Procedure on Investigation of Lines of Businesses

July 7, 1970 REVENUE ADMINISTRATIVE ORDER NO. 12-70 SUBJECT : Procedure on Investigation of Lines of Businesses TO : All Revenue Operations Heads, Regional Directors, Division Chiefs, Revenue District Officers, fieldmen and others concerned I. Background and Purpose A. This revenue administrative order is promulgated in order to further improve the over-all system of investigation of taxpayers for their tax liabilities by the fieldmen of the Bureau pursuant to the provisions of Section 337 of the National Internal Revenue Code, as amended by Section 59 of R.A. 6110, and through the procedure of investigation by lines of businesses. cdta B. The investigation by lines of businesses will introduce to the Bureau a new concept of investigation. Whereas in the past the investigation is done individually and singly, that is, one taxpayer by one examiner, without regard to the kind of business being engaged in and without collating the findings for possible deficiency taxes in other areas or related taxpayers and preparing statistics for top management, the investigation by lines of businesses will accomplish the following: 1. Insure the investigation of all segments of a particular business which will make possible the analysis of all the discrepancies discovered in the investigation and correlating them in the investigation of a particular industry. This would result in the development of an improved standard procedure of audit of all segments of a particular industry. 2. Considering the modern trends of businesses now whereby the production, marketing and distribution activities are operated or owned by affiliated industries, the investigation by lines of businesses will bring about the discovery of related transactions which may have been resorted to as a means of reducing the tax through shifting of income or overdeclaration of deductions. 3. Investigation by lines of businesses will afford the bureau a chance to make a comparison of selling prices, costs of production and operating expenses of similar businesses enabling it to determine or give close scrutiny to those businesses whose incomes or deductions are substantially different from similar businesses. 4. Through investigation by lines of businesses, the collation of statistics will be facilitated which may be of use in issuance of tax policies or estimating most accurately the revenues that may be expected in the future from each line of business. 5. Through team audit, a thorough investigation will be made of businesses which will bring about the discovery of the capabilities of examiners assigned to undertake such investigations and thereby help the top management of the bureau in the assignment of personnel where their abilities can be maximized or fully availed of and provide guidelines for the transfer of non-productive personnel or make them undergo further training to improve their effectiveness. 6. Through the implementation of the "package audit" as provided in Section 337 of the Tax Code, as amended by R.A. 6110, the tax liabilities of the taxpayer will be thoroughly investigated in one audit thereby avoiding the frequent visits of examiners which gives rise to irritants between the taxpayers and the bureau. 7. Consolidate pertinent provisions of orders, circulars and memoranda into one order to facilitate implementation and to provide a preference manual on the matter. 8. Update and improve outmoded provisions of orders, circulars, and memoranda regarding the assignment and distribution of tax returns, cases and dockets to the fieldmen. 9. Provide a more effective supervision and control over the conduct of investigations and the reporting of the results thereof, and 10. Fix responsibilities. II. Organization The different divisions in the Special Operations Department and Revenue District Offices in Regional Offices will be reorganized to suit the requirements and needs in the investigation by lines of businesses, outlined as follows: A. National Office 1. The Audit Division, International Operations Division, Special Laws Enforcement Division, Fraud Investigation Division and the Special Operations Department are hereby abolished. 2. In accordance with the lines of businesses, the following divisions shall be created in lieu of the divisions abolished. a. Agriculture and Natural Resources (Audit) Division; b. Manufacturing (Audit) Division; c. Financing, Real Estate and Transfer Taxes (Audit) Division; d. Services and Miscellaneous (Audit) Division; e. Special Investigation Division. 3. The personnel of the present Audit, International Operations and Special Laws Enforcement Divisions after reducing them to the necessary complement shall be distributed to the Agriculture and Natural Resources (Audit) Division; Manufacturing (Audit) Division; Finance, Real Estate and Transfer Taxes (Audit) Division; and Services and Miscellaneous (Audit) Division. 