RMO No. 17-2009: Prescribes the guidelines and procedures in handling Letter Notices for taxable year 2007  generated thru the Tax Reconciliation System and Reconciliation of Listing for Enforcement System (RELIEF)/Third Party Matching-Bureau of Customs (TPM-BOC) Data Program

Key points

1. Deployment and handling. LNs for taxable year 2007 are deployed under parameters set by the Withholding Tax Division for TRS-LN and the Audit Information, Tax Exemptions and Incentives Division for RELIEF-LN, and approved by the Commissioner through the DCIR-OG. TRS-LNs are consolidated with RELIEF-LNs and handled by the same Revenue Officer. LNs are also consolidated with an ongoing audit under a Letter of Authority for 2007 on written request, subject to DCIR-OG approval.
2. Taxpayer response. A Follow-up Letter is served if there is no response 15 days after receipt of the LN. A taxpayer who disputes a discrepancy has 15 days from receipt to reconcile records and submit documentary proof.
3. Issue-based LA and assessment. If there is no response, or the required documents are not submitted, the office recommends an issue-based LA on Income and Value-Added Taxes Due to Discrepancy/ies Reflected in the LN, served with a Notice for Informal Conference. If the taxpayer does not settle within 15 days, the docket is endorsed for a Preliminary Assessment Notice (PAN) or Final Assessment Notice (FAN).
4. Unserved LNs. LNs that cannot be served are given to the Barangay Captain or an authorized representative. If refused, they are sent by registered mail with a report on constructive receipt, and the same 15-day periods run from constructive receipt.
5. Incorrect lists. If the discrepancy comes from an incorrect Summary List of Purchases, the purchases are disallowed and the input tax is not allowed to the purchaser. For incorrect information on the Summary List of Sales, the seller is penalized.
6. Abatement, installment, and other rules. Interest and penalties are abated if the deficiency tax is paid within 30 days from receipt of the LN covering taxable year 2007 only. Installment payment is allowed where the liability exceeds P 500,000.00, and a default makes the balance due immediately. Payment under an LN does not bar a later LA/TVN, and payments are credited against assessments for discrepancies of the same nature. Under RMC No. 40-2003, an LN counts as notice of audit, so the taxpayer can no longer amend the return for the period covered.

Who is affected

• Taxpayers issued Letter Notices for taxable year 2007
• Revenue Officers and investigating offices handling LNs

Deadlines and effectivity

• Follow-up Letter and reconciliation period: 15 days from receipt of the LN
• Settlement after Notice for Informal Conference and LA: 15 days
• Abatement of interest and penalties: payment within 30 days from receipt of the LN