SEC. 15. The Collector of Internal Revenue shall assess all income taxes. In case of any failure to make and file a return or list within the time prescribed by law or by the Collector or other internal-revenue officer, the Collector of Internal Revenue shall add to the tax fifty per centum of its amount except that, when a return is voluntarily' and without notice from the Collector or other officer filed after such time and it is shown that the failure to file it was due to a reasonable cause and not to willful neglect, no such addition shall be made to the tax. In case a false or fraudulent return or list is willfully made, the Collector of Internal Revenue shall add to the tax one hundred per centum of its amount. The amount so added to any tax shall be collected at the same time and in the same manner and as part of the tax unless the tax has been paid before the discovery of the neglect, falsity, or fraud, in which case the amount so added shall be collected in the same manner as the tax.
SEC. 16. It shall be the duty of the Collector of Internal Revenue and every other internal-revenue officer to whom any payment of any taxes is made under the provisions of this Law, to give to the person making such payment a full written or printed receipt, expressing the amount paid and the particular account for which such payment was made; and whenever such payment is made, such Collector or other officer shall, if required, give a separate receipt for each tax paid by any debtor, on account of payments made to or to be made by him to separate creditors in such form that such debtor can conveniently produce the same separately to his several creditors in satisfaction of their respective demands to the amounts specified in such receipts; and such receipts shall be sufficient evidence in favor of such debtor to justify him in withholding the amount herein expressed from his next payment to his creditor; but such creditor may, upon giving to his debtor a full written receipt, acknowledging the payment to him of whatever sum may be actually paid, and accepting the amount of tax paid as aforesaid, specifying the same, as a further satisfaction of the debt to that amount, require the surrender to him of such collector's or other officer's receipt.
SEC. 17. Any one liable to pay the tax, to make a return or to supply information required under this Law, who refuses or neglects to pay such tax, to make such return or to supply such information at the time or times herein specified in each year, shall be liable, except as otherwise specially provided in this Law, to a penalty of not less than Forty pesos nor more than two thousand pesos. Any individual or any officer of any corporation, partnership, joint-account (cuenta en participacion), association, insurance company, or general co-partnership (compania colectiva), required by law to make, render, sign, or verify any return or to supply any information, who makes any false or fraudulent return or statement with intent to defeat or evade the assessment required by this Law to be made, shall be guilty of a misdemeanor, and shall be fined not exceeding four thousand pesos or be imprisoned, not exceeding one year, or both, in the discretion of the court, with the costs of prosecution: Provided, That where any tax heretofore due and payable has been duly paid by the taxpayer, it shall not be re-collected from any withholding agent required to retain it at its source, nor shall any penalty be imposed or collected in such cases from the taxpayer, or such withholding agent whose duty it was to retain it, for failure to return or pay the same, unless such failure was fraudulent and for the purpose of evading payment.
SEC. 18. The Collector or other internal revenue officer shall require every return to be verified by the oath of the party rendering it. If the Collector or other officer has reason to believe that the amount of any income returned is understated, he shall give due notice to the person making -the return to show cause why the amount of the return should not be increased, and upon proof of the amount understated may increase the same accordingly. Such person may furnish sworn testimony to prove any relevant facts, and, if dissatisfied with the decision of an internal-revenue officer, may appeal to the Collector of Internal Revenue for his decision under such rules of procedure as may be prescribed by regulations.
SEC. 19. All administrative, special, and general provisions of law, including the laws in relation to the assessment, remission, collection, and refund of internal-revenue taxes not heretofore specifically repealed and not inconsistent with the provisions of this Law are hereby extended and made applicable to all of the provisions of this Law and to the tax herein imposed.
