Creation of a Special Audit Group which will Examine the Income Tax Returns of High-Income Executives

August 3, 1976 REVENUE ADMINISTRATIVE ORDER NO. 02-76 SUBJECT : Creation of a Special Audit Group which will Examine the Income Tax Returns of High-Income Executives TO : All Concerned. BACKGROUND AND PURPOSE 1. Heretofore, examination of the income tax returns of individual taxpayers has been conducted either by the Withholding Tax Division or by the Office Audit Section of the Assessment Branches of the different Regional Offices. Included among these returns are those of high-income executives. 2. In this connection, and in order that the Bureau may be able to established a pattern for the taxation of these taxpayers based on data gathered on the different items constituting their income and the nature of their deductions, there is hereby created a Special Audit Group. FUNCTIONS AND DUTIES 3. The Special Audit Group shall have the following functions and duties: a. To examine the income tax returns of high-income executives in the public and private sectors; b. To ascertain the degree of their tax compliance; c. To gather statistics on the nature and extent of income received by each and deductions claimed; d. To conduct a study on the deductions availed of and determine the ratio of the deductions claimed to gross income reported; and e. To submit recommendations on possible legislation that will limit or control deductions. ORGANIZATION 4. The Special Audit Group shall have the following personnel complement: a. One Chief b. Two Assistant Chiefs who shall also act as team leaders c. Twenty revenue examiners d. Two stenographers e. Two clerk-typists and f. One messenger-janitor 5. Except for the stenographers, clerks, and messenger, all the personnel of the Group will be assigned in a concurrent capacity and shall be drawn from any work unit in the National Office or in Revenue Regions No. 4-A and No. 4-B. Appropriate assignment orders will be issued in implementation of this Order. INVESTIGATION AND REPORTING 6. Unless otherwise ordered by the Commissioner of Internal Revenue, every tax investigation, examination, or verification to be undertaken by the Special Audit Group shall be covered by a Letter of Authority and the corresponding Letter of Confirmation, both of which shall be prepared for the signature of the Commissioner of Internal Revenue. The service of the Letter of Authority, the conduct and termination of a tax investigation, and the reporting of a tax case shall be governed by existing rules, circulars, orders and regulations on the matter. All reports of investigation shall be subject to the final approval of the Commissioner of Internal Revenue. aisa dc EFFECTIVITY 7. This Order shall take effect immediately. EFREN I. PLANA Acting Commissioner TAN-1456-040-3