Policies, Guidelines and Procedures in the Clean-Up of Stop-Filer Cases

October 12, 2016 OPERATIONS MEMORANDUM NO. 2016-10-05 TO : Assistant Commissioners Large Taxpayers Service Assessment Service Collection Service Client Support Service Information Systems Development and Operations All Regional Directors All Heads, Revenue Data Centers All Revenue District Officers Chiefs Large Taxpayers Divisions LT Collection Enforcement Division Document Processing Divisions Systems Development Division Collection Performance Monitoring Division Audit Information, Tax Exemption and Incentive Division All Others Concerned SUBJECT : Policies, Guidelines and Procedures in the Clean-Up of Stop-Filer Cases It has been observed that, based on the information generated from the Integrated Tax System (ITS) of this Bureau, there is a continuing increase of stop-filer cases and a very dismal resolution rate thereof by all concerned Revenue District Offices (RDOs)/Large Taxpayers Service (LTS) offices. As of May 2016, records showed that there are 116,721,224 open stop-filer cases. Out of this number, there are 2,985,095 open stop-filer cases for taxpayers under the Taxpayer Account Management Program (TAMP). On the other hand, there are 113,736,129 unresolved stop-filer cases for non-TAMP taxpayers. In terms of the performance of the concerned revenue district offices in resolving these stop-filer cases, the resolution rates of only 0.60% and 0.41% of the total handled stop-filer cases, for TAMP and non-TAMP taxpayers, respectively, have been attained by these offices; and, such average performance is way below the set Key Performance Indicator (KPI) prescribed under Revenue Memorandum Order (RMO) No. 36-2014, in relation to RMO No. 41-2011. It is further noted that these unresolved stop-filer cases arose from registration-related issues, more particularly the current registration status of the concerned taxpayers under the Integrated Tax System-Registration System (ITS-REG)/Electronic Tax Information System-Tax Registration System (eTIS-TRS), that need to be resolved the soonest time possible, as well as the failure by the concerned revenue offices to encode the applicable tax returns that are being monitored by ITS for purposes of generation of stop-filer cases. Moreover, it was observed that there were substantial backlogs in the uploading of returns/collection data from tax returns filed/payments made through the Mobile Revenue Collection Officers System (MRCOS), eBIR Forms, Electronic Filing and Payment System (eFPS), GCash, Limited Bank Data Entry System (LBDES) that gave rise to invalid stop-filer cases. While the procedural requirements on the handling and resolution of stop-filer cases are already prescribed under Revenue Memorandum Order (RMO) No. 41-2011, more specifically with respect to the immediate updating of taxpayers' registration data, prompt encoding of the tax returns filed by taxpayers, and the uploading to the ITS of returns/collection data from the tax returns filed/payments made thru the different filing/payment channels of this Bureau, there is an immediate need to address the substantial volume of open stop-filer cases arising from the aforementioned issues, as well as forestall the further accumulation thereof. In view of the foregoing and considering that the bulk of stop-filer cases for non-TAMP taxpayers may be "invalid" and that the case-by-case resolution thereof may require substantial resources from the concerned offices which may, at the end, will no longer be "cost-effective", the immediate automatic closure of these cases may be undertaken by the Bureau. This policy direction is considered strategic because it will enable all the concerned RDOs/Chiefs, LTS Offices to re-direct their scarce resources to more productive activities that will improve their collection performance. Accordingly, the following policies and procedures shall be strictly observed by all concerned revenue offices: A. The Systems Development Division (SDD) under Information Systems Group (ISG) shall generate a list of all open stop-filer cases of taxpayers whose registration status in the ITS-REG/eTIS-TRS are already tagged as either "C-Cancelled" or "D-Dissolved" for transmission to all the concerned RDOs/LTS Offices, thru the Revenue Data Centers (RDCs)/National Office Data Center (NODC), on or before November 4, 2016. The RDOs/LTS Offices shall verify the aforementioned list and submit written explanations/justifications to the Assistant Commissioner-Client Support Service (ACIR-CSS) citing the reasons why the said stop-filer cases were not resolved/closed prior to the tagging of the registration status of the concerned taxpayers in the ITS-REG/eTIS-TRS as either "C-Cancelled" or "D-Dissolved", copy furnished the Chief, Collection Performance Monitoring Division (CPMD) for monitoring purposes. The ACIR-CSS shall evaluate the said written explanations and should the same are found meritorious, transmit to the SDD the list of stop-filer cases covered by the meritorious explanations for closure by the said Division. For unmeritorious explanations, the same shall be referred to the appropriate revenue office for the necessary actions thereon. CAIHTE B. The SDD under the ISG shall