Flashcards Studio

Facts: A Philippine corporation, AlphaTech Inc., through its President, Raul Santos, and its Chief Accountant, Liza Cruz, maintains two sets of books: one for internal management showing higher cash sales, and one for tax filings showing lower income. The board approves a plan to record cash receipts only in the internal ledger and to omit them from the books used for tax returns, with the knowledge that this will reduce the tax due. The BIR later uncovers the fraudulent entries and assesses deficiency taxes and penalties. (a) Is AlphaTech Inc. liable for tax evasion? (b) Distinguish tax evasion from mere underreporting due to accounting errors or legitimate tax avoidance. (c) What are the possible penalties and remedies for tax evasion and for the individuals involved?