BIR Ruling [DA-004-06]

January 10, 2006 BIR RULING [DA-004-06] Social Security System East Avenue, Diliman, Quezon City Attention: Mr. Santiago D.R. Agdeppa Assistant Vice President & Vice-Chairman, BAC Gentlemen : This refers to your letter dated December 5, 2005 requesting that non-EFPS filed tax returns and payments documents be accepted as compliance with Executive Order (E.O.) No. 398, and as such, the requirements for the submission of income and business tax returns using the Electronic Filing and Payment System (EFPS) for the last six (6) months prior to the date of the opening of bid be waived only for your published projects for the year considering that the participants in your on-going projects for bidding were limited and that most of them have just recently enrolled with the EFPS. In reply, please be informed that Section 1 of E.O. 398 requires that all persons, natural or juridical, whether local or foreign, who desire to enter into or participate in any contract with the government, its departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units, shall, as a pre-condition, submit along with their proposal and/or bid, a copy of their latest income and business tax returns duly stamped and received by the Bureau of Internal Revenue (BIR), and duly validated with the tax payment made thereon. In implementing this provision of E.O. 398, Section 4.1 of Revenue Regulations (RR) No. 3-2005 specifically mandates all prospective participants to any government procurement of goods and services to file their income and business tax returns and other required information electronically using the EFPS. It is significant to note that the main thrust of E.O. 398 in requiring all participants and bidders of government projects to submit their tax returns is to prevent delinquent taxpayers/participants/bidders from entering into any contract with the government. CSDcTA Thus, while RR No. 3-2005 provides for the mandatory EFPS filing of income and business tax returns this Office believes that there is substantial compliance with EO 398 in cases where the taxpayer/participant/bidder submits manually filed tax returns when the following conditions are met: First , the taxpayer/participant/bidder should present his non-EFPS tax returns and payments to the appropriate Revenue District Office; second , the taxpayer/participant/bidder should secure the approval of the Head of the Agency in submitting manually filed tax returns; and third , the taxpayer/participant/bidder should enroll in the EFPS and submit the EFPS enrolment form along with his non-EFPS tax returns. In view of the foregoing, this Office hereby allows you to accept the manually filed tax returns of your bidders for your published projects for the year 2005, provided that the aforementioned conditions are complied with. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service