Internal Revenue Case of the Eastern Inspection Bureau

August 3, 1959 BIR RULING NO. 377-59 The Regional Director BIR Regional District No. 3 Canonigo, Manila S i r : There is returned herewith the entire record of the pending internal revenue case of the Eastern Inspection Bureau involving a proposed assessment of the amount of P10,385.71 as independent contractor's fixed and percentage taxes, including surcharge and compromise penalty. According to the report of investigation submitted by Agent Manuel U. Lontoc, the Eastern Inspection Bureau is undertaking the following functions: 1. The preparation of credit and financial reports of individuals and firms throughout the Philippines; 2. The preparation of location reports which are helpful in tracing accounts and ascertaining the exact whereabouts of individuals or firms with outstanding accounts; 3. The preparation of personnel selection reports which are invaluable in providing factual and pertinent information with reference to antecedents, school, previous employment, special ability information, etc. on prospective employees. 4. To undertake specialized services, surveys, resumes, and other projects in answer to specific questions or problems of the clients. On the other hand, counsel for the taxpayer states that the operations of the Eastern Inspection Bureau is one technically known as credit analysis and reporting, citing authorities to the effect that credit analysis and reporting is a professional undertaking and that credit analysts are skilled technologists who have mastered and applied these technologies through training and experience and have established themselves as a professional group. We analyzed very carefully the character and status of credit analysts and we are inclined to subscribe to the view that the services rendered by the Eastern Inspection Bureau are not the services contemplated by section 191 of the Tax Code. We believe that the functions of the Eastern Inspection Bureau recited in Nos. 2, 3 and 4 of Agent Lontoc's report (supra) are purely means to the attainment of its principal function, the credit and financial report on existing or would be debtors. In view of the foregoing, this Office is of the opinion and so holds that the Eastern Inspection Bureau is not an independent contractor within the purview of section 191 of the Tax Code and, therefore, it is not subject to the tax prescribed therein. LLphil Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue