2013 (Taxation) Bar Exam Questions: Multiple Choice Question 19

[Discuss/answer the question below. Or see Taxation Instructions; Taxation Essay Questions: 12, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12; Taxation Multiple Choice Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and 20; See also 2013 Bar Exam: Information, Discussions, Tips, Questions and Results]

XIX.

Mr. A was preparing his income tax return and had some doubt on whether a commission he earned should be declared for the current year or for the succeeding year. He sought the opinion of his lawyer who advised him to report the commission in the succeeding year. He heeded his lawyer’s advice and reported the commission in the succeeding year. The lawyer’s advice turned out to be wrong; in Mr. A’s petition against the BIR assessment, the court ruled against Mr. A.

Is Mr. A guilty of fraud? (1%)

(A) Mr. A is not guilty of fraud as he simply followed the advice of his lawyer.

(B) Mr. A is guilty of fraud; he deliberately did not report the commission in the current year when he should have done so.

(C) Mr. A’s lawyer should pay the tax for giving the wrong advice.

(D) Mr. A is guilty for failing to consult his accountant.

4 comments

  1. i appreciated this as an ethical case. i felt Mr. A did not deliberately intend to defraud the taxing authority as he only followed a wrong advice, so i just answered A.

    but then again, the case involves non-payment of tax, Mr. A was accorded due process therein and he should have just hired a better lawyer, so may be B is a a more logical answer.

  2. i answered B. because i remembered reading a ruling/something that taxes are the duty of the taxpayer and they cannot go to the BIR and use as a defense that it was the fault of their accountant for not declaring the proper income. just like the Pacquiao case, where he blames his accountant for the under declaration.

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