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

August 7, 2000 REVENUE ADMINISTRATIVE ORDER NO. 07-00 SUBJECT : Organization and Functions of the Assessment Service Including the Divisions Under It Down to Section Level TO : All Internal Revenue Officers and Others Concerned I. OBJECTIVE: This Order defines the organization and functions of the Assessment Service including its divisions and sections pursuant to Executive Order No. 175 dated November 3, 1999 on Organizational Restructuring of the Bureau of Internal Revenue to Improve Administrative Control Over Certain Categories of Taxpayers. 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: AcHSEa 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. Audit Information Section C. Asset Valuation Division 1. Asset Valuation and Appraisal Section 2. Review and Monitoring Section 3. Data Analysis Section III. FUNCTIONS: ASSESSMENT SERVICE shall: 1. Perform staff, advisory and consultative functions relative to assessment, asset valuation, management of the Third-Party Information Program and Reconciliation 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 Contractors' Final Payment Release Certificates; and VAT zero-rating except those of large taxpayers; 2. Develop and administer policies, work programs and prescribed guidelines, standards and procedures relative to the abovementioned functions; 3. Provide policy guidance and operational direction to all divisions under the Service relative to the abovementioned functions; 4. Administer the Tax Credit and Refund System (TCRS), Audit System, operations aspect of the Case Monitoring System (CMS), operations aspect of the Limited Returns Processing System (LRPS), and Zonal Valuation and Profiling functionalities of NO-MIS and Planning and Control System, specifically on the requirements for process improvement; 5. Administer a nationwide assessment program; 6. Review reports of investigation of Excise Taxpayers Service (ETS); 7. Prepare BIR Form 40.00; 8. Prepare and issue pre-assessment notices, letters of demand or assessment notices for duly approved reports of investigation; 9. Prepare and issue Authority to Cancel Assessment (ATCA) when an assessment is cancelled or when a previously assessed deficiency tax is reduced as a result of reinvestigation or a reconsideration requested by the taxpayer; 10. Determine whether a protest on an assessment is meritorious if it merits further factual verification, return to ETS or if needs legal action, refer the same to the Legal Service; 11. Prepare and issue termination/confirmation letters on approved reports of investigation and reinvestigation; 12. Review reports of investigation submitted by Regional Offices covering claims for tax credit/refund within the set threshold except claims for erroneous payments; 13. Review actions made by Regional Offices on protested cases involving factual issues resulting to reduction and/or cancellation of assessment within the set threshold; 14. Determine compliance and measure performance with set programs; 15. Manage the Third-Party Information Program and Reconciliation Listing for Enforcement (RELIEF) Program; 16. Monitor the issuance of Tax Credit Certificates/refunds issued by the BIR and evaluate availments of tax incentives/exemptions by duly registered enterprises/government agencies, instrumentalities, government-owned and controlled corporations including tax-exempt entities and individuals under the pertinent provisions of the Tax Code and other special laws; 17. Conduct verification of tax returns and other documents of selected taxpayers availing of tax exemptions and other incentives; 18. Create and update the zonal valuation table; 19. Recommend tax legislation, regulations, and other revenue issuances for the improvement of tax administration relative to assessment matters; 20. Coordinate 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; 21. Develop, update and maintain a reference information system on the laws, rules, regulations and revenue issuances pertinent to and affecting assessment activities; 22. Coordinate with proper offices in the implementation of the abovementioned functions; 23. Monitor, evaluate and improve programs and activities under the responsibility of the Service; 24. Review, recommend and/or approve all reports and other actions of the divisions under the Service; 25. Consolidate and/or prepare prescribed reports for submission to the offices concerned; and 26. Perform such other related functions as may be assigned. A. Assessment Programs Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures relative to assessment activities and review of audit reports emanating from the field offices; 2. Conduct study, research and analysis for the development of audit procedures and techniques for improving the quality of tax audit; 3. Review and recommend improvements to the reporting system of field offices relative to the assessment programs and activities; 4. Coordinate 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; 5. Provide assistance to field offices in the proper implementation of assessment guidelines, procedures, standards and techniques; 6. Develop the audit selection criteria and prepare the annual audit program; HETDAC 7. Prepare, maintain and update assessment manuals and handbooks; 8. Maintain the Tax Credit and Refund System (TCRS) and Audit System on the requirements for process improvement; 9. Monitor, review and evaluate the implementation of assessment programs and procedures by field offices; 10. Develop, update and maintain a reference information system on the laws, rules, regulations and revenue issuances pertinent to and affecting assessment activities; 11. Recommend 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; 12. Recommend assessment/technical trainings designed to improve the quality of assessment functions, in coordination with the Training Management Division; 13. Coordinate with the proper offices in the implementation of the abovementioned functions; 14. Prepare prescribed reports for submission to the offices concerned; 15. Prepare revenue issuances relative to the abovementioned functions; and 16. Perform such other related functions as may be assigned. 