RMC No. 67-2006: Prescribes the guidelines and procedure in the pre-audit by the Regional Offices of 2005 tax returns not selected for issuance of Letter of Authority/Audit Notice/Tax Verification Notice under RMO No. 11-2006, as amended by RMO No. 18-2006

Key points

1. Returns to be pre-audited. The office assigned by the Regional Director pre-audits 2005 Percentage Tax returns, and returns claiming interest expense, contributions or representation expense deductions. It also pre-audits corporate returns on MCIT applicability under Sec. 27(E) and Section 28(A)(2) of the Tax Code, and returns claiming creditable withholding taxes.
2. Nature of pre-audit. The pre-audit is not a regular audit or investigation. The Revenue Officer checks only the math of the Income and/or Percentage Tax due, the creditable withholding tax claimed, and compliance with RR Nos. 9-98, 13-98, 13-2000 and 10-2002 on limits for deductible expenses. No fieldwork is allowed.
3. TVN issuance. The Regional Director issues a TVN only if the pre-audit finds a discrepancy in tax payment. No TVN is issued without the attached duplicate copy of the tax returns.
4. Steps for the Revenue Officer. The officer prepares a memorandum report and informs the taxpayer in writing of the discrepancy. The taxpayer must settle the deficiency within 15 days from receipt of notice, using BIR Form No. 0605 if paying.
5. If the taxpayer does not pay. If the taxpayer does not respond or pay, the officer recommends a Final Assessment Notice (FAN). The report goes to the Office of the Regional Director for review and FAN issuance.
6. Large Taxpayers Service. Offices under the Large Taxpayers Service may adopt the prescribed pre-audit in appropriate cases.

Who is affected

• Taxpayers who filed the listed 2005 returns and were not selected for audit notices
• Regional Offices and Revenue Officers

Deadlines and effectivity

• Pre-audit must be done and reported on or before December 15, 2006
• Reports due on or before the 10th day of the month
• Taxpayer settles deficiency within 15 days from receipt of notice