Filing Compliance of Taxpayers on the Annual Alphabetical List of Employees (BIR Form Nos. 1604 CF) and Alphabetical List of Payees of Income Payments (BIR Form Nos. 1604 E), Including the Monthly Alphalist of Payees (MAP) and Summary Alphalist of Withholding Taxes (SAWT)

September 16, 2016 OPERATIONS MEMORANDUM ORDER NO. 2016-09-09 TO : ACIR, Large Taxpayers Service All Regional Directors All Chiefs, Large Taxpayers Divisions Chief, Large Taxpayers Data Processing and Quality Assurance Division All Revenue District Officers All Chiefs, Regional Collection Divisions All Heads, Revenue Data Centers All Others Concerned SUBJECT : Filing Compliance of Taxpayers on the Annual Alphabetical List of Employees (BIR Form Nos. 1604 CF) and Alphabetical List of Payees of Income Payments (BIR Form Nos. 1604 E), Including the Monthly Alphalist of Payees (MAP) and Summary Alphalist of Withholding Taxes (SAWT) It has been observed that there is a minimal level of compliance of taxpayers in the submission of Annual Alphabetical List of Employees (BIR Form Nos. 1604 CF), Alphabetical List of Payees of Income Payments (BIR Form Nos. 1604 E) from the taxable years 2013 to 2015. Moreover, the said level of compliance is likewise reflected in the Monthly Alphalist of Payees (MAP) and the Summary Alphalist of Withholding Taxes (SAWT), including the modes of submission of the alphalists [( i.e. , eSubmission, eMail submission, and attachment to Electronic Filing and Payment System (eFPS)]. In addition to the above, a substantially low level of performance on the actions taken by the concerned revenue offices has been likewise observed on the uploading of emailed alphalists to the data warehouse, thru the File Transfer Protocol (FTP) facility. Based on the attached report, an insignificant number of files have been uploaded to the data warehouse thru FTP facility, despite the considerable number of emails received thru the RDOs' dedicated email accounts. These occurrences may be either due to (a) non-opening of emailed files by the concerned Collection Section Chiefs; (b) non-validation and/or non-uploading thereof to the data warehouse, thru the FTP facility; or (c) emails received are not related to the alphalist submissions. In this connection, the following compliance and exception reports on the above subject matter covering the taxable year 2015 shall be transmitted thru email to your end by your respective Revenue Data Centers (RDCs), copy furnished the Chief, Miscellaneous Operations Monitoring Division (MOMD), not later than September 30, 2016: ITAaHc 1. Report on Compliance on the Monthly/Annual Alphalist of Payees/Employees TAMP and NON-TAMP (For Annual Alphalist and MAP) (Annex "A") The report contains the list of registered withholding tax agents (WAs) and their respective registered withholding tax form types. The information on the taxpayers' compliance to the annually filed BIR Form Nos. 1604 CF and E are reflected in Columns 4 and 5 of the report while the information on the compliance to the BIR Form Nos. 1601 E, F and 1600 are listed on the succeeding columns on a per form type and monthly bases. The filenames, dates and exact time of uploading of alphalist for compliant taxpayers and whose submissions are successfully uploaded in the data warehouse are indicated under their respective columns. On the other hand, the WAs who did not submit any alphalist or who have made submissions but the same failed to pass the Bureau's validation requirements are tagged with "X" marks. 2. Exception Report on Un-uploaded Alphalist in the Data Warehouse TAMP and NON-TAMP (Annex "B") The report contains the list of the registered withholding tax agents (WAs) that submitted the prescribed annual and monthly alphalists of employees/payees, but the said alphalists remained in the ITS repository and have not reached the data warehouse due to their failure to pass the second system-validation requirements, more specifically the validity of the Tax Identification Numbers (TINs) of the WAs or zero (0) bytes ( i.e. , the submitted files did not contain any information on the income payees). While the report has basically the same columnar headings as that of the compliance report described in Item No. 1 above, it bears an additional column per form type reflecting the reasons why the uploading to the data warehouse of the specific alphalist has been rejected. 