RMC No. 40-2006: Clarifies certain issues concerning the jurisdictions of the Large Taxpayer Service, the Enforcement Service and the Revenue Regions, including the Revenue District Offices and Divisions under them.

Key points

1. LAMS and duplication. Verification with the Letters of Authority Monitoring System (LAMS) is mandatory before an LA or Audit Notice is prepared. If duplication would result, prior approval of the Commissioner, ACIR-LTS or Regional Director is needed. No new LA/AN may be issued against a taxpayer already covered by one issued by the Commissioner, and the 120-day revalidation rule applies in all cases.
2. Special teams. No new special team may be created without the Commissioner’s approval, on a proposal with justification, manner of audit, procedures and potential results. The Commissioner alone signs the related LAs/ANs and approves the investigation reports.
3. Large Taxpayer Service. The ACIR-LTS has exclusive power to issue LAs/ANs for large taxpayers under its jurisdiction. Exceptions are RATE Program cases, cases already issued LAs/ANs by ES/NID signed by the Commissioner, and cases from confidential informers’ information, which the Commissioner assigns.
4. Enforcement Service. ES/NID audits only unregistered taxpayers, RATE Program cases and meritorious fraud cases, including those the Commissioner selects. If fraud cannot be established, the case goes to the RDO or Large Taxpayers office, and informer reward procedures still apply.
5. Approval of fraud reports. The Commissioner gives final approval if the proposed deficiency income and business taxes are less than 60% of the aggregate basic tax due paid per return, with at least P 10 million aggregate tax due for non-large taxpayers and at least P 50 million for large taxpayers. Cases not covered, such as where no return was filed, also go to the Commissioner.
6. Revenue Regions. Each RDO or Special Investigation Division must develop at least one (1) tax fraud case per month. Where the proposed deficiency is less than 40% of the aggregate basic tax due, with at least P 5 million aggregate tax due, the Assistant Commissioner, Assessment Service gives final approval.

Who is affected

• Large Taxpayer Service (LTS)
• Enforcement Service (ES) and National Investigation Division (NID)
• Revenue Regions, RDOs and Special Investigation Divisions

Deadlines and effectivity

• 120-day rule on revalidation of LA/AN applies in all cases
• At least one tax fraud case developed per month by each RDO or SID