RR No. 18-2005: Provides the policies, procedures and guidelines in the implementation of the Enhanced Voluntary Assessment Program (EVAP) for taxable year 2004 and prior years under certain conditions

Summary

RR No. 18-2005 sets policies, procedures and guidelines for the Enhanced Voluntary Assessment Program (EVAP) for taxable year 2004 and prior years under certain conditions.

Key points

1. Privilege and coverage. EVAP gives last priority in audit and investigation for all internal revenue taxes for the taxable year ending December 31, 2004 and all prior years. This includes one-time transactions taxes such as estate tax, donor’s tax, capital gains tax, expanded withholding tax and documentary stamp tax on transfers of assets. It also covers taxpayers with preferential tax treatment.
2. Who may not avail. Excluded are taxpayers already issued a Final Assessment Notice (FAN) on or before effectivity, persons under investigation from a Tax Informer’s verified information recorded in the Official Registry Book, tax fraud cases pending in the Department of Justice or courts, those with admitted unpaid tax liability unless they first pay it, and cases under the Run After Tax Evaders (RATE) Program.
3. Effect of availment. A Letter Notice or FAN issued after qualifying is considered cancelled. Audit is automatically suspended upon filing the application and paying the EVAP amount. An EVAP taxpayer is audited only with the Commissioner’s prior approval on strong evidence of understatement by more than 30%, and the EVAP payment is credited against any deficiency tax.
4. Application and payment. The taxpayer files the application and pays with the AAB or Revenue Collection Officer/Deputized Municipal Treasurer. The amount is the higher of the prescribed percentage computation or the minimum EVAP payment per taxable year. The payment cannot be used as a tax credit or deduction, and it excludes tax debit memo, creditable withholding tax and MCIT carry-over.
5. Installments and extension. An EVAP amount above P 5,000,000.00 may be paid in 3 equal installments, all made on or before December 31, 2005. A missed installment makes the whole unpaid amount due with delinquency penalties. An extension on grounds of financial incapacity needs a bank list, a waiver of bank secrecy, a written undertaking to pay within 6 months from filing, and a bond if the case is prescribing within 6 months.
6. Review and validity. The availment is reviewed within 30 days from application and payment, and a Certificate of Qualification or Notice of Disqualification is issued. A Notice of Disqualification may be appealed to the Assessment Service through the Assessment Programs Division. The Program is valid until December 30, 2005.

Who is affected

• Natural and juridical persons, including estates and trusts, liable for taxes for 2004 and prior years
• Taxpayers with preferential tax treatment

Deadlines and effectivity

• Covers taxable year ending December 31, 2004 and prior years
• Installments on or before December 31, 2005
• Review within 30 days from application and payment
• Program valid until December 30, 2005

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