3. Report on Compliance on the Summary Alphalist of Withholding Taxes TAMP and NON-TAMP (For SAWT) (Annex "C") This report basically contains the same information reflected in the "Report on Compliance on the Monthly/Annual Alphalist of Payees/Employees TAMP and NON-TAMP (For Annual Alphalist and MAP)." However, the information reflects the taxpayers' compliance to the submission of Summary Alphalist of Withholding Taxes (SAWT). 4. Exception Report on Un-Uploaded Summary Alphalist of Withholding Taxes in the Data Warehouse TAMP and NON-TAMP (Annex "D") The report contains the list of the registered payees that submitted the prescribed SAWT, but the said alphalists remained in the ITS repository and have not reached the data warehouse due to their failure to pass the second system-validation requirements, more specifically the validity of the Taxpayer Identification Numbers (TINs) of the WAs or zero (0) bytes ( i.e. , the submitted files did not contain any information on the income payees). While the report has basically the same columnar headings as that of the compliance report described in Item No. 1 above, it bears an additional column per form type reflecting the reasons why the uploading to the data warehouse of the specific alphalist has been rejected. 5. Report on Compliance on the Uploaded Monthly/Annual Alphalist of Payees/Employees and SAWT in the Data Warehouse TAMP and NON-TAMP with Registration Issues (Annex "E") In addition to the compliance reports described in Item Nos. 1 and 3 above, this report contains the List of WAs/Payees whose submitted alphalists are successfully uploaded to the data warehouse; but with the following issues: a. The alphalists were found in the data warehouse despite the existence of certain registration issues in the ITS-REG/eTIS-TRS, namely: (1) the tax/form type is not duly registered in the said system; (2) the tax/form type was already "end dated" in the said system, but the taxpayers still filed the alphalists; and, (3) the registration status of the concerned WA/payee in the said system is already C-CANCELLED; and b. Some WAs/payees have submitted the alphalists to the old RDOs but such WA/payees have already transferred to other RDOs before the date of extraction/generation of this report. This report is sorted on a per old RDO basis while the identity of the new RDO is indicated in the remarks column of the report. In compliance report described in Item No. 1, these WAs/payees are tagged with mark "X" as non-compliant with regards to the submission of the alphalist in the old RDO. CHTAIc 6. Report of Transferred WAs/Payees with Uploaded Alphalist in the Data Warehouse (Annex "F") This report, as a supplement to the report in Item No. 5 above, contains the WAs/payees that were transferred to other RDOs but their respective alphalists were already submitted to their respective former home RDOs before the date of extraction/generation of the compliance report described in Item No. 1 above. This supplemental list is sorted on a per current/new RDO basis while the identity of their former home RDO is indicated in the remarks column of the report. However, while these WAs/payees are tagged with mark "X" as non-compliant to the submission of the alphalists in the compliance report described in Item No. 1 above, the supplemental list contains the details on the submission of the alphalists ( i.e. , filenames, dates and exact time of uploading of alphalists) which were actually submitted in the former home RDO and uploaded to the data warehouse. For purposes of preparation of the progress reports prescribed in Item No. 5 hereunder to be submitted by the RDOs, a quarterly updated compliance and exception reports prescribed above shall be generated and transmitted to the concerned RDOs thru email, copy furnished the Chief MOMD, not later than 20th day of the second month immediately following the end of each calendar quarter. In order to ensure that the abovementioned minimal level of taxpayers' compliance, as well as the RDOs' performance on the submission and uploading of alphalists to the data warehouse, are uniformly addressed in an accurate and timely manner, all concerned RDOs and all revenue offices under Large Taxpayer Service shall, upon receipt of the aforementioned reports, shall strictly observe the following guidelines and procedures: 1. Sort the reasons for non-uploading to the data warehouse that are identified in the respective exception reports on un-uploaded alphalists/MAP and SAWT, according to the nature thereof. a. Invalid