RMO No. 30-2000: Prescribes the Year 2000 Audit Program for Excise Taxpayers

Key points

1. Coverage. The Program covers 1999, 1998 and unverified prior years returns, including fiscal-period taxpayers with taxable years ended June 1, 1999 to July 31, 2000. It applies to taxpayers primarily engaged in manufacture, production, importation and distribution of articles subject to excise tax.
2. Letters of Authority. The Commissioner of Internal Revenue issues and approves all LAs, based on the selection criteria in the Order. Non-LA cases are covered by Tax Verification Notices or Memoranda, issued and approved by the ACIR, ETS, unless delegated in writing to the Chief, Excise Taxpayers Operations Division.
3. Mandatory audit. This covers taxpayers retiring from business regardless of amount, and those requesting merger, consolidation, split-up or other corporate reorganization. It also covers claims for tax credit/refund of internal revenue taxes except excise tax, taxpayers selected on third-party information, and prescribing tax cases.
4. Short audit by the ACIR, ETS. Cases include inconsistencies between VAT return sales and purchases and third party information, and substantial reduction in gross sales/receipts/tax payments or increase in costs and expenses. They also include inconsistency between VAT and excise tax payments, VAT input greater than VAT output for at least two (2) consecutive quarters, unverified declarations of substantial increase in gross sale or revenue, and reported violations of excise tax laws on production or removal of excisable articles.
5. Regular audit priorities. Selection follows this order: break-even returns or net loss for at least two (2) consecutive years, asset growth but reported net loss, history of low/non-compliance, multinational-corporate excise taxpayers, and other selected excise taxpayers.
6. Rotation and deadlines. A Revenue Officer or Group Supervisor cannot audit the same taxpayer for two (2) consecutive years/periods. Revenue Officers audit and report within one hundred twenty (120) days from the LA date, or submit a progress report and request LA revalidation if not done. Short audits are completed within sixty (60) days from the LA date.

Who is affected

• Excise taxpayers engaged in manufacture, production, importation and distribution of excisable articles

Deadlines and effectivity

• Audit and report within one hundred twenty (120) days from the date of issuance of LA
• Short audits within sixty (60) days from the date of issuance of LA