SEC. 20. Section II of the Act of the United States Congress approved October third, nineteen hundred and thirteen, entitled "An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes;" title I of the Act of the United States Congress approved September eighth, nineteen hundred and sixteen, entitled "An Act to increase the revenue, and for other purposes and title XII of the Act of the United States Congress approved October third, nineteen hundred and seventeen, entitled "An Act to provide revenue to defray war expenses, and for other-purposes," are hereby superseded, except as herein otherwise provided, and except that they shall remain in force for the assessment and collection of all taxes which have accrued thereunder, and for the imposition and collection of all penalties or forfeitures which have accrued or may accrue in relation to any of such taxes.
SEC. 21. Every corporation,, joint-stock company, partnership, joint-account (cuenta en participacion), association, or insurance company subject to the tax herein imposed, when required by the Collector of Internal Revenue, shall render a correct return, duly verified "under oath, of its payments of profits or dividends, whether made in cash or its equivalent or in stock, including the names and addresses of members or stockholders, the paid-up capital or the number of shares owned by each, and the tax years and gains or earnings from which such dividends or profits were derived, in such form as may be prescribed by the Collector of Internal Revenue with the approval of the Secretary of Finance.
SEC. 22. Every person, corporation, partnership, joint-account (cuenta en participacion), general co-partnership (compañia colectiva), or association, doing business as a broker in any exchange or board of trade or other similar place of business shall, when required by the Collector of Internal Revenue, render a correct return duly verified under oath, under such regulations as the Collector of Internal Revenue, with the approval of the Secretary of Finance, may prescribe, showing the names of customers for whom such person, corporation, partnership, joint-account (cuenta en participacion), general co-partnership (compañia colectiva), or association has transacted any business, with such details as to the profits, losses, or other information which the Collector may require, as to each of such customers, as will enable the Collector of Internal Revenue to determine whether all income tax due on profits or gains of such customers has been paid.
SEC. 23. All persons, corporations, partnerships, joint-accounts (cuentas en participacion), general co-partnerships (compañias colectivas), associations, and insurance companies, in whatever capacity acting, including lessees or mortgagors of real or personal property, trustees acting in any trust capacity, executors, administrators, receivers, conservators, and employers, making payment to another person, corporation, partnership, joint-account (cuenta en participacion), general co-partnership (compañia colectiva), association, or insurance company of interests, rents, salaries, wages, premiums, annuities, compensation, remuneration, emoluments, or other fixed or determinable gains, profits, and income, other than payments described in sections twenty-one and twenty-two, of four thousand pesos or more in any taxable year, or, in the case of such payments made by the Government of the Philippine Islands, the officers or employees of the Government having information as to such payments and required to make returns in regard thereto, are hereby authorized and required to render a true and accurate return to the Collector of Internal Revenue, under such rules and regulations and in such form and manner as may be prescribed by him with the approval of the Secretary of Finance, setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment: Provided, That such returns shall be required, regardless of amounts in the case of payments of interest upon bonds and mortgages or deeds of trust or other similar obligations of corporations, joint-stock companies, partnerships, joint-accounts (cuentas en participacion), associations, and insurance companies, and in the case of collections of items, not payable in the Philippine Islands, of interest upon the bonds of foreign countries and interest from the bonds and dividends from the stock of foreign corporations by persons, corporations, partnerships, joint-accounts (cuentas en participacion), general co-partnerships (compañias colectivas), or associations, undertaking as a matter of business or for profit or otherwise the collection of foreign payments of such interest or dividends by means of coupons, checks, or bills of exchange.
The provisions of this section shall apply to the calendar year nineteen hundred and nineteen and each calendar year thereafter.
SEC. 24. Nothing in this Law shall be construed as taxing the income of foreign governments received from their investments in the Philippine Islands in stocks, bonds, or other domestic securities, or from interest on their deposits in banks in the Philippine Islands.
SEC. 25. (a) The term "dividends" as used in this Law . shall be held to mean any distribution made or ordered to be made by a corporation, joint-stock company, association, or insurance company, out of its earnings or profits accrued since March first, nineteen hundred and thirteen, and payable to its shareholders, whether in cash or in stock of the corporation, joint-stock company, association, or insurance company. Stock dividend shall be considered income, to the amount of the earnings or profits distributed.