TIN of Taxpayer/Filer i. Check in the Integrated Tax System-Registration System (ITS-REGS)/Electronic Taxpayer Information System-Taxpayer Registration System (eTIS-TRS) whether or not the taxpayer has a duly registered TIN therein. If there is a duly registered TIN, inform the taxpayer, in writing, of the correct TIN and require the electronic re-submission of the alphalist using the correct TIN; ii. In cases of submission of alphalists through the dedicated email to the RDO, the re-submitted alphalists shall be validated pursuant to Revenue Memorandum Circular (RMC) No. 5-2014. If the prescribed validation requirements have been satisfied, immediately upload the same to the ITS repository through the prescribed FTP facility. Otherwise, immediately inform the taxpayer in writing of any discrepancy for the resolution/correction thereof and require the re-submission of the corrected alphalist. b. Zero (0) bytes content of the alphalists 1. Inform the taxpayer in writing that the Bureau's validation script has detected that the submitted alphalist did not contain any data/information, with the requirement to electronically re-submit the properly filled-up alphalist after the following has been determined: a. MAP A record on the withholding tax payment ( i.e. , BIR Form Nos. 1601E, 1601F and 1600 has been verified in the ITS-Collection Bank Reconciliation System (CBRS)/eTIS-Collection and Remittance Reconciliation System (CRR). b. SAWT There is a record of tax credit claim declared in the annual income tax (BIR Form Nos. 1701/1702) or in the quarterly income tax/VAT return (BIR Form Nos. 1701Q/1702Q/2550Q) submitted by the payee or income recipient, based on verification made with ITS-Return Processing System (RPS)/eTIS-Returns Filing Processing (RFP), or in the manually submitted returns that are not yet encoded in the ITS/eTIS, as the case may be. In cases where there are no withholding tax payments by the WAs/income payors, or the filed annual/quarterly returns by the income payees did not contain any claim for tax credit, as verified from the ITS-CBR/RPS and/or eTIS-CRR/RFP, it shall be deemed that the WAs/income payors have no transaction subject to withholding taxes, or that the income payees did not receive any income subject to withholding taxes, and that the alphalists/SAWTs were submitted for administrative compliance purposes only. Accordingly, the taxpayer shall be informed in writing that the submission of alphalists/SAWT are no longer required under this case pursuant to Revenue Regulations (RR) No. 2-2006. This rule, however, shall not apply in cases of payments of compensation to employees whose income are exempt from withholding taxes in accordance to existing withholding tax regulations. EATCcI In case of submission of alphalists through email, the re-submitted alphalists shall be validated pursuant to RMC No. 5-2014. If the prescribed validation requirements have been satisfied, immediately upload the alphalists to the ITS repository through the prescribed FTP facility. Otherwise, inform the taxpayer in writing on any noted discrepancy for the resolution thereof, and require the re-submission of the corrected alphalist. 2. Segregate the WAs/payees who are tagged with "X" marks from the reports on compliance on annual/monthly alphalist/MAP and SAWT, and perform the procedures prescribed below. a. Segregate from the WAs/payees who are tagged with "X" marks those that are not included in the exception reports on un-uploaded alphalist/MAP and SAWT. b. Check in the RDO's email account dedicated for submission of alphalists created under RMC No. 5-2014 whether or not the remaining WAs/payees who are tagged with "X" marks in the compliance reports, after the segregation procedure described in the preceding paragraph, are still in the RDO's dedicated email account and the same are still pending validation and uploading to the data warehouse. If the files are still in the said email account, perform the necessary validation requirements and immediately upload the same in the ITS repository thru the prescribed FTP facility, after the submitted alphalists have satisfied the validation requirements. For any noted discrepancy, immediately inform the concerned taxpayers, in writing, of the said discrepancy for the resolution thereof and require the electronic re-submission of the corrected alphalist. c. With respect to the other WAs/payees who were not determined to be included among the taxpayers