4. The unit in the present Special Laws Enforcement Division engaged in the investigation of syndicated crimes and apprehension of fake stamps, fake receipts and smuggling shall be converted as a unit and be constituted as the Intelligence Arm of the Bureau of Internal Revenue and placed under the direct supervision of the Commissioner of Internal Revenue. Its powers and duties are contained in another Administrative Order. 5. The personnel of the Fraud Investigation Division shall remain intact and records thereof as well as the personnel shall be transferred to the Special Investigation Division, the new name of the division. 6. All records in the divisions to be abolished should be compiled, collated and forwarded to the Information and Retrieval Section of the Special Investigation Division for use by the said division in its fraud investigation and as reference by the newly created divisions. 7. Equipments in the abolished divisions shall be divided equitably among the newly created divisions. The clerical force in these three divisions should be equitably divided and care should be taken that the stenographers and typists are equitably distributed in the said divisions to insure efficiency in their operations and in the preparation of reports and statistics of the fieldmen and the filing of the said records. B. Regional Offices 1. The grouping of personnel in regional offices is hereby revoked and a new grouping in accordance with the lines of businesses shall be made which shall depend on the number of businesses found in each district, the investigation of which has been allocated to the Regional Office. Businesses which are not included in the grouping by lines of businesses and the jurisdiction of which shall be exclusively with the Regional Office, such as general merchandising, department stores, etc. should all be assigned to the examiners in the revenue district offices. cdti 2. Consonant with the policy of giving more autonomy to Regional Directors, the grouping and delineating of work assignments to fieldmen in Revenue District Offices shall be done by the Regional Director concerned with the assistance of the Revenue District Officers but the pattern of grouping in the National Office should as much as possible be adhered to. C. General Organization 1. In the newly created divisions in the National Office the various industries shall be further allocated to sections, which shall be composed of groups and sub-groups. To avoid the creation of too many sections, grouping of similar or alike industries in a section should be made like forestry which although a broad industry should only be made into a section. 2. Since there may not be enough groups available to each segment of the industry or the industry as a whole, two or more industries or segments thereof may be assigned to a group of fieldmen for investigation. In the assignment of the different segments of an industry, the grouping of closely related processes should be taken into account; that is, any two segments assigned to one group should be the segment which comes after the other in the process of production or manufacture like wholesale dealers and retail dealers. 3. Regional Assignments a. The investigation of industries or segments thereof which have been allocated to the regional office should not be assigned to any of the groups or subgroups or team in the National Office. b. The Regional Director concerned should be informed of the segments of industries or industries allocated for investigation in the region who should prepare the necessary assignments. The audit program of the region which should include the grouping of segments of the industry or industries allocated to the Regional Office should be forwarded to the National Office for information and appropriate action by the latter. 4. In cases where the investigation of taxpayers engaged in the segment of the industry or the industry may be undertaken by both the National and Regional Offices, the particular taxpayers assigned to the National Office shall be assigned to the groups therein and those taxpayers assigned to the Regional Office should be communicated to the Regional Director for appropriate action as provided in the preceding paragraph. 5. Grouping of Fieldmen a. To achieve maximum results and effective supervision the groups in the National Office should consist of ten (10) examiners and one group supervisor, or a total of eleven (11) in each group. This does not preclude the division of the group into subgroups or teams under a team leader which may be assigned a particular line of business but the overall supervision of the group rests with the group supervisor. b. The same pattern should be followed in the regions as much as possible and where there are any deviations from the set-up in the National Office, such fact should be communicated to the National Office by the Regional Director. c. For purposes of assignment of personnel in the divisions, sections and groups, it shall be the policy to make those higher in rank as Supervisors and in no case shall an examiner with a higher rank be placed under a supervisor with a lower rank. d. In the selection of examiners to be retained in the National Office, those