Individuals cleared of tax cases not exempt from paying taxes

The Supreme Court said on Friday that taxpayers acquitted of criminal tax charges remain obligated to settle their tax liabilities.

This decision followed the dismissal of tax evasion cases against E & D Parts and Supply, Inc. and its treasurer by the Court’s Second Division, citing a lack of evidence.

The Office of the Solicitor General (OSG) had filed the case against the company and its treasurer before the Court of Tax Appeals (CTA) for failing to file income tax returns and pay both income and value-added taxes.

However, the CTA found insufficient evidence to hold the treasurer accountable 

for the alleged violations, leading to her acquittal from criminal charges. The tax court also dismissed the related civil case to determine the company’s tax liabilities.

The OSG appealed to the Supreme Court, arguing that the company should still be required to pay the taxes despite the acquittal.

“A taxpayer’s obligation to pay taxes arises from the law itself, and not from committing a criminal act like tax evasion. Therefore, even if a taxpayer is acquitted of a criminal charge, they remain liable for unpaid taxes,” the Court stated.

The Supreme Court, however, clarified that in this case, E & D Parts was not required to pay the assessed tax due to an invalid assessment.

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