generate separate lists of all open stop-filer cases by non-TAMP taxpayers as of September 30, 2016 grouped as follows: 1. Taxpayers who have failed to file any tax return and/or pay the corresponding tax due thereon for at least three (3) years prior to the date stated above; 2. Taxpayers who failed to file any tax return and/or pay the corresponding tax due thereon from the date of registration with this Bureau, excluding the taxpayers identified in the immediately preceding paragraph; 3. Taxpayers whose form type was erroneously registered in the ITS-REG/eTIS-TRS; and 4. Taxpayers with open stop-filer cases created in the former revenue district office/LTS Office (old) before their transfer to another RDO/LTS Office (new). In the generation of the abovementioned lists, the SDD shall take into consideration the "invalid" stop-filer cases that may have been created due to backlog in the encoding of the pertinent tax returns and/or unuploading of tax returns/payment data in the ITS through the different filing/payment channels such as MRCOS, eBIR Forms, eFPS, Mobile Payment ( e.g. , GCash), LBDES, etc. Furthermore, if the concerned taxpayers are paying the Annual Registration Fees and regularly filing their income tax returns and other tax returns and/or paying the corresponding taxes thereon, the same shall be included in generating the list of open stop-filer cases due to erroneously registered form type referred to in Item 3 above. C. The soft copies of all the lists prescribed in Item B above shall be transmitted by the concerned RDCs/NODC to the RDOs/LTS Offices under their jurisdictions, copy furnished the Chief, CPMD, on or before November 11, 2016. The RDOs/LTS Offices shall conduct validation of the open stop-filer cases included in the transmitted list and prepare a written report thereon with a recommendation on the closure/non-closure of open stop-filers referred to in Items B.1, B.2 and B.3 above, for submission to the Chief, CPMD on or before December 12, 2016. The said written recommendation report shall be submitted together with a list of duly validated open stop-filer cases recommended for mass closure in accordance with the RDC/NODC-transmitted lists. The CPMD shall monitor the compliance of all concerned RDOs/LTS Offices in the validation of the lists and the submission of the prescribed recommendation reports, as well as the conduct of pre-evaluation of their written recommendation reports, prior to the transmission thereof to the Validation Committee created through a Revenue Special Order (RSO) for appropriate action. The Committee-validated reports confirming the closure of the open stop-filer cases ( i.e. , Items B.1, 2 and 3) shall be transmitted to the SDD for the immediate execution of closure thereof in the ITS-CMS. It shall be understood that the execution referred herein is not deemed to be a one-time mass closure execution of validated open stop-filer cases, but the same shall be for each and every receipt of the transmitted Committee-validated report. The CPMD shall prepare and submit to the Deputy Commissioner for Operations and ACIR-CS a written report on the level of compliance by all RDOs/LTS Offices in the submission of the above-prescribed recommendation reports, actions undertaken by the Validation Committee, and results on the final execution by the SDD on the mass closure of these open stop-filer cases. The said report shall be submitted to the aforementioned officials on or before December 31, 2016, for their information and appropriate action. D. Stop-filer cases that are created due to non-uploading to the ITS/eTIS of the return/payment data listed below shall be considered as "invalid". These cases shall be automatically eligible for mass clean-up without the need for prior validation by the concerned revenue offices under this Order. However, taxpayers reported as "Cannot be Located" (CBL) are not included in the mass closure as discussed in the subsequent item letter "F". 1. Tax returns filed thru the eFPS and eBIR Forms facilities; 2. No-payment tax returns covered by the electronic Acknowledgement Receipts (eARs) and tax returns with tax payments covered by electronic Revenue Official Receipts (eRORs) generated thru MRCOS facility received by the RDOs; 3. Tax returns filed thru Mobile Payment facility ( e.g. , GCash); and 4. No-payment tax returns that were processed thru the Data Imaging Project in pilot RDOs. E. Based on the ISG-generated list of open stop-filer cases, the concerned RDOs/Large Taxpayers Document Processing and Quality Assurance Division (LTDPQAD) shall conduct a verification to determine which among these cases were created due to non-encoding of the pertinent no-payment tax return data and/or non-encoding of return/payment data by the RDOs/DPDs/LTDPQAD for returns/payments received thru the Revenue Collection Officers (RCOs) prior to or during the implementation of the MRCOS. The RDOs shall create a list enumerating the names of the taxpayers included in the list of open stop-filer cases whose returns have been forwarded to the DPD/DPS. This shall be provided to the concerned DPD/DPS to enable them to validate the said list and issue a confirmation letter/certification confirming that the physical