with the best qualifications should be given priority in the retention. Some of the considerations shall be appropriate civil service eligibility; educational attainment CPA or lawyer, or both; appointment at least Revenue Examiner II; previous experience; outstanding achievements; and accomplishments as shown in the report of the Management Survey Team. cdt e. Designation of supervisors (1) For the purpose of staffing the divisions, the Chief of Division should have a range not lower than Chief Revenue Examiner or Chief Revenue Inspector. (2) For Assistant Chief of Division, the range should not be lower than Supervising Revenue Examiner III. (3) For Chief of Section, the range should not be lower than Supervising Revenue Examiner III. (4) For Group Supervisor, the range should not be lower than Supervising Revenue Examiner II. (5) For the Team Leader of the subgroup, the range should not be lower than Supervising Revenue Examiner I. f. In assigning the fieldmen to the group, the grouping should be pyramidal, that is, there should be more fieldmen of the lower range than those of the higher range. No group or subgroup should be staffed with only one range of examiners but should include the appropriate ranges in a manner that a subgroup will at least have a Supervising Revenue Examiner I as team leader. g. The pattern of grouping in the region should adhere as closely as possible to the grouping in the National Office but the mechanics thereof shall be the responsibility of the Regional Director with the assistance of the Revenue District Officers. The range of the Group Supervisor should be at least Supervising Revenue Examiner I for first class revenue districts and Senior Revenue Examiner for other revenue districts. h. In cases where there are not enough groups or subgroups in the revenue district for the different kinds of industries or segments of industry assigned thereto, two or more segments of the industry may be assigned to one group or subgroup subject to the provisions of paragraph II-C-2 of this Revenue Administrative Order. i. Fraternization and Transfer. In order to make effective the assignment of fieldmen in each group, to avoid the evil effects of fraternization and in order that the training of fieldmen may be well-rounded in all kinds of businesses, the fieldmen assigned to the groups or subgroups should be rotated at least once every two years but if the exigencies of the service so requires, the re-assignment of any fieldman in a particular group may be effected at anytime. j. If there is a lack of men in any group either in the National Office or in the Regional Office, additional men from other regions where their services can be spared should be deployed to those offices or units where they are needed. k. Coordinators (1) To insure effective implementation, coordinators from the National Office should be designated to coordinate activities in the Regional Offices in relation to the activities in the National Office. For this purpose, the Philippines is divided into five areas with a coordinator in each area. (a) Area I Regional Offices 1, 2, 3 and 4 (b) Area II Regional Offices 5, 6, 7 and 8 (c) Area III Regional Offices 9, 10 and 11 (d) Area IV Regional Offices 12, 13, 14 and 15 (e) Area V Regional Offices 16, 17, 18, 19 and 20 (2) The coordinators in the Regional Offices shall be under the control and direct supervision of the National Coordinator in the National Office. (3) To coordinate the activities of the divisions in the National Office and Regional Offices, a National Coordinator should be designated in the National Office who should be responsible to the Commissioner and Deputy Commissioner for Operations. (4) The National Coordinator shall be assisted in addition to the Area Coordinators by a staff composed of ranking officials of the bureau. (5) The National Coordinator shall be responsible for: (a) Coordination of activities of the Agriculture and Natural Resources (Audit) Division; Manufacturing (Audit) Division; Financing, Real Estate and Transfer Taxes (Audit) Division and Services and Miscellaneous (Audit) Division. (b) Supervision over the area coordinators wherein he must see to it that discrepancies discovered by examiners in Regional Offices reported by the Area Coordinator as related to or needs verification with the findings in the investigation of segments of the industry or industries examined by the National Office or vice-versa are taken into account in the reporting of the investigated cases. (c) Supervision in the collation, summarizing and analyzing of data taken from the reports of investigation. (d) Supervision of the administrative phase of industries enjoying incentives. Such supervision should include the determination and checking as to whether the industries operating under incentives are fulfilling the requirements; preparation of reports and other correspondence and action on cases other than the investigation phase. For this purpose and to achieve close supervision over these industries with special incentives, a separate unit in the staff