Organization and Functions of the Assessment Service Including the Divisions Under it Down to Section Level

February 9, 2009 REVENUE ADMINISTRATIVE ORDER NO. 004-09 SUBJECT : Organization and Functions of the Assessment Service Including the Divisions Under it Down to Section Level TO : All Internal Revenue Officials and Employees I. OBJECTIVE: This Order defines the organization and functions of the Assessment Service including its divisions and their sections pursuant to the Rationalization Plan of the Bureau. STcHDC II. ORGANIZATION: The Assessment Service shall be under the direct supervision of the Deputy Commissioner for Operations Group. It shall be headed by an Assistant Commissioner and shall be composed of the following divisions with their respective sections: A. Assessment Programs Division 1. Audit Programs Section 2. Programs Monitoring, Review and Evaluation Section 3. Audit Procedures and Techniques Section B. Audit Information, Tax Exemption and Incentives Division 1. Tax Exemption and Incentives Section 2. Third Party Information Section 3. Letter Notice Monitoring Section C. Asset Valuation and Performance Monitoring Division 1. Zonal Valuation Monitoring Section 2. Assessment Performance Monitoring Section 3. Data Analysis and Review Section D. VAT Credit Audit Division 1. Field Evaluation Section 2. Data Verification and Processing Section E. Audit Review Division 1. Tax Credit/Refund Review Section 2. VAT Credit/Refund Review Section 3. Tax Audit Review Section III. FUNCTIONS: ASSESSMENT SERVICE 1. Performs staff, advisory and consultative functions relative to assessment of taxes, asset valuation, assessment performance, management of the Third-Party Information Program and Reconciliation of Listing for Enforcement (RELIEF) Program; monitoring of availments of tax incentives/exemptions by duly registered enterprises/government agencies, instrumentalities, government-owned and controlled corporations, including tax-exempt entities and individuals; processing of applications for VAT zero-rating except those of large taxpayers; review of tax investigation reports on claims of tax credit/refund and claims for VAT Input tax credits; 2. Formulates policies and administers work programs, standards, guidelines and procedures including forms relative to the abovementioned functions; 3. Provides policy guidance and operational directions to all divisions under the Service relative to the abovementioned functions; 4. Administers a nationwide assessment program; 5. Reviews and approves reports of investigation submitted by Regional Offices covering claims for tax credit/refund within the set threshold and claims for tax credit recommended by the DOF-One-Stop Shop (OSS) Center except claims for erroneous payments; 6. Recommends tax legislation, regulations, and other revenue issuances for the improvement of tax administration relative to assessment matters; SDcITH 7. Coordinates with proper offices in the implementation of the abovementioned functions; 8. Monitors, evaluates and improves programs and activities under the responsibility of the Service; 9. Reviews, recommends and/or approves all reports and other actions of the divisions under the Service; 10. Consolidates and/or prepares prescribed reports for submission to the offices concerned; and 11. Performs such other related functions as may be assigned. A. Assessment Programs Division 1. Formulates policies, work programs, standards, guidelines and procedures including forms relative to assessment activities audit planning and review of audit reports emanating from the field offices and One Stop Shop (OSS); 2. Coordinates with the proper offices in the implementation of the abovementioned functions; 3. Prepares prescribed reports for submission to the offices concerned; 4. Prepares revenue issuances relative to the abovementioned functions; and 5. Performs such other related functions as may be assigned. 1. Audit Programs Section 1.1. Develops audit selection criteria and prepares the annual audit program including audit policies and workload standards for the examination and review functions of the field offices; 1.2. Conducts study and analyses of data on tax and information returns as well as reports on economic events, industry trends and business activities in the country prepared by concerned offices, for risk assessment and preparation of the annual national audit plan, including selection criteria, audit policies, workload standards and reporting requirements for the examination and review functions of the field office; 1.3. Coordinates with Large Taxpayers Service, Excise Taxpayers Service, Enforcement Service and other investigating units to ensure that their respective assessment programs are consistent with the overall assessment program of the Bureau; 1.4. Provides direction to field offices in the proper implementation of assessment guidelines, procedures, standards and techniques; 1.5. Reviews, provides comments and maintains the contents of the Portal System on income tax, percentage tax and value-added tax; and 1.6. Performs such other functions as may be assigned. 