RMO No. 32-2005: Prescribes the guidelines and procedures in handling Letter Notices for deployment via the Information Delivery Portal in the years 2005 onwards for audit and enforcement purposes

Key points

1. Coverage. The Order covers VAT and income tax liabilities of individual and corporate taxpayers issued LNs through the IDP. These are BOC LNs for taxable year 2003 and consolidated RELIEF/SLSP and BOC LNs for taxable years 2004 onwards.
2. Voluntary payment and abatement. A taxpayer who pays the deficiency income tax and VAT within 60 days from receipt of the LN is entitled to abatement of interests and penalties. Payment after the 60 days is assessed interests and penalties.
3. Effect on audit. Paying under an LN does not stop the Bureau from issuing a Letter of Authority (LA) for a comprehensive audit. Any payment is credited against a later assessment if the audit discrepancies are of the same nature as those in the LN.
4. Conversion of LNs to LAs. LNs with no response, or left unserved because the taxpayer could not be located, are converted to LAs after the 60-day period. A taxpayer who disputes the LN may reconcile records with the BIR within 120 days from issuance, but loses abatement of interest and penalties after the 60 days. Unresolved discrepancies after 120 days lead to an LA replacing the LN.
5. Type of audit. The audit under an LA should be an issue-based audit focusing on Third Party Information. If that is not suitable, a comprehensive audit follows RAMO No. 1-2000 and the reporting requirements of RMO No. 53-98.
6. Amending returns. An LN counts as a notice of audit or investigation for amending any return covering the period in the LN. The taxpayer is disqualified from amending that return upon receiving the LN.

Who is affected

• Individual and corporate taxpayers issued LNs through the IDP

Deadlines and effectivity

• Payment within 60 days from receipt of LN for abatement of interests and penalties
• Reconciliation of records within 120 days from LN issuance
• BOC LNs for taxable year 2003; consolidated LNs for taxable years 2004 onwards