Mikey Arroyo, wife want tax evasion raps junked

(UPDATED 4:40 p.m.) Almost three months after the Bureau of Internal Revenue filed a tax evasion complaint against them, Ang Galing Pinoy Rep. Juan Miguel "Mikey" Arroyo and his wife Angela asked the court to junk the charges against them. The couple went to the Department of Justice (DOJ) on Monday to submit their joint counter-affidavit to the the BIR's complaint that the spouses allegedly accumulated P73.85 million in aggregate tax liabilities from 2004 to 2009. "What I can say is that I am here to face the charges and I thank the DOJ for giving us this opportunity," Arroyo told reporters at the sidelines of the DOJ's proceedings. In their affidavit, the couple said the BIR "decided to forego examination of our books" in filing the complaint last April 7. The couple added that the complaint should be junked because "the charges have no basis in fact and in law." Below is the BIR's computation of the couple's tax liabilities arising from their alleged non-filing of income tax returns and underdeclaration of income. Denial of wrongdoing Speaking to reporters, the couple's lawyer, Ruy Rondain said the BIR's computation was erroneous and that the spouses' tax liability was bloated by "100 percent." "Even based on the computations of the BIR, the computations drawn were wrong," Rondain said. The spouses, in their counter-affidavit, likewise denied evading their duties to pay taxes and file their income tax returns. "We have complied with all pertinent regulations and issuances issued by the BIR and the Department of Finance (DOF) pertaining to the filing of income tax returns for taxable years 2005, 2008 and 2009," the couple said. DOJ preliminary probe The Arroyos were supposed to attend the DOJ's preliminary investigation hearing last May 26, but were unable to do so because they were in the United States. Senior Assistant State Prosecutor Lagrimas Agaran, who heads the DOJ panel conducting the preliminary probe, then set the submission of the counter-affidavit on June 27, the date that the Arroyo couple and BIR lawyers are available. The panel also gave the BIR until July 7 its reply to the Arroyos' counter-affidavit. After which, both parties can file their respective memoranda on July 15. The DOJ's preliminary inquiry seeks to determine whether there is probable cause to file a case against the respondents. Once probable cause is determined, the prosecutors handling the case can file the proper criminal information (a written legal pleading) before the appropriate court. On April 7, the BIR filed its complaint with the DOJ alleging that the couple violated the National Internal Revenue Code for their alleged willful failure to file their income tax returns and substantial underdeclaration of income. Section 254 of the Tax Code pertains to "the attempt to evade or defeat tax," while Section 255 pertains to "failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation." The bureau said that a scrutiny of Mikey's Statements of Assets and Liabilities and Networth (SALN) from 2002 to 2009 would show that from 2004 to 2009, the lawmaker and his wife bought millions-worth of properties, including houses, vehicles, and shares of stock. However, the BIR noted: "Despite receipt of substantial amounts of income, the Arroyo spouses repeatedly failed to file any annual income tax return (ITR) and to pay the corresponding taxes due thereon." The bureau alleged that Mikey did not file his ITR in 2005, 2008, and 2009 while Angela was declared as a one-time taxpayer in 2004. The Arroyos' computation In their counter-affidavit, however, the spouses discussed how they should not be held liable for tax evasion. They said that for the taxable year 2005, their total income would amount to P556,374 (consisting of the reported taxable income per return of P378,000 and the interest income and tax exempt income of P178,374). "Comparing this with the increase in net worth of P 420,000 as computed in Annex 6, there is no unreported income that would result," the couple said. They added that for 2007, their total income or adjustments reached P7,148,816 (consisting of the reported taxable income per return of P375,000, and interest income, tax exempt income and gifts from relatives, all amounting to P6,772,316). "Comparing this with the increase in net worth of P 7,142,530 as computed in Annex 6 there is no unreported income that would result," they said. For 2008, the couple said their total income amounted to P2,614,153 (consisting of the reported taxable income per return of P376,500 and the tax exempt income and interest income of P2,237,653) They then said that with their increase in net worth of P 2,500,000, they have no underdeclared income. As for 2009, their total income was P2,311,380 (consisting of the reported taxable income per return of P376,500 and the tax exempt income and interest income of P1,934,880). "Comparing this with the increase in net worth of P2,099,999 as computed in Annex 6, there is no unreported income that would result," said the Arroyos. — RSJ/VVP, GMA News