Summary
RMO No. 18-2017, issued on August 14, 2017, sets the policies, guidelines and procedures for tagging or classifying inactive business taxpayers.
Key points
- Who counts as inactive. Registered business taxpayers (individuals and non-individuals) that failed to file all required returns for all registered tax types and pay the taxes due for the last two (2) consecutive years. Taxpayers that notified the BIR district office of temporary cessation of business, and taxpayers that cannot be located or served notices after all possible means, are also covered.
- Mixed-income earners and cancelled receipts. An inactive self-employed individual who is also registered as an employee is not tagged Inactive. Unused official receipts and invoices under a valid Authority to Print are deemed cancelled upon end-dating of the business tax types and must be surrendered to the RDO for destruction.
- Effect of the Inactive tag. Cash Register Machine/Point-of-Sale permits and unused receipts or invoices of taxpayers tagged Inactive are deemed cancelled as of the date of tagging. A taxpayer reverted to Active must apply for a new set of invoices or receipts, if applicable.
- Estate of a decedent TIN. The TIN issued to an Estate under ONETT is tagged Inactive upon full payment of the Estate Tax. It returns to Active if more properties are found after payment, and is tagged Inactive again upon full settlement. If heirs run the decedent’s business, the TIN is not cancelled and is treated as a separate individual taxpayer until closed or liquidated.
- Validation before tagging. RDOs and Chiefs of Large Taxpayers Divisions must check that non-filing is not due to un-encoded or un-uploaded returns, include the taxpayer in Tax Compliance Verification Drive operations, and recommend only qualified taxpayers. Taxpayers found existing and operational get a reminder letter and must respond within five (5) working days, failing which closure and criminal or civil charges are recommended.
- Closure and erroneous classification. Permanent closure follows submission of documents, changing the status from Inactive to Ceased/Dissolved, and resolving valid stop-filer cases. Penalties apply up to the filing of the closure application, and BIR Form 1905 and requirements must be submitted. A taxpayer with an erroneous taxpayer type must submit a notarized affidavit to the RDO.
Who is affected
- Registered business taxpayers (individuals and non-individuals)
- Taxpayers that cannot be located
- Estates of decedents with a TIN under ONETT
- RDOs and Chiefs of Large Taxpayers Divisions
Deadlines and effectivity
- Non-filing for the last two (2) consecutive years
- Response to reminder letter: within five (5) working days
Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.
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