Statement of Functions of the Collection Service Including the Divisions Under It Down to Section Level

April 8, 1988 REVENUE ADMINISTRATIVE ORDER NO. 14-88 SUBJECT : Statement of Functions of the Collection Service Including the Divisions Under It Down to Section Level TO : All Internal Revenue Officers and Others Concerned I. Objective : This Order implements more effectively the Reorganization of the Bureau under Executive Order No. 127 defining, delineating and expanding the functions of the Collection Service and its Divisions pertinent to collection activities. Also, it formally elevates the PO/CR Monitoring Unit to a Division, which shall be transferred to the Financial Service. casia II. Organization : The Collection Service shall have the following Divisions and respective Sections: A. Accounts Receivable/Billing Division 1. Tax Billing Section 2. General Accounts Control Section 3. National Accounts Section B. Collection Enforcement Division 1. Warrant Preparation Section 2. Warrant Service and Enforcement Section 3. Seized and Forfeited Properties Section C. Collection Performance Evaluation Division 1. Collection Systems Evaluation Section 2. Collection Performance Evaluation Section 3. Reports Consolidation and Administrative Section D. Withholding Tax Division 1. Field Verification Section 2. Expanded Withholding Tax Section 3. Final Tax and Government Money Payment Withholding Tax Section 4. Compensation Income Withholding Tax Section III. Functions : The Collection Service shall have the following functions: 1. Perform staff, advisory and consultative functions relating to collection matters; 2. Develop and recommend policies and work programs and set up standards, guidelines and procedures relative to bureau-wide collection activities; 3. Review and evaluate performance of the field service relative to collection activities to determine adherence to policies, procedures and standards; 4. Supervise activities relative to the implementation of all laws, rules and regulations on the withholding tax system; 5. Direct and supervise the preparation and issuance of assessment notices and demand letters based upon approved audit reports and examination of returns, and set up receivable accounts inventory; 6. Review and prepare recommendations on requests of taxpayers for compromise/abatements of their delinquent accounts in connection with the Bureau's tax campaigns; 7. Recommend necessary tax legislations and regulations on the basis of its operations and experiences which shall serve as inputs to the tax planning and research efforts of the Planning and Research Service; cd i 8. Coordinate with the Assessment and Legal Offices relative to protested cases and with the Financial Service relative to monitoring of revenue collections; 9. Direct and supervise the activities of the divisions under this Service and exercise technical supervision over field offices on collection matters; and 10. Perform such other related functions as may be assigned to it. A. The Accounts Receivable/Billing Division shall have the following functions: 1) Administer the receivable accounts program of the Bureau; 2) Develop and recommend policies and prepare work programs, procedures and methods for the control of receivable accounts; 3) Bill taxpayers on assessed tax cases and prepare corresponding original entry into the books of accounts; 4) Monitor and consolidate the general control ledger for all receivable accounts; cd i 5) Coordinate with the assessing units where the deficiency assessment originates, Records Division, Revenue Computer Center, Legal Office, Revenue Accounting Division and other units affected in the collection of receivable accounts; 6) Prepare a register of taxpayers' liabilities for tax clearance purposes and for verification before tax credits or frauds are granted; 7) Evaluate offers of compromise for the settlement of delinquent accounts and prepare corresponding recommendations; 8) Control, maintain and analyze a perpetual inventory system on the following: a) all receivable accounts as indexed individually; b) backpay certificates applied in payment of tax liabilities; and c) tax credits and tax debits. 