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

August 21, 2000 REVENUE ADMINISTRATIVE ORDER NO. 11-00 SUBJECT : Organization and Functions of the Legal 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 Legal 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 Legal Service shall be under the direct supervision of the Deputy Commissioner for Legal and Inspection Group. It shall be headed by an Assistant Commissioner and shall be composed of the following divisions with their respective sections: A. Law Division 1. Rulings Section 2. Regulations and Bills Section B. Appellate Division 1. Protest and Appeal Section 2. Tax Credit/Refund Section C. Litigation Division 1. Litigation Section I 2. Litigation Section II D. Prosecution Division 1. Prosecution Section I 2. Prosecution Section II E. International Tax Affairs Division 1. Tax Treaty Policy and Tax Advisory Section 2. Tax Treaty Implementation and Exchange of Information Section III. FUNCTIONS: LEGAL SERVICE shall: 1. Perform staff, advisory and consultative functions relative to the preparation and interpretation of revenue laws, implementing regulations/issuances, decisions on administrative protests involving questions of law and claims for tax credit/refund of taxes erroneously paid, litigation and prosecution matters, tax treaties, international tax policies and agreements and other legal matters; 2. Develop and administer policies, work programs, standards, guidelines and procedures relative to the abovementioned functions; 3. Provide policy guidance and operational directions to all divisions under the Service relative to the abovementioned functions; 4. Administer and maintain the Legal Information System (LIS) and coordinate with the offices concerned on its maintenance; 5. Review for the Commissioner's approval all decisions, rulings and opinions on legal questions which are of first impression. No case involving legal questions which are of first impression shall originate from and be issued by the Regional Director; 6. Act on protests and/or appeals of taxpayers relative to tax assessments involving questions of law on cases falling under its jurisdiction; 7. Process claims for tax credit/refund of taxes and penalties erroneously or illegally collected at the time of payment involving amounts falling under its jurisdiction; 8. Institute civil actions involving internal revenue cases; 9. Institute criminal actions on persons violating internal revenue laws and other laws administered by the Bureau of Internal Revenue; 10. Draft and interpret tax treaties; 11. Evaluate and process all tax treaty relief applications; 12. Digest rulings and decisions for public dissemination; 13. Draft revenue regulations and other issuances; 14. Interpret internal revenue laws and revenue regulations; 15. Monitor and coordinate the activities of the Legal Divisions of the Regional Offices; 16. Coordinate with proper offices in the implementation of the abovementioned functions; 17. Monitor, evaluate and improve programs and activities under the responsibility of the Service; 18. Review, recommend and/or approve all reports and other actions of the divisions under the Service; 19. Consolidate and/or prepare prescribed reports for submission to the offices concerned; and 20. Perform such other related functions as may be assigned. A. Law Division shall: 1. Formulate and recommend policies, work programs, standards, guidelines and procedures for the conduct of legal operations in the Bureau including the interpretation of the provisions of the National Internal Revenue Code (NIRC) of 1997 and other laws related thereto, and/or all laws including revenue regulations necessary for the operations of the Bureau; 2. Prepare drafts of all rulings and opinions on legal issues of first impression involving the interpretation of the NIRC of 1997 and other laws related thereto; 3. Act on requests for tax exemption under the Tax Code and other tax laws for cases falling under its jurisdiction; 4. Prepare drafts of proposed tax legislations, revenue rules and regulations implementing/amplifying revenue laws and other laws pertinent and/or necessary for the operations of the Bureau; 5. Prepare comments on the legal aspects of proposed Senate and House Bills; 6. Serve as clearing house for Revenue Regulations (RRs) and other issuances involving legal matters or with tax implications; 7. Prepare digest of rulings and opinions and codify the same for dissemination to the public; 8. Process claims for informer's reward and initiate action for the payment thereof if the informer is adjudged entitled thereto; 9. Submit to Legal Service all signed/approved official rulings and revenue issuances prepared by the Division for the regular updates of the Legal Information System; 10. Coordinate the uniform application of tax laws, regulations and court decisions; 11. Conduct studies and researches relative to the abovementioned functions; 12. Coordinate with proper offices in the implementation of the abovementioned functions; 13. Prepare prescribed reports for submission to the offices concerned; 14. Prepare revenue issuances relative to the abovementioned functions; and 15. Perform such other related functions as may be assigned. 1. Rulings Section shall: 1.1. Draft proposed rulings involving the interpretation of the NIRC of 1997 and other laws related thereto and laws including revenue regulations pertinent to and/or necessary for the operations of the Bureau; 1.2. Prepare digest of rulings and opinions and codify the same for dissemination to the public; 1.3. Act on requests for tax exemption under the Tax Code and other tax laws for cases falling under its jurisdiction; 1.4. Process claims for informer's reward and initiate action for the payment thereof if the informer is adjudged entitled thereto; 1.5. Gather all official rulings, revenue regulations and issuances necessary to update the legal database; and 1.6. Perform such other related functions as may be assigned. TcaAID 2. Regulations and Bills Section shall: 2.1. Prepare and recommend drafts of proposed tax legislations and amendments to the NIRC of 1997 for submission to the President and/or Congress thru the Department of Finance (DOF); 2.2. Conduct studies and researches and prepare comments and opinions on the legal aspects of proposed Senate and House Bills that will affect internal revenue collection and administration or which may have tax implications; 2.3. Draft Revenue Regulations (RRs) and review other issuances with tax implications prepared by different offices in accordance with existing BIR policies; and 2.4. Perform such other related functions as may be assigned. B. Appellate Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures relative to administrative appeals and protests of taxpayers involving questions of law and claims for credit/refund of taxes erroneously or illegally collected; 2. Act on protests and/or appeals of taxpayers relative to tax assessments involving questions of law on cases falling under its jurisdiction; 3. Process claims for tax credit/refund of taxes and penalties erroneously or illegally collected at the time of payment involving amounts falling within its jurisdiction; 4. Issue notices of conference hearing and subpoena witnesses when necessary for the resolution of pending protested tax cases and claims for tax credit/refund falling under its jurisdiction; 5. Submit to the Legal Service all administrative decisions of the Commissioner and approved revenue issuances prepared by the Division for the regular updates of the Legal Information System; 6. Prepare digest of the administrative decisions of the Commissioner; 7. Conduct studies and researches relative to the abovementioned functions; 8. Coordinate with proper offices in the implementation of the abovementioned functions; 9. Prepare prescribed reports for submission to the offices concerned; 10. Prepare revenue issuances relative to the abovementioned functions; and 11. Perform such other related functions as may be assigned. 1. Protest and Appeal Section shall: 1.1. Act on protests and/or appeals of taxpayers relative to protested assessment involving questions of law for cases falling under its jurisdiction; 1.2. Prepare administrative decisions on protested tax cases involving questions of law, and digest of the said decisions; 1.3. Evaluate requests for reconsideration of assessments and recommend to the proper office, the reinvestigation of contested or disputed assessments if the arguments adduced by the parties so warrant; 1.4. Prepare notices of conference hearing and subpoena witnesses when necessary for the resolution of protested tax cases falling under its jurisdiction; CcAESI 1.5. Gather official administrative decisions/actions on protested cases necessary in updating the legal database; and 1.6. Perform such other related functions as may be assigned. 2. Tax Credit/Refund Section shall: 2.1. Prepare guidelines and procedures on claims for tax credit/refund of taxes and penalties erroneously or illegally collected; 2.2. Process claims for tax credit/refund of taxes and penalties erroneously or illegally collected at the time of payment. Claims for tax credit/refund that necessitate tax audit shall be processed by the appropriate office in the region/National Office (NO); 2.3. Prepare notices of conference hearing and subpoena witnesses when necessary for the resolution of claims for tax-credit/refund falling under its jurisdiction; 2.4. Refer to the appropriate office/s claims for tax credit/refund which are directly filed by the taxpayers with the Appellate Division prior to normal audit of the return; 2.5. Gather official decisions on taxpayers' claims for tax credit/refund necessary to update the legal database; and 2.6. Perform such other related functions as may be assigned. C. Litigation Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures relating to the litigation work on the civil aspect of internal revenue cases under the NIRC of 1997 and other related laws and regulations; 2. Represent the Commissioner of Internal Revenue in the hearing/trial involving internal revenue cases; 3. Institute civil actions involving internal revenue cases; 4. Act on petitions for review filed by taxpayers in the Court of Tax Appeals, Court of Appeals, Supreme Court or in Regional Trial Courts and administrative bodies involving internal revenue cases; 5. Prepare all pleadings, briefs and memoranda to be filed with the Supreme Court, Court of Appeals, Court of Tax Appeals, Regional Trial Courts, and other courts and offices in connection with internal revenue cases pending before said courts; 6. Represent revenue officials and personnel in civil cases brought against them in connection with the lawful performance of their official functions; 7. Interview witnesses, evaluate evidence in connection with internal revenue cases; 8. Prepare digest of court decisions on internal revenue cases filed; 9. Monitor and/or coordinate the activities of the Legal Divisions in the Regional Offices with respect to litigation work; 10. Submit to the Legal Service all court decisions on civil cases filed and all approved revenue issuances prepared by the Division for regular updates of the legal database; 11. Conduct studies and researches relative to the abovementioned functions; 12. Coordinate with proper offices in the implementation of the abovementioned functions; 13. Prepare prescribed reports for submission to the offices concerned; 14. Prepare revenue issuances relative to the abovementioned functions; and 15. Perform such other related functions as may be assigned. Litigation Sections I and II shall perform identical functions as enumerated above. D. Prosecution Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures relative to the criminal prosecution of violations of the NIRC of 1997 and related statutes; 2. Institute criminal actions against persons violating internal revenue laws and other tax laws administered by the Bureau of Internal Revenue; 3. Establish database for criminal violations of internal revenue laws, rules and regulations as well as information on the effective enforcement of the prosecution processes; 4. Represent the Commissioner of Internal Revenue in the prosecution of criminal cases involving tax evasion and/or violations of internal revenue laws, rules and regulations including other laws administered by the BIR; 5. Evaluate cases referred to it with the view of having them properly documented and substantiated to ensure successful prosecution thereof under the NIRC of 1997; 6. Prepare subpoena testificandum/subpoena duces tecum , five (5) days VAT compliance notice and closure orders; 7. Recommend deportation of alien taxpayers and/or inclusion in the Hold Order List of persons prosecuted for violation of internal revenue laws, rules, regulations and other related laws and make necessary representation as government counsel before the Deportation Board; 8. Refer cases for the filing of criminal action to Ombudsman; 9. Prepare digest of court decisions on criminal cases filed; 10. Represent revenue officials and personnel in criminal cases brought against them in connection with the lawful performance of their official functions; 11. Coordinate with other BIR offices and/or external offices for the successful prosecution of violations of internal revenue laws and regulations; 12. Submit to the Legal Service all court decisions on criminal cases filed and/or approved revenue issuances prepared by the Division for regular updates of the legal database; 13. Conduct studies and researches relative to the abovementioned functions; 14. Coordinate with proper offices in the implementation of the abovementioned functions; 15. Prepare prescribed reports for submission to the offices concerned; 16. Prepare revenue issuances relative to the abovementioned functions; and 17. Perform such other related functions as may be assigned. Prosecution Sections I and II shall perform identical functions as enumerated above. E. International Tax Affairs Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures for the proper and effective implementation of tax treaties and other international tax agreements; 2. Prepare rulings, comments and opinions on questions and issues involving interpretation of tax treaties, other international tax agreements and international organizations; 3. Administer and implement the mutual agreement and exchange of information provisions of the tax treaty; 4. Evaluate and process all tax treaty relief applications; 5. Process certificate of residency of residents earning income abroad; 6. Issue Tax Exemption Certificates to qualified Asian Development Bank (ADB) personnel; 7. Process VAT exemption requested by foreign embassies under the principle of reciprocity; 7. Process VAT refunds of foreign embassies and their qualified personnel and/or dependents; 9. Process VAT refunds of ADB and its qualified personnel; 10. Submit to the Legal Service all approved rulings and revenue issuances prepared by the Division relative to international matters for the regular updates of the legal database; 11. Coordinate tax treaty negotiations, international tax conferences, visits of foreign tax authorities and liaise with other government agencies in relation to international tax matters; 12. Coordinate the uniform application of international tax laws, revenue regulations and court decisions; 13. Monitor and evaluate the implementation of activities and works related to abovementioned functions (including tax administration activities of foreign service posts); 14. Prepare documents relative to funding requirements/provision for tax treaty negotiations; 15. Conduct studies and researches relative to the abovementioned functions; 16. Coordinate with proper offices in the implementation of the abovementioned functions; 17. Prepare prescribed reports for submission to the offices concerned; 18. Prepare revenue issuances relative to the abovementioned functions; and 19. Perform such other related functions as may be assigned. 1. Tax Treaty Policy and Tax Advisory Section shall: 1.1. Develop, assess and monitor Philippine international tax policies, tax treaties and other international agreements related to taxation; 1.2. Recommend amendments to existing tax treaties and international tax agreements; 1.3. Prepare rulings, comments and opinions on questions involving the interpretation of the provisions of tax treaties and other international tax agreements and international organizations; 1.4. Process VAT exemption requested by foreign embassies under the principle of reciprocity; 1.5. Issue Tax Exemption Certificates to qualified ADB personnel; 1.6. Conduct studies and researches to prepare the Bureau for the changing environment in the international tax arena; 1.7 Provide comments and recommendations on proposed revenue issuances and revenue procedures affecting international tax matters; 1.8 Plan, supervise and coordinate the negotiations, conclusion, signing and ratification of tax treaties as well as international tax meetings, seminars and conferences; 1.9. Coordinate the visit of foreign dignitaries, tax authorities and other visitors (foreign and local) desiring to be briefed on international tax matters; 1.10. Advise government entities, tax practitioners, taxpayers and other personnel of the BIR regarding international taxation and provide them with materials on such agreements and the related revenue issuances; 1.11. Submit to Legal Service all revenue rulings and issuances prepared by the Division relative to international taxation necessary in updating the legal database; and 1.12. Perform such other related functions as may be assigned. 2. Tax Treaty Implementation and Exchange of Information Section shall: 2.1. Develop policies, work programs, standards, guidelines and procedures in relation to the implementation of tax treaties; 2.2. Evaluate and process for approval tax treaty relief applications and monitor trends in the availment of the relief; 2.3. Process claims for tax credit/refund on erroneously collected internal revenue taxes arising from the application of tax treaty provisions including requests for exemptions; 2.4. Process certificate of residency of residents earning income abroad; 2.5. Coordinate the exchange of information and mutual agreement procedures for all existing tax treaties; 2.6. Secure and provide pertinent information to tax treaty partners pursuant to the Exchange of Information provision of the tax treaty; 2.7. Implement rules and regulations for the effective enforcement of Philippine tax laws and tax treaties as they affect international taxpayers ( e.g. , international carriers and their agent corporations, multinationals and overseas contractors); 2.8. Conduct verification on: 2.8.1. specific requests for information from tax treaty partners 2.8.2. automatic or spontaneous information received from tax treaty partners 2.8.3. documents pertinent to VAT refunds of foreign embassies, ADB and their qualified personnel 2.9. Monitor and coordinate tax administration activities of foreign service posts; 2.9.1. Provide administrative support and other related services for the effective operations of the Foreign Service Posts and Office of the Revenue Attache/Representative; 2.9.2. Monitor the tax administrative performance of Foreign Service Posts and Office of the Revenue Attache/Representative; 2.9.3. Serve as the central point of contact for all communications to and from Foreign Service Posts/Office of the Revenue Attache/Representative and the non-resident taxpayers; DTcACa 2.9.4. Coordinate with the Department of Foreign Affairs on fiscal and administrative matters relative to administrative operations of Foreign Service Posts; 2.9.5. Coordinate with the Department of Foreign Affairs regarding the reimbursement of expenses of foreign service posts; 2.10. Study, recommend and implement measures/issuances affecting the monitoring of international transactions (e.g. advance pricing agreements, etc); 2.10. Prepare documents relative to funding requirements/provision, for tax treaty negotiations; and 2.11. 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