2. Programs Monitoring, Review and Evaluation Section 2.1. Monitors, consolidates and evaluates work plans and assessment reports of field offices to determine compliance with existing assessment laws, rules and regulations, policies, guidelines and procedures and to measure performance with set programs; 2.2. Reviews and recommends improvements to the reporting system of field offices relative to the assessment programs and activities; CHDaAE 2.3. Evaluates profile of identified industries based on benchmarking reports submitted by the regional offices and concerned offices in the National Office; 2.4. Recommends actions on the result of the evaluation of field offices' implementation of assessment programs and enforcement of assessment laws, rules and regulations and adherence to policies, guidelines and procedures; 2.5. Recommends for punitive action of revenue officers habitually delayed in the submission of required reports; 2.6. Provides top management with periodic reports on the monitoring, review and evaluation of assessment activities and programs; 2.7. Recommends assessment/technical trainings designed to improve the quality of assessment functions, in coordination with the Training Management Division; and 2.8. Performs such other related functions as may be assigned. 3. Audit Procedures and Techniques Section 3.1. Develops/updates audit procedures and techniques for improving the quality of tax audit, including the audit of specialized industries, interrelated taxpayers, automated accounting system and new trends on recording business transactions; 3.2. Maintains and updates the assessment manuals and handbooks for the use of the field offices; 3.3. Maintains the Audit System and Tax Credit and Refund System (TCRS) specifically on the requirements for process improvement, Operations Manual including job aids, templates review, enhancements, correspondence, reports review and maintenance of pertinent Codes Table; HaTSDA 3.4. Provides assistance to field offices in the proper implementation of assessment guidelines, procedures, standards and techniques; 3.5. Prepares reports for submission to the Service and top management as a result of the above functions; and 3.6. Performs such other related functions as may be assigned. B. Audit Information, Tax Exemption and Incentives Division 1. Formulates policies, work programs, standards, guidelines and procedures including forms relative to the following: a. Monitoring of tax exemption and evaluation of availment of tax incentives by entities duly registered with the Board of Investments (BOI), Philippine Export Zone Authority (PEZA) and Subic Bay Metropolitan Authority (SBMA); b. Management of Third-Party Information Program and Reconciliation of Listing for Enforcement (RELIEF) System; cITAaD 2. Maintains the Case Monitoring System (CMS) and Returns Processing Systems (RPS), specifically on the requirements for process improvements; 3. Coordinates with the proper offices in the implementation of the abovementioned functions; 4. Prepares prescribed reports for submission to the offices concerned; 5. Prepares revenue issuances relative to the abovementioned functions; and 6. Performs such other related functions as may be assigned. 1. Tax Exemption and Incentives Section 1.1. Coordinates with concerned regulatory agencies on matters pertaining to the processing and monitoring of availments of tax exemptions/incentives, as well as the issuance of favorable endorsements for qualification to VAT zero-rating except those of large taxpayers; 1.2. Conducts post-audit review of evaluation reports relative to the applications for the availment of incentives filed by BOI registered enterprises; TCaEAD 1.3. Gathers and collates data on revenues waived from existing fiscal incentives laws from the Revenue District Offices (RDOs) for transmittal on a yearly basis to the National Tax Research Center (NTRC) specifically the availment of fiscal incentives through the BIR; 1.4. Monitors and evaluates the availment of tax incentives by entities duly registered with the Board of Investments (BOI), Philippine Export Zone Authority (PEZA) and Subic Bay Metropolitan Authority (SBMA); 1.5. Processes and approves applications for VAT zero-rating of effectively zero-rated transactions except applications of large and excise taxpayers; 1.6. Provides top management with periodic reports as a result of the above functions; and 1.7. Performs such other related functions as may be assigned. 2. Third Party Information Section 2.1. Provides inputs for the preparation of revenue issuances relative to the implementation of TPI Program; 2.2. Manages and maintains Third Party Information (TPI) Program and all other related activities; 2.3. Maintains and adopts a system of information retrieval and analysis through access to records of government and private entities as authorized under Sec. 5 of the NIRC of 1997 and other applicable laws and regulations; EcASIC 2.4. Conducts continuing analysis and evaluation of the TPI Program in coordination with the concerned offices under the Information Systems Group and recommends enhancements whenever necessary; 2.5. Defines the parameters for the issuance of Letter Notices to taxpayers deliberately misleading their tax returns; 2.6. Reviews periodically existing Memorandum of Agreement (MOA) and Implementing Rules and Regulations (IRR) on the exchange of information and recommends amendments/updates to extant provisions therein or expand the scope and contents as may be necessary; 2.7. Explores areas of cooperation or collaboration with other government agencies for the effective implementation of Section 5 (B) of the NIRC of 1997, as amended; 2.8. Provides top management with periodic reports as a result of the above functions; and 2.9. Performs such other related functions as may be assigned. 