Further Amending RAO No. 4-77, as Previously Amended by RAO No. 7-82, Dated July 2, 1982, Prescribing the Office Audit Procedure in Revenue Regional Offices

February 9, 1987 REVENUE ADMINISTRATIVE ORDER NO. 04-87 SUBJECT : Further Amending RAO No. 4-77, as Previously Amended by RAO No. 7-82, Dated July 2, 1982, Prescribing the Office Audit Procedure in Revenue Regional Offices TO : All Internal Revenue Officers, Employees and Others Concerned In view of the need for accelerating the examination of individual income and business returns, in the lower category of cases within the jurisdiction of Office Audit Sections and in order to broaden the authority of said offices to investigate cases within specified limits conformably with the objectives of insuring a fair, just and expeditious termination of cases therein, Revenue Administrative Order No. 4-77, dated April 25, 1977, as amended by RAO 7-82 is hereby further amended, as follows: "IV. Scope of Work . (a) Jurisdictional amounts and nature of income covered : The Office Audit Section shall examine individual income and business returns, which have been classified for office audit in accordance with the following: Individual Income Tax In Rev. Regions No. 3-A In all Other Returns Showing 3-B, 4-A, 4-B, 4-C, 6-A, Rev. Regions 6-B, 7, 11-B 1. Salary income with or without W-2, and commission income, claiming travelling, representation, and entertainment expenses All All which appear to be excessive or the total amount of which amounts to more than 30% of gross income. 2. Business and With gross receipts of With gross receipts professional income. not more than P200,000. of not more than P100,000. 3. Farming income. With gross receipts of With gross receipts not more than P200,000. of not more than P100,000. 4. Gains and losses from With an aggregate With an aggregate sale or exchange of gross sales of not gross sales of not capital and non-capital more than P200,000. more than P100,000. assets. 5. Rental income. With gross receipts With gross receipts of not more than of not more than P200,000. P100,000. (b) Limitation on investigative authority . Revenue District Officers, Asst. Rev. District Officers, Chiefs and Asst. Chiefs of Branches, as well as other officers occupying similar positions or designations are directed to desist from personally conducting an examination and/or investigation of tax returns, except in the following cases: (a) When his expertise in view of the particular nature of the business is necessary or indispensable, provided he is assisted by an Enforcement Officer assigned in his Office. He may, however, conduct the examination alone if there is no Enforcement Officer assigned thereat. (b) When there are less than three (3) enforcement officers assigned in his Office. VIII. Preparation and Review of Reports . A. The preparation of an office audit report (Annex "Q") is much simpler than that for field audit case. All information is available in the working papers prepared during the interview and only the adjustments which will give rise to a deficiency assessment would be shown in the report form. A "No discrepancy" statement on the report form itself in applicable cases would be sufficient. In all instances, however, the review of field audit reports of investigation covered by Letter of Authority should be given priority. On the other hand, office audit field reports of investigation shall be given second priority. EFFECTIVITY This order shall take effect immediately. (SGD.) BIENVENIDO A. TAN, JR. Commissioner