1. Audit Programs Section shall: 1.1. Develop and recommend policies, work programs, standards, guidelines and procedures relative to assessment programs and activities; 1.2. Develop audit selection criteria and prepare the annual audit program including audit policies and workload standards for the examination and review functions of the field offices; 1.3 Prepare assessment-related revenue issuances as necessary; 1.4. Develop, update and maintain a reference information system on the laws, rules, regulations and revenue issuances pertinent to and affecting assessment activities; 1.5. Coordinate 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; 1.6. Prepare reports for submission to the Service and to top management as a result of the above functions; and 1.7. Perform such other functions as may be assigned. 2. Programs Monitoring, Review and Evaluation Section shall: 2.1. Conduct field visitations and evaluation of assessment activities to determine the extent of compliance of Regional and District Offices with existing rules and regulations, policies, guidelines and procedures; 2.2. Monitor, consolidate and evaluate 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; 2.3. Recommend 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; 2.4. Provide inputs to the other sections within the division for the improvement of audit programs, procedures and techniques based on its evaluation and monitoring of the performance of field offices; 2.5. Provide top management with periodic reports on the monitoring, review and evaluation of assessment activities and programs; 2.6. Recommend assessment/technical trainings designed to improve the quality of assessment functions, in coordination with the Training Management Division; and 2.7. Perform such other related functions as may be assigned. 3. Audit Procedures and Techniques Section shall: 3.1. Develop/update 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. Maintain and update the assessment manuals and handbooks for the use of the field offices; 3.3. Maintain the Tax Credit and Refund System (TCRS) and Audit System specifically on the requirements for process improvement, Operations Manual including job aids, templates review, enhancements, correspondence, reports review and maintenance of pertinent Codes Table; 3.4. Conduct visitation of ITS RDOs, Assessment Divisions and Revenue Data Centers to determine problems or issues in relation to the Tax Credit and Refund and Audit Systems; 3.5. Provide assistance to field offices in the proper implementation of assessment guidelines, procedures, standards and techniques; 3.6. Prepare reports for submission to the Service and to top management as a result of the above functions; and 3.7. Perform such other related functions as may be assigned. B. Audit Information, Tax Exemption and Incentives Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures relative to the monitoring of tax exemption; evaluation of availments of tax incentives; management of Third-Party Information Program, Reconciliation Listing for Enforcement (RELIEF) Program and audit information; processing of applications for Contractors' Final Payment Release Certificates; and VAT zero-rating except those applications of large taxpayers; 2. Monitor tax exemptions, issuance of tax credit certificates/refunds by the BIR and evaluate availments of tax incentives by duly registered enterprises/government agencies, instrumentalities, government-owned and controlled corporations, including tax-exempt entities and individuals as well as the issuance of Contractors' Final Payment Release Certificates under the pertinent provisions of the Tax Code and other special laws; 3. Verify compliance by entities enjoying tax exemptions and/or incentives with the terms and conditions embodied in the general or special laws granting such exemptions and/or incentives; 4. Coordinate with concerned regulatory agencies on matters pertaining to the monitoring of tax exemptions and evaluation of availments of tax incentives, as well as issuance of favorable endorsements for qualification to VAT zero-rating except those of large taxpayers; 5. Conduct verification of tax returns and other documents of selected taxpayers availing tax exemptions and/or incentives; 6. Conduct review and evaluation of tax credit certificates granted by external agencies arising from availment of tax exemptions/incentives; 7. Gather, collate, analyze and evaluate data on duly registered enterprises enjoying tax incentives and extent of tax exemptions by government agencies and instrumentalities and tax-exempt entities and individuals; 8. Verify and process applications for Contractors' Final Payment Release Certificate of DPWH contractors based in Metro Manila for the approval and signature of higher authority, and monitor the approval of all similar applications filed in the district offices; 9. Process and approve applications for VAT zero-rating of effectively zero-rated transactions except applications of large taxpayers; 10. Manage and maintain the Audit and Third-Party Information Program (TPI) and the Reconciliation Listing for Enforcement Programs; 11. Maintain and adopt 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; 12. Provide audit and third-party information for use of top management and other concerned offices; 13. Monitor, process and evaluate Revenue Officer's Audit Reports (BIR Form No. 1717/0500 series) and other related assessment reports; 14. Maintain the operations aspect of Case Monitoring System (CMS), operations aspect of the Limited Returns Processing System (LRPS), specifically on the requirements for process improvement, Operations Manual including job aids, templates review, enhancements, correspondence, reports review and maintenance of pertinent Codes Table; 15. Maintain the NOMIS Planning and Control System specifically Profiling functionalities on the requirements for process improvement, relevant documentation including Computer Based Training (CBT), Manual Procedures Guide (MPG) and job aids, templates review, enhancements, correspondence, reports review and maintenance of pertinent Codes Table; 16. Coordinate with the proper offices in the implementation of the abovementioned functions; 17. Prepare prescribed reports for submission to the offices concerned; CHIEDS 18. Prepare revenue issuances relative to the abovementioned functions; and 19. Perform such other related functions as may be assigned. 1. Tax Exemption and Incentives Section shall: 1.1. Develop and recommend policies, work programs, standards, guidelines and procedures relative to the monitoring of tax exemptions and evaluation of availments of tax incentives by duly registered enterprises/government agencies, instrumentalities, government-owned and controlled corporations including tax-exempt entities and individuals; 1.2. Formulate/improve policies and procedures on the processing of applications and monitoring of issuance of Contractors' Final Payment Release Certificates filed by government contractors; 1.3. Gather and consolidate reports on availment of incentives/exemptions of government agencies and instrumentalities including government-owned and controlled corporations and registered tax-exempt private entities and individuals; 1.4. Create, maintain and update records of government agencies and instrumentalities and government-owned and controlled corporations including tax-exempt private entities and individuals with tax exemptions; 1.5. Verify compliance by government agencies and instrumentalities/private entities and individuals enjoying tax exemptions and/or incentives with the terms and conditions embodied in the general or special laws granting such exemptions/incentives; 1.6. Conduct verification of tax returns and documents of government agencies and instrumentalities and-government-owned and controlled corporations/private entities and individuals availing of tax exemptions/incentives; 1.7. Monitor the availment of exemptions by tax-exempt private corporations and evaluate availment of tax incentives by private enterprises duly registered with the Board of Investments (BOI), Philippine Export Zone Authority (PEZA), Philippine Export Board and other similar agencies; 1.8. Monitor the issuance/grant of Tax Credit Certificates/refunds by the BIR and evaluate issuance/grant of the same by other external agencies including the issuance of Certificates of Entitlement to Income Tax Holiday by the BOI, PEZA and other external agencies; 1.9. Coordinate 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; 1.10. Recommend action to top management on the application for tax exemption of government agencies, instrumentalities and government-owned and controlled corporations; 1.11. Verify and process applications for VAT zero-rating of effectively zero-rated transactions except those of large taxpayers as well as applications for Contractors' Final Payment Release Certificate of contractors based in Metro Manila for the approval and signature of higher authority and monitor the issuance of all Certificates processed and issued by district offices outside Metro Manila; 1.12. Provide top management with periodic reports as a result of the above functions; and 1.13. Perform such other related functions as may be assigned. 2. Third Party Information Section shall: 2.1. Develop and recommend policies, work programs, standards, guidelines and procedures in the management of the Third-Party Information Program and Reconciliation Listing for Enforcement (RELIEF) Program; 2.2. Maintain and adopt 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; 2.3. Conduct analysis and evaluation of third-party information gathered and manage the Third-Party Information Program and RELIEF Program; TIHCcA 2.4. Provide taxpayer and industry profiles using available data from external agencies for taxpayer selection, inquiry and investigation; 2.5. Provide third-party information for use of top management and other concerned offices; 2.6. Recommend potential taxpayers requiring immediate audit or investigation based on TPI and RELIEF Programs; 2.7. Prepare revenue issuances relative to TPI and RELIEF Programs; 2.8. Provide top management with periodic reports as a result of the above functions; and 2.9. Perform such other related functions as may be assigned. 3. Audit Information Section shall: 3.1. Develop and recommend policies, work programs, standards, guidelines and procedures in the management of Audit Information; 3.2. Maintain the operations aspect of Case Monitoring System, operations aspect of the Limited Returns Processing System specifically on the requirements for process improvement, Operations Manual including job aids, templates review, enhancements, correspondence, reports review and maintenance of pertinent Codes Table; 3.3. Maintain the NOMIS Planning and Control System specifically Profiling functionalities on the requirements for process improvement relevant documentation including CBT, MPG and job aids, templates review, enhancements, correspondence, reports review and maintenance of pertinent Codes Table; 3.4. Identify, gather, collate, analyze and evaluate information and statistical data on assessment/audit activities of the National, Regional and District Offices; 3.5. Monitor, process and evaluate Revenue Officers Audit Reports (BIR Form No. 1717/0500 series) and other related assessment reports; 3.6. Provide audit information for use of top management and other concerned offices; 3.7. Prepare revenue issuances relative to reporting requirements on audit/assessment activities which will provide audit information; 3.8. Prepare reports for submission to the Service and to top management as a result of the above functions; and 3.9. Perform such other related functions as may be assigned. C. Asset Valuation Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures