Statement Required under RA No. 2070, as amended

October 29, 1959 BIR RULING NO. 552-59 The Philippines Free Press Free Press Building 708 Rizal Avenue M a n i l a Attention : Information Department Gentlemen : As requested in your letter of June 24, 1959, hereunder are the answers to the queries of your readers Messrs. E. A. Villanueva III, Hermenegildo F. Trazo, and Avelino C. Dizon. cdtech Re : Queries of Mr . E . A . Villanueva It will be noted from the letter of Mr. Villanueva that he believes that the statement required under Republic Act No. 2070, as amended, is an income tax return. This belief is erroneous. The statement required under said Act is not an income tax return. It is purely a declaration of assets, income and liabilities. Under Republic Act No. 2070, as amended by Republic Act No. 2212, the deadline for filing the first "Statement of Assets, Income and Liabilities." (BIR Forms No. 1.80 for individuals and No 1.81 for juridical entities) is February 28, 1960. The second statement should be filed within the month of February 1962 and within the same month every four years thereafter. Republic Act No. 210 was not repealed by Republic Act No. 2070. Real property actually owned by the declarant should be declared in the tax census statement although said property is not registered in his name. Re : Queries of Mr . Hermenegildo F . Trazo A letter of authority duly accomplished and signed by the issuing officer for the reexamination of the books of a taxpayer is sufficient to warrant said reexamination. The internal revenue officer so authorized may examine said books or outside the taxpayer's place of business or establishment; but, if the books are to be examined outside the latter's place of business, the officer must issue a receipt (BIR Form No. 19.14) for the books taken by him and the examination should be made only in his office, not elsewhere. (Sec. 20, Bookkeeping Regulations; Field Circular No. V-19; BIR Ruling No. 87 and No. 486 dated February 9 and September 24, 1959, respectively) The power of authorized internal revenue officers to examine or re-examine the books of accounts and other accounting records or taxpayers stems from the duty of the Bureau of Internal Revenue to collect the internal revenue taxes due the Government and to enforce all revenue laws and regulations administered by it. (Sec. 3, Tax Code; Regulations and Rulings cited above) No hard and fast rule could be laid down to define or limit the facts under which a reinvestigation of books of accounts may be conducted. Whether or not a reinvestigation is warranted shall be determined in accordance with the circumstances and merits of each case. It may be said, however, that reasonableness is the criterion. A formal complaint is not necessary as a basis or condition precedent for a reinvestigation of books of accounts. Examinations of the books of accounts and other accounting records of taxpayers undertaken by internal revenue officers are purely administrative in character. Said examinations are merely fact-finding processes not meant to settle controversies between the taxpayer and the Government but simply to determine whether the taxpayer is complying with internal revenue laws and regulations or whether the taxpayer is paying the taxes due the Government. These examinations are not judicial or quasi-judicial proceedings wherein the parties have the right to confront the witnesses against them. Further, it may not be amiss to state that in an examination of books of accounts, the examining officer, more often than not, confines himself only to the books examined. No witnesses are examined by him. If there are doubtful entries in the books, the officer may request the bookkeeper or the owner of the business himself to explain the entries. From these it will be seen that there is hardly, if not none at all, an intervention of third parties in the examination referred to. Such being the case, this Office believes that the right of confrontation of witnesses has no bearing on the examinations conducted by internal revenue officers of the taxpayers' books of accounts. Re : Queries of Mr . Avelino C . Dizon An affidavit of transfer of real property is a certificate issued for the purpose of giving information or establishing a proof of fact within the purview of section 225 of the Tax Code. Said affidavit is, therefore, subject to the documentary stamp tax of thirty centavos. LLjur The letters of inquiry are returned herewith. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue