Regulations Relating to Inspection of Income Tax Returns

October 13, 1922 DOF REGULATIONS NO. 033-22 1 SUBJECT : Regulations Relating to Inspection of Income Tax Returns In accordance with the provisions of section 14 (b) of the Income Tax Law, the following rules and regulations shall govern the examination and inspection of income tax returns of individuals, partnerships, estates, trusts, corporations, joint-stock companies, joint accounts (cuentas en participacion) , associations, and insurance companies filed pursuant to the Income Tax Law as amended by Act No. 2926 of the Philippine Legislature: SECTION 1. Nature and Scope of These Regulations. These regulations deal only with inspection of returns, as the law expressly requires the approval of the Governor-General of regulations on this subject. Other uses to which returns may be lawfully put, without action by the Governor-General, are not covered by these regulations. SECTION 2. Terms "Corporation" and "Return" Construed. The term "corporation" whenever used shall, unless otherwise indicated, include every corporation, joint-stock company, partnership, joint account (cuenta en participacion) , association, or insurance company, organized in the Philippine Islands, no matter how created or organized, but not including duly registered general copartnerships (companias colectivas) . The term shall also include every corporation, joint-stock company, partnership, joint account (cuenta en participacion) , association, or insurance company organized, authorized, or existing under the laws of any foreign country, but deriving income from sources within the Philippine Islands. The term "return" when so used, shall, unless otherwise indicated, include income tax returns only. Written statements filed with the Collector of Internal Revenue designed to be supplemental to and to become a part of tax returns shall be subject to the same rules and regulations as to inspection as are the tax returns themselves. SECTION 3. Application for Permission to Inspect Returns. Except as hereinafter specifically provided, the Collector of Internal Revenue may, in his discretion, upon written application setting forth fully the reasons for the request, grant permission for the inspection of returns in accordance with these regulations. The application will be considered by the Collector and a decision reached by him whether the applicant has met the conditions imposed by these regulations and whether the reasons advanced for permission to inspect are sufficient to permit the inspection. Such written application is not required of the officers and employees of the Bureau of Internal Revenue whose official duties require inspection of a return. SCEDaT SECTION 4. Inspection of Returns of Individuals. The return of an individual shall be open to inspection as follows: (a) By the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; (b) by the person who made the return, or by his duly constituted attorney in fact; (c) by the administrator, executor, or trustee of the taxpayer's estate, or by the duly constituted attorney in fact of such administrator, executor, or trustee, where the maker of the return has died; and (d) in the discretion of the Collector of Internal Revenue, by one of the heirs at law or next of kin of such deceased person upon showing that he has a material interest which will be affected by information contained in the return. SECTION 5. Inspection of Joint Returns. A joint return of a husband and wife shall be open to inspection (a) by the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; and (b) by either spouse for whom the return was made (or his or her duly constituted attorney in fact or legal representative), upon satisfactory evidence of such relationship being furnished. SECTION 6. Inspection of Return of Partnerships. The return of a partnership whether general or limited shall be open to inspection (a) by the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; and (b) in the case of general copartnerships, by any managing partner, if managers are provided for by the members, or, if there are no managing partners, by any member of such partnership (or his duly constituted attorney in fact or legal representative) during any part of the time covered by the return upon satisfactory evidence of such fact being furnished; and in the case of limited partnerships, by the general members of the same during any part of the time covered by the return upon satisfactory evidence of such fact being submitted. SECTION 7. Inspection of Return of an Estate. The return of an estate shall be open to inspection (a) by the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; (b) by the administrator, executor, or trustee of such estate, or by his duly constituted attorney in fact; and (c) by one of the heirs at law or next of kin of the deceased person whose estate is being administered upon a showing of a material interest which will be affected by the information contained in the return. SECTION 8. Inspection of Return of a Trust. The return of a trust upon which a tax has been determined shall be open to inspection (a) by the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; (b) by the trustee or trustees, or the duly constituted attorney in fact of such trustee or trustees; and (c) by any individual (or his duly constituted attorney in fact or legal representative) who was a beneficiary under such trust during any part of the time covered by the return, upon satisfactory evidence of such fact being furnished. SECTION 9. Inspection of Return of a Corporation. The return of a corporation shall be open to inspection (a) by the officers and employees of the Bureau of Internal Revenue whose official duties require such inspection; (b) upon satisfactory evidence of identity and official position, by the president, vice-president, secretary, treasurer, or any of the members of the board of directors, or any executive or principal officer of such corporation. SECTION 10. Inspection of Returns at the Instance of Other Executive Departments. When the head of an executive department (other than the Department of Finance) or of any other bureau or office of the Philippine Government, desires to inspect or to have some other officer or employee of his branch of the service inspect a return in connection with some matter officially before him, the inspection may, in the discretion of the Secretary of Finance, be permitted upon written application to him by the head of such executive department or other Government bureau or office. The application must be signed by such head and must show in detail why the inspection is desired, the name and address of the taxpayer who made the return, and the name and official designation of the one it is desired shall inspect the