3. Letter Notice Monitoring Section 3.1. Provides third party information/data in the Data Warehouse Facility to authorized investigating offices; 3.2. Monitors activities of field offices in the utilization of TPI and other related activities; 3.3. Monitors and evaluates collection/assessment and status of LNs resulting from computerized matching of TPI against tax declarations of taxpayers; 3.4. Provides top management with periodic reports on the results of compliance relative to the above functions; and 3.5. Performs such other related functions as may be assigned. C. Asset Valuation and Performance Monitoring Division 1. Formulates policies, work programs, standards, guidelines and procedures including forms relative to zonal valuation, assessment performance monitoring and data analysis and review; 2. Coordinates with the proper offices in the implementation of the abovementioned functions; 3. Prepares prescribed reports for submission to the offices concerned; 4. Prepares revenue issuances relative to the abovementioned functions; and 5. Performs such other related functions as may be assigned. 1. Zonal Valuation Monitoring Section 1.1. Acts as secretariat to the Executive Committee on Real Property Valuation (ECRPV) and Technical Committee on Real Property Valuation (TCRPV) in the establishment/updating of zonal valuation; 1.2. Requests Revenue District Offices (RDOs) to update/revise the schedule of zonal values of real properties to come up with the fair reasonable market values of the properties under their respective jurisdiction; 1.3. Reviews/encodes the proposed schedule of zonal values submitted by the Sub-Technical Committee on Real Property Valuation (STCRPV) before deliberation and evaluation by the TCRPV; 1.4. Coordinates and assists the STCRPV and TCRPV in the conduct of public hearings on zonal values of real property under the jurisdiction of Revenue District offices; 1.5. Prepares/finalizes after public hearing the proposed zonal values and all other documents for the approval of the ECRPV and Department of Finance (DOF); DcCHTa 1.6. Creates and updates the newly approved zonal valuation table to be uploaded to ITS-Database National Office Management Information System (NOMIS) for purposes of computing any internal revenue tax arising from sales, exchanges or other disposition of real properties; 1.7. Receives, studies and evaluates taxpayer's request for assignment of zonal values and/or revaluation of approved zonal value of real properties for appropriate action by the TCRPV; 1.8. Participates in the conduct of ocular inspection of real properties relative to the requests for assignment of zonal values and/or revaluation; 1.9. Assists the TCRPV in the resolution of appealed cases involving approved zonal values and controversies as to the valuation issues in the Regional and District Offices; ITCcAD 1.10. Prepares letters of communication to TCRPV members, Revenue District Offices concerned and to taxpayers relative to appealed cases for resolution; 1.11. Monitors, evaluates and consolidates reports of RDOs on collection of capital gains, documentary stamps and other taxes derived from transfer of real properties, shares of stocks and other assets as well as reports on real property transactions from the Land Registration Authority (LRA) and BIR-LRA verifiers for submission to top management; 1.12. Prepares prescribed reports for submission to the offices concerned; and 1.13. Performs such other related functions as may be assigned. 2. Assessment Performance Monitoring Section 2.1. Collates, tabulates and analyzes statistical data on revenue assessment and collection through enforcement activities; 2.2. Recommends for punitive action revenue officers habitually delayed in the submission of required reports; IcHDCS 2.3. Manages and maintains the Letter of Authority Monitoring System (LAMS) to provide updates on status as well as collection/assessments on Letters of Authority (LAs) assigned to the RDOs; 2.4. Develops and recommends policies, guidelines and procedures in the automation of Tax Verification Notice (TVN) Monitoring System; 2.5. Maintains the operational aspects of Case Monitoring System; and 2.6. Performs such other related functions as may be assigned. 3. Data Analysis and Review Section 3.1. Sets-up and maintains data on real property transactions of corporations and individuals to serve as inputs in establishing zonal valuation of real properties; 3.2. Reviews tax returns involving transfers of real properties (capital gains tax, estate and donor's tax) with reported gross sales, estate and gifts of five million pesos (P5M) and above except those involving erroneous/illegal collection of taxes and tax fraud cases; 3.3. Reviews, analyzes and monitors reports on issuance of Certificates Authorizing Registration (CARs)/Tax Clearance Certificates (TCLs) and results of property transactions submitted by Revenue District Offices and Regional Offices to determine adherence to the guidelines and procedures in the implementation of revenue issuances on property valuation and transfers; AHDTIE 3.4. Collates assessment reports/data of all assessment units for the purpose of evaluating national, regional and district assessments; 3.5. Provides top management with periodic reports as a result of the above functions; and 3.6. Performs such other related functions as may be assigned. D. VAT Credit Audit Division 1. Formulates policies, work programs, standards, guidelines and procedures including forms relative to field audit/verification of VAT credit claims filed in the DOF-OSS Center; 2. Refers to Revenue District Office, through the Revenue Regional Director, discrepancies found during field audit/verification of VAT credit claims; TAaCED 3. Coordinates with the proper offices in the implementation of the abovementioned functions; 4. Prepares prescribed reports for submission to the offices concerned; 5. Prepares revenue issuances relative to the abovementioned functions; and 6. Performs such other related functions as may be assigned. 