should be created. III. Duties and responsibilities of Group Supervisors As soon as assignments of the lines of industries or segments thereof have been made to the group, the group supervisor before making any assignments to fieldmen shall accomplish the following: A. Hold a seminar of the group to which may be invited resource speakers coming from the higher echelons of the bureau or from outside for dissemination of guidelines to be used in the investigation of the taxpayers concerned. Such guidelines should include among others the following: 1. Nature of the business and how it operates; 2. Taxes payable by the business; 3. Based on past experiences, methods of evasion resorted to by the taxpayer; and 4. Audit techniques. B. All available records of past investigations of the taxpayer should be looked into to determine whether there are any items which may be useful in the investigation of its subsequent tax liabilities. C. Conduct a background research of the taxpayer to determine the characteristics of the business, tax returns being filed and such other items that may be necessary in determining the correct amount of taxes due. D. If the industry is regulated or under the supervision of any unit or agency of the government, contact should be made with the government unit or agency to determine peculiar facts that characterize the industry. E. The group head should keep a complete record of the assignments and he shall exercise close supervision in the investigation of taxpayers assigned to his group and subgroups. F. He should prepare an audit program for the particular industries or segments thereof which should include a schedule of activities. He should see to it that there is proper apportionment of time assigned to each particular industry so that there will be no time wasted and efforts of the fieldmen will be fully utilized. Overlapping of investigations or assignments should be avoided as much as possible to insure effective control of the investigation of cases and the prompt termination of investigations and the reporting thereof. VI. Jurisdiction of Investigation A. BOI Industries Industries operating under the Board of Investments or such other special laws granting incentives to taxpayers presently under the jurisdiction of the Special Laws Enforcement Division shall be assigned to the division or group where the particular industry belongs. B. Interrelated Industries 1. In the case of interrelated industries, the different industries shall be assigned to the division and group where the particular industry belong. 2. For purposes of investigating the parent or management corporation, a composite team headed by a supervisor selected by the National Coordinator should be formed to be composed of men from the various groups which investigated the interrelated industries. 3. For an effective review of the reports submitted and close coordination of the investigation and inasmuch as management or parent companies do not belong to any of the divisions, the report thereon should be submitted direct to the National Coordinator. C. Withholding Tax Division The Withholding Tax Division of the Assessment Department shall have jurisdiction over the following: 1. Processing of the report of investigation of Withholding tax at source submitted by the fieldmen of the division to which the particular industry has been assigned. 2. Synchronization of the investigation of employers for withholding tax on wages with the investigation of the other tax liabilities of the employer. For this purpose, fieldmen of the Withholding Tax Division should be assigned to the group or team in the National Office conducting the regular investigation of the employers but he shall be under the administrative control of the Chief, Withholding Tax Division. 3. The investigation of employers in Regional Offices, including those of Regional Offices 6, 7 and 8 shall be undertaken by the examiners in the region simultaneously with the investigation of income and other internal revenue tax liabilities of the employer. To achieve uniformity in investigation and reporting, guidelines should be issued by the Withholding Tax Division to Regional Offices. The reports on withholding tax investigations should be processed in the Withholding Tax Division. 4. Synchronization of the investigation for withholding tax purposes under R.A. 1051 with the particular group to which the industry belong. For this purpose, examiners of the Withholding Tax Division should be attached to the group conducting the investigation, but they shall be under the administrative control of the Chief, Withholding Tax Division. However, where the government agency subject to the provisions of Rep. Act 1051 is not performing proprietary functions and, therefore, not subject to any kind of tax, investigation thereof shall be the jurisdiction of the Withholding Tax Division. 