RMO No. 25-2012: Prescribes the guidelines and procedures in the pre-audit of annual Income Tax Returns of individuals engaged in business/practice of profession and corporate taxpayers filed at the Revenue District Offices

Summary

RMO No. 25-2012 prescribes the guidelines and procedures for pre-auditing annual Income Tax Returns (ITRs) of individuals in business or profession and of corporate taxpayers filed at Revenue District Offices (RDOs).

Key points

1. How pre-audit is done. It is conducted without field investigation and is not covered by an electronic Letter of Authority or Tax Verification Notice. Where Data Processing Divisions handle returns, the Revenue Officer views imaged returns and prints them only if there are discrepancies or findings.
2. What is verified. The Revenue Officer checks the computation of tax due and payment, the personal and additional exemptions claimed, and ceiling-limited deductions such as interest, charitable contributions, representation and miscellaneous expenses. The officer also checks claims for tax holiday and other incentives, the MCIT, creditable withholding taxes, use of Tax Credit Certificates, the Optional Standard Deduction, the NOLCO, and completeness of attachments.
3. Returns with no discrepancy. Pre-audited returns with no discrepancy, and those where the taxpayer settled the deficiency, are no longer sent to the Assessment Division. They stay in the RDO for possible audit under the Audit Program.
4. Later selection for audit. Pre-audited annual ITRs may still be selected for regular audit if they meet the selection criteria in the annual Audit Program.

Who is affected

• Individuals engaged in business or practice of profession registered in RDOs
• Corporate taxpayers registered in RDOs
• Revenue Officers

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