Privilege of Last Priority in Audit and Investigation

June 6, 1988 BIR RULING NO. 241-88 204 (3) 000-00 241-88 S i r : This refers to your letter dated September 18, 1987 requesting clarification as to whether M.A. Foundry Incorporated, a corporation allegedly engaged in contract business whose income is covered by job orders subject to 4% percentage tax, can avail of the privilege of last priority in audit and investigation of its 1986 internal revenue tax liabilities under Revenue Memorandum Order No. 14-87. In reply, please be informed that the privilege of last priority in audit and investigation extends only to the 1986 income, sales and subsequent sales tax returns. It is to be noted however, that the privilege is available only to a manufacturer, producer, importer or dealer or one who is engaged in trade or business where inventory is a factor in the determination of income . Accordingly, since M.A. Foundry Incorporated is a contractor subject to 4% percentage tax on its gross receipts, it is not qualified to avail of the privilege of last priority in audit and investigation of its 1986 internal revenue tax liabilities. Of course M.A. Foundry Incorporated can file a claim for refund or tax credit of the additional income tax it paid when it filed the amended income tax return for 1986 on account of its availment of the privilege of last priority, pursuant to Section 204(3) of the Tax Code, as amended. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner