RMC No. 31-2007: Directs the strict implementation of the imposable sanctions with regard to the Tax Code provision and its implementing regulations on punishable acts of erring financial officers and/or tax practitioners

Key points

1. Acts punished under Section 257. Section 257 covers financial officers and independent CPAs engaged under Section 232(A) who willfully falsify audit reports or certify financial statements with an essential misstatement or omission. It also covers others who audit books without being qualified, offer to certify statements without audit, keep two or more sets of books, make false entries, or use fake or falsified accountable forms such as RORs, Letters of Authority, CARs, TCCs and TDMs. Other listed acts include evading tax and failing to keep books in a native language, English or Spanish.
2. Penalties. Upon conviction for each act or omission, the penalty is a fine of not less than P 50,000 but not more than P 100,000 and imprisonment of not less than 2 years but not more than 6 years. A CPA’s certificate is automatically revoked or cancelled upon conviction, and a foreigner is immediately deported after serving sentence, without further deportation proceedings.
3. Norms of conduct for tax practitioners. Section 7 of RR No. 11-2006, which amended RR No. 15-99, sets norms such as not representing conflicting interests without consent of all directly interested parties. Practitioners must inquire into the relevant facts, assure that representations contain no falsehood, and not present as true matters they know to be voided or superseded. They must inform clients of likely penalties and make reasonable inquiries if information appears incorrect, inconsistent or incomplete. Willful or reckless violation may be the subject of disciplinary action before the Boards.
4. Suspension or cancellation of accreditation. Section 8 of RR No. 11-2006 lists grounds for suspending, cancelling or revoking the accreditation certificate, after due notice and hearing. Grounds include conviction of an offense under the NIRC or involving dishonesty or breach of trust, giving false or misleading information to the BIR, evading tax, misappropriating client funds meant for tax payment, and bribing or influencing BIR personnel. Others include disbarment or suspension as an attorney or CPA, a false opinion given knowingly, recklessly or through gross incompetence, and the Tax Code offenses listed in the regulation.
5. Directive to field offices. Regional Directors, Revenue District Officers, heads of investigating offices and Task Forces initiate actions such as suspension or cancellation of accreditation and filing of criminal actions. These apply against financial officers and tax practitioners found guilty of violating the provisions.

Who is affected

• Financial officers and independent CPAs
• Tax practitioners
• Regional Directors, Revenue District Officers, heads of investigating offices and Task Forces

Deadlines and effectivity

• Issued April 25, 2007