(b) Any distribution made to the shareholders or members of a corporation, joint-stock company, partnership, joint-account (cuenta en participacion), association, or insurance company in the year nineteen hundred and nineteen, or subsequent tax years, shall be deemed to have been made from the most recently accumulated profits or surplus, and shall constitute a part of the annual income of the distributee for the year in which received, and shall be taxed to the distributee at the rates prescribed by law for the years in which such profits or surplus were accumulated, but nothing herein shall be construed as taxing any earnings or profits accrued prior to March first, nineteen hundred and thirteen, but such earnings or profits may be distributed in stock dividends or otherwise, exempt from the tax, after the distribution of earnings and profits accrued since March first, nineteen hundred and thirteen, has been made.
SEC. 26. Premiums paid on life insurance policies covering the lives of officers, employees, or those financially interested in any trade or business conducted by an individual, partnership, joint-account (cuenta en participacion), general co-partnership (compañia colectiva), corporation, joint-stock company, association, or insurance company, shall not be deducted in computing the net income of these.
SEC. 27. Section four hundred and eighty-nine of Act Numbered Twenty-seven hundred and eleven is hereby amended to read as follows:
"SEC. 489. Disposition of proceeds of income and inheritance taxes.—The proceeds of the tax on income and of the tax on inheritances, legacies, and other acquisitions mortis causa shall accrue to the Insular Government."
SEC. 28. Section fourteen hundred and twenty-four of Act Numbered Twenty-seven hundred and eleven is hereby amended by adding a new subsection (m), which shall read as follows:
"(m) The manner in which income-tax returns, information, and reports shall be prepared and reported and the tax collected and paid, as well as the conditions under which evidence of payment shall be furnished the taxpayer, and the preparation and publication of income-tax statistics."
SEC. 29. Section fifteen hundred and eighty-eight of Act Numbered Twenty-seven hundred and eleven is hereby amended by adding thereto the following paragraph:
"If any person, corporation, partnership, joint-account (cuenta en participacion), association, or insurance company liable to pay the income tax neglects or refuses to pay the same after demand, the amount shall be a lien in favor of the Government of the Philippine Islands from the time when the assessment was made by the Collector of Internal Revenue until paid, with interest, penalties and cost that may accrue in addition thereto upon all property and rights to property belonging to the taxpayer: Provided, That this lien shall not be valid against any mortgagee, purchaser, or judgment creditor until notice of such lien shall be filed by the Collector in the office of the clerk of the Court of First Instance having jurisdiction over the property subject to tax,"
SEC. 30. Section twenty-seven hundred and sixteen of Act Numbered Twenty-seven hundred and eleven is hereby amended to read as follows:
"SEC. 2716. Unlawful divulgence of trade secrets.—Any officer or employee of the Bureau of Internal Revenue who divulges to any person or makes known in any other manner than may be provided by law information regarding the business or income of any taxpayer, the secrets, operation, style of work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties shall be fined in a sum not more than two thousand pesos or be imprisoned for a term of not less than six months nor more than five years, or both."
SEC. 31. Section twenty-seven hundred and thirty-one of Act Numbered Twenty-seven hundred and eleven is hereby amended to read as follows:
"SEC. 2731. Procuring unlawful divulgence of trade secrets.—Any person who causes or procures an officer or employee of the Bureau of Internal Revenue to divulge any confidential information regarding the business or income of any taxpayer knowledge of which was acquired by him in the discharge of his official duties and which it is unlawful for him to reveal, and any person who publishes or prints in any manner whatever not provided by law any income, profits, losses, or expenditures appearing in any income-tax return, shall be fined in a sum not more than two thousand pesos or be imprisoned for a term of not less than six months nor more than five years, or both."
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