5. Investigation of individuals claiming tax credit for taxes withheld from wages which may be refundable or collectible except where the individual concerned is engaged in business or has other income in other schedules in the income tax return, excluding refundable returns which would fall under the office audit classification. D. Specific Tax Department 1. For the proper enforcement of the specific tax law, close coordination should be maintained between the Specific Tax Department on one hand and the divisions organized by lines of businesses and Regional Offices on the other hand. 2. For this purpose, a Coordinator is to be designated to supervise and coordinate the investigation of specific taxes in collaboration with the investigation of the other tax liabilities. The coordinator upon request of the group concerned and the recommendation of the Chief of the Specific Tax Department shall assign men from the Specific Tax Department to the group in the division or in the Regional Offices to investigate the taxpayer for specific tax liabilities. 3. The reports of fieldmen assigned to specific tax investigations should be made part of the report of the team but the Coordinator for Specific Taxes should see to it that he reviews the findings and forward them to the Specific Tax Department for appropriate action. V. Reporting A. Nature of Report 1. Since the reports of investigation can only be properly evaluated through the reporting thereof, a procedure should be devised which should be simple but qualitative. Simple in the sense that too many reports which may be overlapping should not be prepared and qualitative in the sense that the report can be easily understood, the discrepancies clearly identifiable and that the statistics as shown by the results of the investigation quickly picked up, collated, utilized and analyzed. 2. For this purpose, a method of reporting should be promulgated to include all the necessary data for computerization and use by the Bureau for the formulation of policies and the proper administration of said policies. 3. In the procedure for reporting, there should be included a system of costing: that is, determine how much it costs the government to conduct investigations. Costs shall include salaries, traveling and such other items of sundry expenses that enter into the cost of investigation. VI. Review A. Who shall review 1. The investigation function shall stop at the stage where the notice to the taxpayer has been sent. Thereafter, the investigation function ceases and the docket or case shall then be forwarded to the Assessment Department in the National Office or the Assessment Branch in the Regional Office. cdti 2. The responsibility of the said department or branch shall consist of the following: a. Review of the case to determine whether all aspects have been covered and whether all the requirements of reporting are complied with. b. Sending of the preliminary five-day letter if the taxpayer is not in agreement. c. Preparation of the corresponding letter of demand. d. Regional Office (1) With respect to those cases assigned to the regional offices, the jurisdiction as to its review shall be the same as at present: to the group supervisor, then to the revenue district officer and finally to the regional director. (2) Before final action toward assessment of the report is made, the findings shall be evaluated by the Area Coordinator assigned in the region to determine whether it may affect other segments of the industry. The findings of the Area Coordinator should be communicated to the National Coordinator. 3. The present procedure of elevating cases to the National Office where the amount of deficiency tax or even though there is no deficiency tax, the taxes due per return exceeds certain fixed amounts as provided in Revenue Administrative Orders Nos. 13-64 and 14-64 should be continued. 4. Where some taxpayers engaged in a segment of the industry are assigned for investigation to the region and the rest of the taxpayers in the group are assigned to the National Office, the final review of all reports of investigation on all these taxpayers shall be exclusively the prerogative of the Assessment Department. VII. Determination of the Efficiency of the Examiners A. The National Coordinator and Assessment Branches in the Regional Offices shall provide a procedure whereby the examiner can be graded on his accomplishments which will be taken into consideration in determining his performance rating. B. Such procedure should not solely depend on the assessment or collections made by the examiners. C. In determining accomplishments of examiners for assessment purposes, the division concerned shall prepare a monthly report of all reports submitted and released for review and demand. The assessments shown therein shall be the one credited to the fieldman. D. The previous practice of examiners of reporting assessments although the report has not been passed upon by superior officers should be stopped. Only after the report has been passed upon and released for assessment should the examiner be entitled to the credit of the assessment. E. If the report is submitted by a group, the assessments or collections reported should be divided equally among the examiners who conducted the