Law Summary
Key Definitions
- Informer: Qualified individual voluntarily providing sworn information leading to discovery of tax fraud or NIRC violations.
- Confidential Information: Sworn written statement detailing alleged tax violations.
- Relatives within Sixth Civil Degree: Includes up to second cousins of BIR and public officials/employees.
Informer Disqualifications
- Current BIR or public officials/employees.
- Relatives within sixth civil degree of such officials.
- Former officials/employees with information acquired during tenure.
Filing Procedures
- Confidential Information must be under oath and filed with the BIR Chief of Prosecution or Legal Division.
- Covers specific violations including tax evasion, failure to file/pay taxes, issuance of receipts, unlawful business, use of multiple TINs, false entries, among others.
- If tax liability under P1,000,000, filing with Regional Legal Division is appropriate.
Requisites for Valid Confidential Information
- Informer must not be disqualified and must declare lack of disqualifying relationships.
- Information must be detailed, credible, and supported by substantial evidence (e.g., tax returns, financial statements).
- Information must be new to BIR and not part of any ongoing or previous investigation.
- Must not duplicate previous filings.
Processing and Recording of Confidential Information
- Upon receipt, the Chief of Prosecution or Legal Division evaluates validity.
- Valid information is executed in four copies, recorded in Confidential Entry Book.
- Copies distributed for filing, investigation (NID/SID), claims processing, and informer identification.
- Strict confidentiality rules apply.
Protection of Informer Identity
- Informer’s identity is deleted from investigative documents.
- No disclosure to third parties including the Informer during investigation.
- Access to identity granted only in exceptionally meritorious cases by investigation heads.
Preliminary Investigation Procedures
- Assigned investigators have 60 working days to determine probable cause for valid confidential info cases.
- Where insufficient, cases referred for regular audit; informer notified.
- Denunciations via letters or electronic mail get 30-day evaluation.
- Informers may be summoned to execute sworn affidavit for reward eligibility.
Confidentiality During Investigation
- Investigators prohibited from revealing gathered information except update on investigation status.
Reporting and Evaluation of Cases
- Investigator submits report recommending reward entitlement.
- Attachment of certification confirming collection/payment from taxpayer is required.
Informer's Reward Entitlement Conditions
- Information must lead to revenue recovery, conviction, penalties, or compromise collection.
- Single or joint informers share or compete for reward based on submission timing and completeness.
Reward Amount
- Ten percent of taxes and penalties collected or P1,000,000, whichever is lower.
Non-Compromise of Fraud Assessments
- Tax assessments involving proven criminal fraud cannot be compromised.
Exclusion from Administrative Programs
- Taxpayers under valid confidential information investigation are excluded from certain BIR programs granting audit priority or benefits.
Informer Follow-up Procedure
- Monthly updates sent to informer; only written requests with valid ID accepted.
- Requests via phone, personal contact, or after 3 years from filing date are ignored.
- Investigator responds within 10 working days.
Claims for Reward
- Claims filed within 3 years from collection or imposition of penalties.
- Claims processed through hierarchical BIR and DOF approval.
- Distinct procedures for National Office (NID) and Regional Office (SID) cases.
Payment Procedures
- Upon approval, disbursement vouchers processed through Accounting, Financial Services, and General Services Divisions.
- Subject to budget and audit rules.
Taxation of Informer's Reward
- Subject to 10% final withholding tax remitted by BIR.
Repealing Conflicting Provisions
- Previous inconsistent issuances are repealed.
Effectivity
- Immediate effect upon promulgation on November 25, 2010.