identified in the immediately preceding Item b, determine whether or not these WAs/payees are included in the above-described supplemental report that identified the taxpayers who have actually submitted their alphalists in their former home RDOs. No further action shall be undertaken by the RDOs for taxpayers that are already included in the said supplemental report. However, in case of taxpayers that are not included therefrom, they shall be deemed to have not submitted the prescribed alphalist. Accordingly, these taxpayers shall be immediately required, in writing, to submit the prescribed alphalists. d. In cases where the failure of the WA/payee to submit the prescribed alphalists is due to erroneously registered tax/form type, verify/validate whether or not the concerned taxpayer has taxable transactions subject to withholding tax. If there are no taxable transactions, except in cases of payments of compensation to minimum wage employees that are exempt from withholding taxes, in accordance to the existing withholding tax regulations, require the concerned taxpayer to submit an updated BIR Form No. 1905 to end-date the applicable tax/form type in the ITS-REG/eTIS-TRS. 3. Sort the issues/discrepancies on the ITS-REG/eTIS-TRS registration details identified in the compliance report described in Item No. 5 according to the nature of such issues/discrepancies, and undertake the applicable procedures, as follows: a. Not Registered to tax/form type Check the existing records ( e.g. , applicable tax returns, financial statements, etc.) previously filed by the concerned WAs/Payees with the RDO to determine whether or not there are transactions that are subject to withholding tax ( i.e. , compensation, expanded, final and government money payments). If there are taxable transactions, require the concerned taxpayers, in writing, to submit an updated BIR Form No. 1905, for purposes of registration of the appropriate tax/form type. However, if there is no taxable transaction, immediately inform, in writing, the taxpayer that the submission of alphalists/SAWT are no longer required under this case pursuant to Revenue Regulations (RR) No. 2-2006; provided, further, that this rule shall not apply in cases of payments of compensation to employees whose income are exempt from withholding taxes in accordance to existing withholding tax regulations. Moreover, it shall be further informed that in the event that taxable transactions shall arise in the future, the immediate registration of the proper tax/form type and the submission of the applicable alphalists shall still be required from the concerned taxpayers. DHITCc b. TP is registered in RDO <new RDO> Compliance on the submission of the alphalists of taxpayers that transferred from one RDO to another shall be checked from the Report of Transferred WAs/Payees with Uploaded Alphalists to the Data Warehouse mentioned in Item No. 2.c hereof to be provided by the concerned RDCs. Accordingly, no further action shall be made by the RDO where the concerned taxpayers are currently registered. c. Tax Type is end-dated effective <filing end date> Check the registration information of the WAs/payees in the ITS-REG/eTIS-TRS and with the filed documents ( e.g. , TCL1, BIR Form No. 1905, LOAs issued for taxpayers retiring from business, etc.) for registration updates to determine whether or not the end-dating of the tax/form type was proper. If the end-dating thereof was erroneously made because the concerned taxpayers are still filing the prescribed alphalists, they shall be required to re-register the proper tax/form type. d. Taxpayer's registration code is inactive Check the taxpayer's actual status in the ITS-REG/eTIS-TRS and the existing documents that authorized the tagging of the taxpayers' status to "C-CANCELLED" to prove whether or not the said status as indicated in the compliance report is valid. If the same is determined to be erroneous, the taxpayers' status shall be reverted to "A-ACTIVE." If reason for the tagging of the taxpayers' registration status to "C-CANCELLED" was due to existence of multiple TINs and the concerned taxpayers have erroneously submitted the prescribed alphalists using the cancelled TINs, these taxpayers shall be immediately notified, in writing, to resubmit the prescribed alphalists using their correct active TINs. 4. All taxpayers who failed to submit the prescribed alphalists shall be immediately imposed with the appropriate penalties. Moreover, while the taxpayers may have actually submitted the alphalists but the same failed to satisfy the validation requirements, a separate penalty shall be imposed against the taxpayer for each incorrectly accomplished and submitted alphalist, pursuant to the provisions of Revenue Memorandum Circular No. 5-2014. 