RMC No. 32-2007: Circularizes the Memorandum of the Commissioner of Internal Revenue dated April 26, 2007 in relation to the new paradigm in meeting the collection target

Key points

1. Strict evaluation of exemptions and refunds. All claims for exemptions, cash refunds and TCCs must be strictly evaluated, with any doubt resolved in favor of the government. Signing of rulings granting tax exemptions moves from the Regional Directors to the ACIR-Legal Service, and from the ACIR-LS to the DCIR-Legal and Inspection Group. Refund/TCC reports of P 1 Million and above but not more than P 10 Million are cleared with the DCIR-Operations Group, and those above P 10 Million with the CIR as final approving official. These changes last until the CIR issues an order reverting them.
2. Audit and assessment. Audit and assessment periods under RMO No. 11-2006 must be scrupulously observed, with no prolonged discussions or negotiations. The process is brought expeditiously to the PAN/FAN stage. Protests on PANs/FANs without substantial issues are summarily denied and the process goes to the payment stage, unless the taxpayer elects to go to court. The load of each Revenue Officer-Assessment is increased from 20 to 30 cases at any one time.
3. Broadening the tax base. Tax mapping (e.g. TCVD) and third party information mining are intensified to add new taxpayers, with progress reports listing new taxpayers added per RDO. The database registration clean-up and build-up is expedited, and the discrepancy report on Summary Lists of Sales and Purchases (SLSP) is expedited.
4. Audit priorities. Priority goes to businesses apparently earning more revenues this year, such as hotels and tourism-related establishments, stockbrokers, real property lessors, dealers and brokers, mining companies, TV stations, advertising companies, recruitment agencies, hospitals, clinics and laboratories. Other priorities are business agents and their clients reporting no payment returns, professionals, government contractors, the top 10,000 private corporations under RR No. 17-2003, and taxpayers reporting exempt, net loss or no operations.
5. Enforcement and collection. Establishments violating the Tax Code are closed. Collection of Accounts Receivable is intensified through warrants of distraint and/or levy, with an exhaustive audit of accounts closed in the ITS. Returns of stop/non-filer taxpayers are strictly monitored, stocktaking and surveillance of establishments are intensified, and fraud case development under RMO No. 40-2006 is intensified.
6. Programs and reporting. The campaign for taxpayers to avail of the IVAP under RR No. 18-2006 and the one-time administrative abatement under RR No. 3-2007 is intensified. Proceedings are started against erring financial officers and tax practitioners under RMC No. 31-2007. Monthly progress reports go to the CIR every 15th day of each following month starting June 15, 2007, and performance is a basis for reshuffle and transfer of officials and employees.

Who is affected

• Regional Directors, Revenue District Officers and Revenue Officers
• Taxpayers in the listed audit priority groups

Deadlines and effectivity

• Memorandum dated April 26, 2007
• Monthly progress reports: every 15th day of the following month, starting June 15, 2007