If a company declares a operating loss, how can it be charged to income tax??? Rumour is STRADCOM may cease operations next week...and LTO may go back to manual operations.

BIR garnishes Stradcom accounts

by Liza Reyes, ABS-CBN News
Posted at 08/06/2013 7:04 PM | Updated as of 08/06/2013 7:04 PM

MANILA - The Bureau of Internal Revenue (BIR) has garnished the accounts of Stradcom Corporation, the IT service provider of the Land Transportation Office (LTO) for Stradcom's alleged failure to settle its income tax.

The BIR claims Stradcom owes P317 million covering tax year 2011, excluding surcharges and interest due.

"The remedy is simple, just pay the tax liability and the tax levy will be lifted," BIR chief Kim Henares said in a phone interview.

On July 31, the BIR issued a warrant of distraint/levy against Stradcom, effectively garnishing its accounts.

Under the National Internal Revenue Code, the BIR has the power to seek remedies through garnishment of personal property and bank accounts of delinquent taxpayers.

Force Majeure

In a letter addressed to Transportation and Communications Secretary Joseph Emilio Abaya and Undersecretary Jose Perpetuo Lotilla, Stradcom cautioned the government that it will be forced to stop operations if it insists on paying the tax due given its constrained financial state.

"We will expect the Republic, particularly the DOTC, LTO, and the BIR, to explain to the transacting public and the media the complete truth that are now soon to lead to the stoppage of operations of not only Stradcom, but more importantly the LTO IT BOO project," Cezar Quiambao, president of Stradcom said.

The government still owes Stradcom about P3 billion out of the P4.2 billion in back service fees.

It has so far paid only P1 billion to Stradcom. For the year 2011, the company reported a net loss of P524 million.

Stradcom's operation has been unceremoniously extended, on a temporary basis, after the government failed to successfully bid out the LTO IT project when its 13-year contract expired last February.

To date, the government has yet to find a new service provider, thus the extension, to prevent a chaotic disruption at the LTO.

No intervention

Sec. Abaya however said, the DOTC will not intervene in the dispute between the BIR and Stradcom.

"I hope they're not threatening," Abaya said.

Instead, Abaya urged Stradcom to settle its tax dues.

Asked if the agency is prepared with the onslaught of consumer complaints in case the LTO goes manual with its operations, Abaya maintained they're ready.

"If they do stop, extreme case is we go manual. It's not the end of the world."