degree of consanguinity are disqualified from claiming this reward.

Legal Protections and Confidentiality

The identity of the informer is generally kept confidential to protect them from retaliation. However, the whistleblower must be prepared to execute a Sworn Affidavit to make the report official and to qualify for the informer's reward.

Summary of Penalties for Evaders

The Bureau of Internal Revenue takes these reports seriously. Once a case is proven, the offender may face:

Civil Penalties: A surcharge of 50% of the tax due in cases of fraud.
Criminal Penalties: Imprisonment (ranging from 6 to 10 years) and heavy fines as determined by the Court of Tax Appeals.

Would you like me to draft a sample template for a formal letter of complaint to the BIR?