return(s) is/are under their possession, including the status of the return shall also be indicated, i.e. , for pre-processing or for encoding. Since these open cases are not eligible for automatic mass closure, the RDOs must secure the said confirmation letter/certification from the concerned DPDs/DPSs stating that they have the physical possession of these un-encoded tax returns and the confirmation letter/certification shall be attached to the written recommendation report for submission to the Chief, CPMD. With respect to the un-encoded collection data received by the RCOs that were not covered by the eRORs generated thru MRCOS, all concerned RDOs shall ensure that the same are duly encoded in the ITS-CBR/eTIS-CRR not later than November 11, 2016. On the other hand, the concerned DPDs/DPSs of the RDOs shall likewise ensure the encoding of the un-encoded tax returns data, giving priority to BIR Form Nos. 1701, 1702 series 2550Q and 2551M/Q, in the ITS-RPS/eTIS-RFP on or before the same deadline. DETACa With respect to tax returns received by the RDOs/RCOs which were not yet transmitted to the DPDs/DPSs as of the effectivity of this Order, the original copies of these tax returns, their corresponding BCS-As and BCS-Bs, together with the attachments, shall be transmitted to the DPDs/DPSs not later than October 21, 2016. In the transmittal of these tax returns by the RDOs to the DPDs/DPSs, the returns should be batched according to taxable year and form type and each batch shall not exceed fifty (50) returns. Accordingly, the DPDs/DPSs shall likewise ensure that the tax return data for these stop-filer cases are duly encoded in the ITS-RPS/eTIS-RFP not later than December 12, 2016. The resolution of the stop-filer cases created therefrom is not covered by this Order, but the same shall be handled pursuant to RMO No. 41-2011. Furthermore, a separate issuance shall be issued to address the issues on untransmitted tax returns, including the imposition of appropriate sanctions to the erring revenue officials/personnel. F. The mass closure of open stop-filer cases involving taxpayers that are reported as "Cannot Be Located" (CBL) taxpayers already published in the newspaper of general circulation and posted in the Bureau's website shall not be included in this Order. Prior to the generation of the list by SDD, the Audit Information Tax Exempt and Incentive Division (AITIED) under the Assessment Service (AS) shall provide the former with the updated list of all published CBL taxpayers. However, a separate list of open stop-filer cases by CBL taxpayers shall be generated by the SDD for transmission to the concerned RDOs thru their respective RDCs, for their appropriate action. The resolution of these open stop-filer cases shall be undertaken pursuant to RMO No. 41-2011. G. With respect to the list of open stop-filer cases created in the old RDO/LTS Office before the taxpayer's transfer to the new RDO/LTS Office referred to in Item B.4 above, the SDD thru the concerned RDCs shall likewise transmit the same to both the new and old RDOs/LTS Offices. The stop-filer cases of the said taxpayers shall be resolved by the old revenue office since the same cannot be viewed in the ITS-Case Monitoring System (CMS) database of the new revenue office and the same remain with the old RDO. Inasmuch as the new RDO/LTS Office has direct communication with the concerned taxpayer, the proper coordination with the taxpayers and the old revenue office shall be made by the new RDO/LTS Office to enable the resolution and closure of open stop-filer cases in the old revenue office. Such coordination among these offices is necessary considering that the resolution thereof shall be for their mutual benefit. H. For TAMP taxpayers, as well as non-TAMP taxpayers who are intermittently/irregularly filing their tax returns and paying the corresponding tax due thereon, guidelines and policies in the resolution of open stop-filer cases prescribed under RMO No. 41-2011 shall be strictly complied with by all concerned revenue offices. I. For taxpayers with open stop-filer cases under Item Nos. B.1, B.2, and B.3 above, the concerned RDOs/LTS Offices shall effect the end-dating of the registration status of the applicable tax/form types in the ITS-REG/eTIS-TRS, upon validation of the lists, to prevent further accumulation of stop-filers cases for the affected tax/form types. However, should the Committee rejects the recommendation of the RDOs/LTS Offices, the reversal/updating, as the case may be, of the previously end-dated registration status of the concerned taxpayers shall be immediately undertaken upon receipt of notice from the Validation Committee. J. The mass clean-up of open stop-filer cases for non-TAMP taxpayers under this Order shall be accomplished on or before December 31, 2016. K. For all other open stop-filer cases of TAMP and non-TAMP taxpayers, all concerned RDOs/LTS Offices shall continuously resolve the same to ensure that the prescribed minimum resolution rate of eighty percent (80%) of stop-filers handled pursuant to the Key Performance Indicator (KPI) set under the existing RMO has been attained. For your information and strict implementation. (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue