Privilege of Last Priority in Audit Applies Only to Tax Liabilities for 1986

November 16, 1987 BIR RULING NO. 363-87 7 000-00 363-87 Gentlemen : This refers to your letter dated September 28, 1987 in effect, requesting a ruling that the privilege of "last priority in audit" covers sales tax returns up to June 30, 1987 . It is represented that your client Tan Ching Bee General Merchant, of 914 Cabuco St., Cavite City, availed of last priority in audit pursuant to Revenue Memorandum Order No. 14-87 by paying the amount of P15,396.20 under Official Receipt No. 1372813 dated August 14, 1987; that your client availed of the tax amnesty for the taxable year 1981 to 1985, under Executive Order No. 41 citing taxpayer's Code No. 36-F-00435-64-A for business tax; and that on September 14, 1987, a Letter of Authority was issued by the Regional Director of Revenue Region No. 4-B ordering the examination of your books of accounts for the first semester of 1987 and unverified prior semesters. In reply, please be informed that the benefit of last priority in audit, which means that the audit and investigation shall be conducted only when authorized by the Bureau of Internal Revenue, applies only to tax liabilities for 1986, pursuant to paragraph IV, Revenue Memorandum Order No. 14-87, which states: "IV Immunity. Taxpayers availing of the privilege granted herein shall not be immuned from investigation with respect to their tax liabilities for the year 1986, but they shall be given the benefit of being last in the order of priority in the audit and investigation of tax return for said year. Accordingly, they shall not be subject to tax investigation for 1986 except upon prior written authority from the Commissioner of Internal Revenue and only in cases specified in paragraph II hereof or where there is an indication of fraud in the availment of the privilege." The fact that the taxpayer availing of the privilege of last priority is required to submit, among others, sworn statements of actual inventories as of December 31, 1986 and June 30, 1987 does not indicate that said period is likewise covered. It was only a mode of checking the correctness of the value of the inventories taking into account the adjusted inventory as of December 31, 1986 for the purpose of giving the taxpayers concerned a chance to adjust and correct it for tax purposes. With respect to taxable years 1981-1985, if your client's availment of tax amnesty under Executive Order No. 41 is proper, he is relieved from civil, criminal or administrative liability; consequently, he shall not be further examined or investigated by this Bureau. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner