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RMC No. 96-2024: Amending certain provisions of RMC No. 5-2001 on the grounds and procedures for the implementation of Section 206 of the Tax Code on 1997 on Constructive Distraint

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Summary

RMC No. 96-2024 amends RMC No. 5-2001 on the grounds and procedures for constructive distraint under Section 206 of the Tax Code of 1997. It replaces Section 2 of RMC No. 5-2001, which lists the cases for a notice or warrant of constructive distraint.

Key points

  1. Retirement with large assessment. A taxpayer applying for retirement from business may be covered if a substantial assessment is pending with the BIR. An assessment is substantial when it equals or exceeds the taxpayer’s net worth or equity in the current taxable year.
  2. Travel and transfers abroad. A taxpayer under investigation who left the Philippines at least twice a year over twelve (12) months may be covered, unless the trips are justified or connected with business, profession, or employment. A non-bank taxpayer under investigation who moved bank deposits or valuable personal property abroad may also be covered.
  3. Aliases and property in others’ names. Using aliases in bank accounts, other than the name the taxpayer is legally or popularly known by, is a ground. So is keeping bank deposits and property under other persons’ names outside any lawful fiduciary or trust capacity.
  4. Undeclared income. Undeclared income known to the public or the BIR, with strong reason to believe the taxpayer will hide property, is a ground. The same applies to credible information or a complaint backed by substantial evidence. Undeclared income means an amount exceeding declared gross sales, gross receipts, or gross revenue by at least thirty percent (30%).
  5. Concealment and obstruction. A taxpayer under investigation who tries to hide personal property, or intends to act to obstruct collection of tax due, may be covered.
  6. Other grounds. A taxpayer tagged as Cannot be Located is covered, as are other analogous cases. The list is not limited to those stated.

Who is affected

  • Taxpayers who may be subject to a notice or warrant of constructive distraint

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.