1. Field Evaluation Section 1.1 Conducts field audit/verification of VAT credit claims of direct exporters filed at the DOF-OSS Center; 1.2 Pursues third party verification and access to records to validate VAT information declared by claimants; 1.3 Prepares evaluation reports, including narrative memorandum report on the result of field audit/verification conducted; 1.4 Recommends appropriate action on the results of audit/verification, such as the recommendation for issuance of Tax Credit Certificate or denial of claim, if warranted; 1.5 Prepares and submits periodic reports; and 1.6 Performs such other related functions as may be assigned. 2. Data Verification and Processing Section 2.1 Receives and records claimant's application from DOF-OSS Center; 2.2 Conducts verification in the Integrated Tax System on tax returns data, tax payments/remittances and VAT registration; DECcAS 2.3 Creates and maintains a database of VAT credit of regular claimants as well as their suppliers; 2.4 Prepares and records issuance of Tax Verification Notice (TVN) or equivalent authority for the investigation of claims for VAT credits; 2.5 Maintains record book and files of documents, endorsement, evaluation/audit reports and other correspondence received and submitted by the Division; 2.6 Monitors and keeps track of tax cases handled by the Division; 2.7 Prepares and submits periodic reports; and 2.8 Performs such other related functions as may be assigned. E. Audit Review Division 1. Formulates policies, work programs, standards, guidelines and procedures including forms relative to review of tax investigation reports on claims of tax credit and refund processed and recommended by Regional Offices and the DOF-OSS Center; 2. Develops standards, guidelines and procedures in the review of cases involving tax credit and refund; 3. Recommends policies, guidelines, procedures and techniques in the investigation of taxpayer's tax liabilities in relation to claims for tax credit/refund; 4. Monitors and keeps track of tax cases handled by the Division; 5. Coordinates with the proper offices in the implementation of the abovementioned functions; 6. Prepares prescribed reports for submission to the offices concerned; 7. Prepares revenue issuances relative to the abovementioned functions; and 8. Performs such other related functions as may be assigned. 1. Tax Credit/Refund Review Section 1.1 Monitors the issuance of Tax Credit Certificates/Refunds issued by the BIR; 1.2 Reviews and evaluates tax audit reports recommended by Regional Directors involving claims for tax credit/refund of any internal revenue tax, amounting to one million pesos (P1,000,000.00) and above (factual issues) and ten million pesos (P10,000,000.00) and above (factual and legal issues); 1.3 Prepares reports on the results of review and evaluation and recommends appropriate action for the approval of ACIR, Assessment Service and/or higher authorities; 1.4 Creates a database on the results of the aforementioned functions; 1.5 Prepares accomplishment reports and other periodic reports for submission to Assessment Service and other concerned offices; and 1.6 Performs such other related functions as may be assigned. 2. VAT Credit/Refund Review Section 2.1 Reviews and evaluates tax audit reports submitted by Tax Revenue Group and processed in the DOF-OSS Center on claims for excess VAT input tax credits filed by direct exporters regardless of amount; 2.2 Prepares reports on the results of review and evaluation and recommends appropriate action for the approval of ACIR, Assessment Service and/or higher authorities; TAHcCI 2.3 Creates a database on the results of the aforementioned functions; and 2.4 Performs such other related functions as may be assigned; 3. Tax Audit Review Section 3.1 Conducts review of tax cases closed in Revenue District Offices and approved by Regional Directors, such as, but not limited to cases with Letter of Authority, Tax Verification Notice and Letter Notice: a. tax credit/refunds granted amounting to less than one million pesos (except large taxpayers); b. Preliminary/final assessment; c. Paid and terminated cases with Termination Letter; d. ONETT cases; and e. Other closed and approved tax cases; 3.2 Creates a database on results of the aforementioned function; 3.3 Reviews actions made by Regional Offices on protested cases involving factual issues resulting to reduction and/or cancellation of assessment within the set threshold, and results of reinvestigation; 3.4 Prepares reports on the results of review and evaluation on the aforementioned cases and recommend appropriate action for the approval of ACIR, Assessment Service and/or higher authorities; and 3.5 Performs such other related functions as may be assigned. IV. REPEALING CLAUSE: All issuances or portions thereof not consistent with the provisions of this Order are hereby repealed or amended accordingly. V. EFFECTIVITY: This Order shall take effect immediately. (SGD.) SIXTO S. ESQUIVIAS IV Commissioner of Internal Revenue Approved: (SGD.) MARGARITO B. TEVES Secretary of Finance