return. When the head of a bureau or office in the Department of Finance, not a part of the Bureau of Internal Revenue, desires to inspect a return in connection with some matter officially before him, other than an income tax matter, the inspection may, in the discretion of the Secretary, be permitted upon written application to him by the head of such bureau or office, showing in detail why the inspection is desired. The reasons submitted for permission to inspect as provided in this section shall be considered by the Secretary and a decision reached by him whether the reasons are sufficient to permit the inspection. aTEScI SECTION 11. Copies of Returns Furnished for Use in Legal Proceedings. When it becomes necessary for the Bureau of Internal Revenue to furnish returns or copies thereof for use in legal proceedings, inspection of such returns or copies that necessarily results from such use is permitted. The original income tax return of an individual, corporation, joint-stock company, partnership, joint account (cuenta en participacion) , association, insurance company, or fiduciary, or a copy thereof, may be furnished by the Collector of Internal Revenue for use as evidence in litigation in any court, where the Government of the Philippine Islands is interested in the result, or for use in the preparation for such litigation, to provincial or city fiscal or any attorney connected with the Bureau of Justice designated to handle such matters, upon written request of the Attorney-General, or an assistant attorney acting on his behalf. When an income tax return or copy thereof is thus furnished, it must be limited in use to the purpose for which it is furnished, and is under no conditions to be made public except where publicity necessarily results from such use. In case the original return is necessary, it shall be placed in evidence by the Collector of Internal Revenue or by some other officer or employee of the Bureau of Internal Revenue designated by the Collector for that purpose, and after it has been placed in evidence it shall be returned to the files in the Office of the Collector in Manila. Neither the original nor a copy of an income tax return, desired for use in litigation in court where the Government of the Philippine Islands is not interested in the result and where such use might result in making public the information contained therein, will be furnished, except as otherwise provided in the next succeeding section. SECTION 12. Inspection of Returns to be Made in Office of the Collector; Copies of Returns Furnished the Taxpayer. Except as provided in section 11, returns may be inspected only in the Office of the Collector of Internal Revenue, Manila. SCHTac A copy of an income tax return may be furnished by the Collector of Internal Revenue to the person who made the return or to his duly constituted attorney, or if the person is deceased, to his executor or administrator; or if the entity is in the hands of a receiver, trustee in bankruptcy, guardian, or similar legal custodian, to the receiver, trustee, guardian, or other similar custodian, upon written application for same, accompanied by satisfactory evidence that the applicant comes within this provision. "The person who made the return," as herein used, refers in the case of an individual return to the individual whose return is desired, and in the case of a return of a corporation, joint-stock company, partnership, joint account (cuenta en participacion), association, insurance company, or fiduciary, to the corporation, joint-stock company, partnership, joint account (cuenta en participacion), association, insurance company, or fiduciary, a copy of whose return is desired. A corporation may also designate by proper action of its board of directors the officer or individual to whom a copy of a return made by the corporation may be furnished, and upon sufficient evidence of such action and of the identity of the officer or individual, a copy may be furnished to such person. A copy of a partnership income tax return will be furnished to the partners only in case all the partners join in the request therefor, it matters not what particular partner or officer of the partnership made the return. If the partnership has been dissolved, the members surviving may be furnished a copy if all the members surviving join in the request. SECTION 13. Person Permitted to Inspect Return May Make Copy Thereof. A person who, under these regulations, is permitted to inspect a return may make and take a copy thereof or a memorandum of data contained therein. SECTION 14. Unlawful Divulgence of Trade Secrets. By section 2716 of Act No. 2711 otherwise called the Administrative Code of 1917 as amended by section 30 of Act No. 2833, known as the Income Tax Law, it is made an offense for any officer or employee of the Bureau of Internal Revenue to divulge to any person or to make known in any other manner than as may be provided by law information regarding the business or income of any taxpayer, the secrets, operation, style of work, or apparatus of any manufacturer or producer or confidential information regarding the business of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties, which offense is punishable by a fine in a sum of not more than P2,000 or an imprisonment for a term of not less than six months nor more than five years, or both. SECTION 15. Procuring Unlawful Divulgence of Trade Secrets. By section 2731 of Act No. 2711 otherwise called the Administrative Code of 1917 as amended by section 31 of Act No. 2833, known as the Income Tax Law, it is made an offense for any person to cause or procure an officer or employee of the Bureau of Internal Revenue to divulge any confidential information regarding the business or income of any taxpayer knowledge of which was acquired by him in the discharge of his official duties and which it is unlawful for him to reveal, and for any person to publish or print in any manner whatever not provided by law any income, profits, losses, or expenditures appearing in any income tax return, which offense is punishable by a fine in a sum of not more than P2,000 or an imprisonment for a term of not less than six months nor more than five years, or both. SECTION 16. Former Rules and Regulations are Repealed. All former rules and regulations bearing on the subject of inspection of income tax returns promulgated by the Department of Finance are hereby superseded. SECTION 17. Effective Date. These regulations shall become effective upon their promulgation in the Official Gazette and shall remain in force until expressly withdrawn or overruled. SEHACI Manila, October 13, 1922. ALBERTO BARRETTO Secretary of Finance Approved: LEONARD WOOD Governor-General Footnotes 1. Promulgated June 16, 1923, XXI Off. Gaz., 72, page 1245.