investigation. F. This determination shall be made by the Chief of the Division and the supervisor should see to it that there are no free riders in the assessment reported. Free riders shall be held to mean examiners who merely sign the report without assisting in the investigation of the case. G. In the preparation of Form 40.00 by the divisions of the Assessment Department or by the Assessment Branch, a column should be added or the remarks column utilized for the placing of code numbers of the examiners that participated in the investigation. H. The Data Processing Center in processing Form 40.00 shall take into account the code numbers of the examiners and they should prepare a list whereby the respective shares of each examiner in the assessments are properly recorded. I. In processing collections of deficiency taxes, the Data Processing Center should determine whether the collections reported on deficiency taxes belong to the particular examiners who should be properly credited. These collections should be collated and properly credited to each examiner and the total thereof determined which should be used as basis in computing how much is the collection of each examiner through investigation. cd VIII. Scope of Investigation A. The ordinary examination or investigation of taxpayers' books of accounts, including subsidiary books and other accounting records for the purpose of determining their liabilities for the following taxes shall be made simultaneously, once in a taxable year except in the cases provided in Section 337 of the National Internal Revenue Code, as amended: 1. Income tax, including a. Withholding tax on wages b. Withholding tax at source under Sections 53 and 54 2. Transfer taxes 3. Privilege taxes on business and occupation 4. Documentary stamp tax 5. Mining taxes 6. Tax on banks 7. Tax on finance companies 8. Tax on receipts of insurance companies 9. Franchise tax 10. Amusement taxes 11. Forest charges 12. Residence taxes 13. Sugar tax Verification of compliance with bookkeeping requirements and of submission of required attachments and other information required to be submitted and test-checking of inventory lists filed shall also be included in the examination or investigation. B. In view of the provisions of section 337 of the National Internal Revenue Code, as amended, the "package audit policy" shall be adopted in the examination of the various tax liabilities of the taxpayer. "Package audit" provides for the examination at the same time of all returns filed by a business or a taxpayer or all his taxable transactions for the same taxable period. C. Investigation of collectible accounts 1. In order to reduce our collectible accounts to the minimum and in order to have a systematic procedure in determining the status of taxpayers' collectible accounts, examining officers should also include in the investigation of any taxpayer's liabilities the determination of their pending collectible accounts. They shall render a report on the results of their verification of the latest list of collectible accounts and/or the taxpayers' records, on the form prescribed for this purpose. If the examining officer finds that the particular taxpayer under examination has no pending collectible account, he shall so certify in his report. If the records show that the taxpayer has pending collectible accounts, the examiner shall specify in his report the nature, kind, period or year of delinquency, and status of the collectible account. The examining officer shall try to effect collection of any delinquency of the taxpayer under investigation and if he fails to do so, to state in his report why the taxpayer did not settle the delinquency. 2. If the collectible account is contested by the taxpayer and there is a need for reinvestigation, the examiner should secure a copy of the letter of protest from the taxpayer. He should include this in his report stating that the taxpayer is not paying his collectible account because his protest has not been resolved. 3. This report shall be forwarded by the Chief, Assessment Branch or the Revenue Operations Head (Assessment) as the case may be to the Collection Branch or to the Collection Department for processing and for the institution of the necessary follow-up procedure. 4. In protested cases, the Chief of the Assessment Branch or Revenue Operations Head (Assessment) shall determine the status of the protest and follow it up accordingly so that the case may be immediately terminated. Due notice should be given by the branch or department concerned to the Data Processing Center so that the case can be transferred from Collectible Accounts to Deferred Accounts or vice-versa. D. Delineation of Investigations 1. Cases in which the Regional Director with the approval of the Commissioner requests that the tax return of a taxpayer in his region be examined by the National Office should be referred to the Division charged with the investigation of taxpayers engaged in the particular industry. Fraud referral cases shall, however, be referred to the Special Investigation Division. 