5. A quarterly progress reports (Annex "G" & "H") on the results of the actions undertaken on these compliance, exception and supplemental reports shall be prepared and submitted to the Collection Service, Attention: The Chief, Miscellaneous Operations Monitoring Division not later than 30th day of the second month immediately following the end of each calendar quarter, for monitoring purposes. The progress report on the results of the actions taken on the compliance and exception reports transmitted to all concerned RDOs on or before September 30, 2016 as mentioned in the third paragraph of this OM shall be submitted thru email to MOMD on or before October 31, 2016 using the same format prescribed in the preceding paragraph. 6. In order to minimize future incidents of unsuccessful uploading of alphalists to the data warehouse and continuous incorrect tagging of taxpayers as non-compliant in the submission of alphalists, the registration information in the ITS-REGS/eTIS-TRS of all registered WAs/payees under your respective jurisdiction shall be continuously cleansed, updated and/or validated pursuant to the existing rules and procedures ( e.g. , determination of the erroneously registered form/tax type(s), uploading of pre-generated TINs that are not yet captured in the ITS-REG/eTIS-TRS). 7. The RDOs' dedicated email accounts for alphalists that were previously configured in the desk top personal computers (PCs) of all the concerned Collection Section Chiefs of RDOs shall be opened daily and checked for newly emailed alphalists for purposes of immediate validation thereof and subsequent uploading to the data warehouse thru the FTP facility. In cases where these desktop PCs where such email accounts are configured can no longer be determined, such instance shall be immediately reported to the Bureau's Help Desk in order to secure technical assistance from the concerned RDCs for the reconfiguration of the email account to the Collection Section Chiefs' desktop PCs. Further, it shall be ensured that these dedicated email accounts shall only be used for alphalist-related activities ( e.g. , receiving the taxpayers' emailed alphalists, uploading the same to the data warehouse, and the sending out of feedbacks to concerned taxpayers whether or not the emailed alphalists have passed the validation requirements, etc.), and not for any other purposes. Considering that details of the aforesaid compliance and exception reports are segregated to Taxpayer Account Management Program (TAMP) and Non-TAMP taxpayers, actions on TAMP taxpayers shall be given utmost priority to ensure immediate compliance in the submission of the prescribed alphalists by this group of taxpayers. With respect to Non-TAMP taxpayers, however, and notwithstanding the aforementioned policy, the prescribed actions thereon shall nevertheless be immediately undertaken to enable the full monitoring of compliance by all concerned taxpayers in the submission of the prescribed alphalists. cEaSHC It is likewise reminded that the submission of alphalist shall be made only thru the electronic modes of submission pursuant to the provisions of RR 1-2014, as clarified under RMC No. 5-2014. Accordingly, the manual submission thereof by taxpayers shall no longer be allowed. Further, if the taxpayers have already electronically submitted their respective alphalist, the submission of the hard copies thereof to the concerned RDOs/LTS Offices shall no longer be required from the concerned taxpayers. The compliance and exception reports on the level of taxpayers' compliance with the submission of alphalists for taxable year 2016 and thereafter shall be regularly generated by the Information Systems Group and the same shall be electronically transmitted to the concerned RDOs, on or before the 30th day of the second month immediately following the end of each calendar quarter. The guidelines and procedures in handling and monitoring the disposition of these compliance and exception reports will be covered by a separate revenue issuance. This Operations Memorandum Order shall take effect immediately. (SGD.) NESTOR S. VALEROSO DCIR, Operations Group Officer-in-Charge