relative to the valuation and appraisal of values of real and personal properties for purposes of computing internal revenue taxes; 2. Create and update the zonal valuation table to be provided/downloaded to the RDOs for purposes of computing any internal revenue tax arising from sales, exchanges or other disposition of real properties; 3. Act as Secretariat of the Executive Committee on Real Property Valuation (ECRPV) and Technical Committee on Real Property Valuation (TCRPV) on all matters related to real property valuation; 4. Coordinate with and assist the Technical Committee on Real Property Valuation (TCRPV) and the Chairman, ECRPV in the resolution of appealed cases involving approved zonal values and controversies as to the valuation issues in the Regional and District Offices; 5. Maintain the NOMIS Planning and Control System specifically Zonal Valuation functionalities on the requirements for process improvement, relevant documentation including CBT, MPG and job aids, templates review, enhancements, reports review and maintenance of pertinent Codes Table; 6. Evaluate zonal valuation exception reports for purposes of updating zonal values and determining adherence to the revenue laws, rules, regulations and issuances in the implementation of approved zonal values; 7. Conduct study and research on matters pertaining to asset valuation to approximate the realistic fair market value of real and personal properties; 8. Review, analyze and monitor 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; 9. Monitor and evaluate reports on real property transactions from Revenue District Offices, Land Registration Authority and BIR-LRA verifiers; 10. Coordinate with the proper offices in the implementation of the abovementioned functions; 11. Prepare prescribed reports for submission to the offices concerned; 12. Prepare revenue issuances relative to the above-mentioned functions; and 13. Perform such other related functions as may be assigned. 1. Asset Valuation and Appraisal Section shall: 1.1. Develop and establish work plans and programs on valuation of assets, both real and personal, for purposes of computing internal revenue taxes; 1.2. Review the proposed schedule of zonal values submitted by the Sub-Technical Committee on Real Property Valuation (STCRPV) before deliberation and evaluation by the TCRPV; 1.3. Maintain the NOMIS Planning and Control System particularly, Zonal Valuation functionalities specifically on the requirements for process improvement, relevant documentation including CBT, MPG and job aids, templates review, enhancements, reports review and maintenance of pertinent Codes Table; 1.4. Coordinate and assist 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. Act as Secretariat to the ECRPV and TCRPV in the establishment and updating of zonal valuation of real properties; 1.6. Create and update the zonal valuation table to be provided/downloaded to the RDOs for purposes of computing any internal revenue tax arising from sales, exchanges or other disposition of real properties; 1.7. Provide technical assistance to banks and other private and government offices regarding approved zonal values; 1.8. Prepare prescribed reports for submission to the offices concerned; and 1.9. Perform such other related functions as may be assigned. 2. Review and Monitoring Section shall: 2.1. Develop, maintain and update a technical reference information system on implementation of laws, rules and regulations pertinent to property valuation, appraisal and taxation; 2.2. Develop methods and procedures in the monitoring of compliance to various memoranda of agreement on real and personal properties between the Bureau of Internal Revenue and other public and private offices; EcDATH 2.3. Prepare and recommend revenue issuances including amendments thereon to enhance the administration and enforcement of revenue laws, rules and regulations relative to asset valuation; 2.4. Study and evaluate taxpayers' protest for reclassification and/or revaluation of their real properties for appropriate action by the Technical Committee on Real Property Valuation; 2.5. Participate in the conduct of ocular inspection of real properties under protest for reclassification and/or revaluation; 2.6. Prepare letters and communications to TCRPV members, Revenue District Offices concerned and to taxpayers relative to resolutions of the TCRPV and ECRPV; 2.7. Review, analyze and monitor copies of CARs/TCLs submitted by RDOs to determine adherence to the guidelines and procedures in the implementation of approved zonal values; EaTCSA 2.8. Evaluate zonal valuation exception reports for purposes of updating zonal values and determining adherence to the revenue laws, rules, regulations and issuances in the implementation of approved zonal values; 2.9. Prepare reports for submission to the Service and to top management as a result of the above functions; and 2.10. Perform such other related functions as may be assigned. 3. Data Analysis Section shall: 3.1. Develop and maintain systematic compilation of valuation of assets, both real and personal, tangible and intangible for purposes of computing internal revenue taxes; 3.2. Identify, gather and collate information and statistical data on valuation of assets which shall serve as inputs in the development of plans, programs and procedures on asset valuation; 3.3. Monitor, evaluate and consolidate 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 LRA and BIR-LRA verifiers for submission to top management; DSacAE 3.4. Recommend training programs on asset valuation and appraisal as well as the taxation of sales, exchanges or other disposition of real properties in coordination with the Training Management Division; 3.5. Provide top management with periodic reports as a result of the above functions; and 3.6. Perform 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.) DAKILA B. FONACIER Commissioner of Internal Revenue Approved: (SGD.) JOSE T. PARDO Secretary of Finance ATTACHMENT BIR Organizational Structure