BIR Ruling [DA-153-99]

March 12, 1999 BIR RULING [DA-153-99] 1st Indorsement November 24, 1998 Respectfully returned to Assistant Commissioner Neny M . Arguna , who is concurrently a Member of the Voluntary Assessment Committee (VAC), the within papers bearing on the claim of ARWOOD INDUSTRIES, INC. for refund of the amount of P811,224.04 representing overpaid withholding tax for the year 1996. The facts of the case are as follows: 1. That on April 1, 1997, Arwood filed its corporate income tax for 1996 showing a refundable amount of P970,212.25; 2. That on November 28, 1997, Arwood filed an amended return for 1996 and Voluntary Assessment Form per RMO No. 59-97, as amended by RMO. No. 63-97 without making any payment but reducing its claim for refund from P970,212.25 to P811,224.04; 3. That on January 9, 1998, Letter of Authority No. 150854 was issued to conduct an audit of taxpayer's income tax return in compliance with the directive of the Commissioner dated October 17, 1997 to commence the processing of claims of taxpayers who filed refundable returns for 1996; 4. That upon oral directive of then ACIR GALURA, the said LA was recalled and the case returned by the investigating examiner on March 30, 1998. Revenue District Officer Teogenes T. Abrigo of Ilagan, Isabela posed the following questions viz: "1. Is the filing of the amended income tax return reducing the claim for income tax refund from P970,212.25 to P811,224.04 a valid availment under the Voluntary Assessment Program (RMO No. 59-97, as amended)? "2. If in the affirmative, how can the taxpayer receive its claim for income tax refund? In connection with issue No. 1, it is our opinion that the availment by Arwood of the VAP is valid notwithstanding the fact that no payment was made when it filed the amended return for 1996. It must be emphasized herein that the rationale behind the VAP is to give taxpayers a final opportunity to come up with a clean slate. Presumably, the purpose of Arwood in availing of the VAP is to correct its previous declaration of income, purchases, deductions, etc. in its 1996 original income tax return, thus resulting in a reduced refundable amount. Moreover, RMO. No. 59-97, as amended by RMO No. 63-97 specifically enumerates those who may not avail of the VAP and does not include cases like the instant case wherein the availment does not result in a deficiency tax payment. LexLib With regard to question No. 2, please be informed that the tax audit of taxpayers with claim for refund of any internal revenue taxes is expressly authorized by Revenue Memorandum Order No. 59-98 which became effective on June 10, 1998. Parallel to this is RMO NO. 12-98 which mandatorily requires that LA's be issued to cover 1996 and 1997 internal revenue tax returns of corporate taxpayers with claims for tax credit/refund. Accordingly, a Letter of Authority must be issued by the Regional Director of Revenue Region No. 3 to investigate the herein case of Arwood Industries, Inc. in order that subject-taxpayer may be able to get the refund of the said amount of P811,224.04 as overpaid withholding tax for 1996. Please be guided accordingly. (SGD.) MILAGROS V. REGALADO OIC, Assistant Commissioner (Legal Service)