2. If in the course of the investigation by the four divisions or the regional offices, indication of fraud is discovered, the case should be immediately referred to the Special Investigation Division to determine whether criminal prosecution is warranted. 3. Special Investigation Division a. The division shall have nationwide jurisdiction in the investigation and prosecution of all kinds of criminal tax fraud cases initiated and/or developed by it and all tax cases referred to it from various sources especially where a prima facie case or evidence of fraud has been established. In all instances, the determination of whether a fraud case is civil or criminal shall be the responsibility of the Special Investigation Division. b. All referrals coming from regional offices and other investigating divisions in the National Office showing indications of fraud shall be handled by the Special Investigation Division. The division shall take charge of the investigation of said referrals for criminal prosecution and determination of the civil liability. Whether the case is ultimately prosecuted or not, the investigation of the civil liability of the referrals shall be handled by the Special Investigation Division. c. Review of cases where the Commissioner has determined that there has been collusion between examiners and taxpayers in the examination of a tax case. 4. Office audit a. The procedure outlined in Revenue Administrative Order No. 7-64, dated September 1, 1964, shall continue to be followed in Regional Offices Nos. 6, 7 and 8 and such other regions as may have been or may be authorized to conduct office audit of returns. b. "Package Audit" policy shall also be implemented in office audit cases. IX. Submission of Audit Reports A. All field and office audit reports submitted must comply with the requirements of the Handbook on Auditing Techniques and Procedures as promulgated in Revenue Memorandum Order No. 25-65, dated July 1, 1965 and Revenue Administrative Order No. 7-64 dated September 1, 1964, respectively, and with the procedures and requirements provided in Revenue Memorandum Order No. 17-66, dated February 23, 1966. B. The said reports shall likewise comply with the requirements of the following: 1. Revenue Memorandum Circular No. 9-68 dated March 1, 1968, the subject matter of which is cross-checking of recipients of income liable to file income tax returns with the master file of taxpayers. 2. Revenue Memorandum Order No. 8-67, dated February 1, 1967, the subject matter of which is the submission of a separate report on the internal revenue tax payments of the taxpayer for the period or years investigated. C. Separate reports on the withholding tax on wages shall be prepared for transmittal to the Withholding Tax Division in the National Office for processing and evaluation. D. Likewise, separate reports shall be prepared for each kind of tax for an intelligent, adequate, systematic and accurate review by superior officers. X. Miscellaneous Provisions A. Cases determined by the Commissioner of Internal Revenue as sensitive, policy, or affecting national security shall be given priority over all other cases by the Division undertaking the investigation. These shall include cases referred by the President of the Philippines, Congress, and the Secretary of Finance. B. All unverified returns of a taxpayer for previous years shall be included in the authority for the latest year. C. If two or more authorities were issued for different years to different examiners, the examiner assigned the latest year shall be given the right to consolidate the investigation. If authorities were not served upon the taxpayer within thirty (30) days after issuance, they shall be cancelled and surrendered. D. No letter of authority or memorandum letter for the investigation of the estate and inheritance tax liabilities shall be issued until after the required return is filed in accordance with the provisions of section 96 of the National Internal Revenue Code or after the return has become due but no return has been filed and no request for extension for filing the return was made. When estate and inheritance tax returns are filed within the time prescribed in Section 93 of the Tax Code, it may be made the basis for the issuance of an authority for package audit for the taxable year it was filed. E. In the investigation of estate and inheritance tax returns all unverified tax returns of the deceased shall be included in the investigation. XI. Repealing Clause The provisions or portions thereof of Field Circular Nos. V-70 and V-157, Revenue Administrative Order No. 6-67, Revenue Memorandum Circular Nos. 20-64; 22-64; 21-65; 30-65; 33-65; 40-65 and 27-65 and Revenue Memorandum Orders Nos. 28-64; 14-65 and 29-65, which are inconsistent with the provisions of this Revenue Administrative Order are hereby revoked or amended accordingly. XII. Effectivity This Revenue Administrative Order shall take effect upon approval thereof. aisadc MISAEL P. VERA Commissioner of Internal Revenue APPROVED: CESAR VIRATA Acting Secretary of Finance