9) Reconcile dockets with Form 40.00 reports received from assessing units; 10) Supervise the safekeeping of dockets while they are in the possession of the Division and attach to the corresponding docket all communication and data received pertinent to cases/dockets handled; and acd 11) Perform such other related functions as may be assigned to it. A-1 Tax Billing Section a) Prepare demand letters and assessment notices of tax cases with duly approved transcript of assessments issued by the investigating units of the Bureau; b) Compute interests and other increments on deficiency tax cases assessed and demanded; c) Prepare and maintain a monthly summary of tax cases assessed and/or demanded (BIR Form 40.00) in accordance with existing requirements; d) Prepare and update individual index cards for every tax account assessed and demanded to indicate the status and/or whereabouts of the dockets; acd e) Record and transmit taxpayer's protest letter or request for reinvestigation or reconsideration with the corresponding docket to the concerned assessing unit; f) Maintain special logbooks for cases/dockets charged out to divisions/units in the National and Regional Offices; g) Coordinate with different assessing divisions of the National Office to facilitate the preparation of demand letters and assessment notices; and h) Perform such other related functions as may be assigned to it. A-2 General Accounts Control Section a) Maintain books of accounts such as Monthly Summary of Taxes Assessed and/or Demanded (BIR Form 40.00), Subsidiary Ledger (BIR Form 27.06), General Control Ledger (BIR Form 12.53) and other accounting control devices for a systematic recording of all assessed and generated accounts receivable reflecting accurate and current data for information needs of top management; b) Keep separate registers of national-assessed and regional-assessed accounts for facility in setting up jurisdictional responsibilities and as bases of analysis of collections relative to national goals; c) Maintain special logbooks to record dockets charged out of the division for action by other units; d) Monitor the movement and status of tax assessment pending settlement by posting the information to subsidiary ledger card (BIR Form 27.06) and institute call-up system until the same are collected and/or closed; e) Reconcile the quarterly report of inventory of dockets submitted by other units of the Bureau with the perpetual inventory devices maintained in the division; f) Update inventory of receivable accounts by: f-1) monitoring the dockets and documents received and closed during the month; f-2) posting to the inventory control devices the accounts paid or closed by ATCA during the month to the general control ledger (BIR Form 12.53) f-3) consolidating the data for national and regional accounts in the general control ledger; and f-4) monitoring and debiting to the general control ledger the unpaid second installment income tax and dishonored checks involving national accounts. g) Prepare Authority to Cancel Assessment whenever 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; h) Update the whereabouts and status of dockets through regular reconciliation of the quarterly inventory reports received with the inventory control devices; i) Analyze collection performance by comparing accounts closed in relation to the actual collection made for the period; j) Prepare monthly statements of accounts receivable; k) Effect the payment agreed upon to be settled as deficiency tax before protests of taxpayers are entertained; l) Issue payment orders for deficiency tax assessments and prepare the corresponding reports needed for top management; m) Process applications for tax clearance certificates and issue the corresponding certificates of clearance; acd n) Prepare abstracts of delinquent taxpayers for notification to the Department of Foreign Affairs and National Bureau of Investigation (NBI); o) Perform such other related functions as may be assigned to it. A-3 National Accounts Section a) Maintain an inventory of receivable accounts (BIR Form 40.00) involving the amounts of P20,000.00 or over assessed by the Divisions in the National Office; b) Control national accounts by maintaining individual subsidiary ledger (BIR Form 27.06) and General Control Ledger (BIR Form 12.53); c) Prepare collection letters for taxpayers and tracers to different divisions/units handling collection dockets for the expeditious collection of receivable accounts within the prescribed period; d) Maintain special logbooks to record dockets charged out of the division for action by other units; e) Verify accuracy and validity of reports which are the bases for setting up receivable accounts by counter-checking the dockets including attachments with the Monthly Summary of Taxes Assessed and/or Demanded (BIR Form 40.00); f) Check the correctness of compliance in the filing of Surety Bond and Waiver of Prescription to guarantee payment of receivable accounts; g) Compute increments for late payments of taxes and prepare the corresponding authority to accept payment; h) Evaluate and act on request to pay taxes by installment and keep a register of accounts granting such requests; i) Analyze trends and progress in the collection of deficiency tax assessments involving national accounts; and j) Perform such other related functions as may be assigned to it. B. The Collection Enforcement Division shall have the following functions: 1) Administer and enforce tax lien thru seizure, garnishment, distraint or levy of personal and/or real property; cdt 2) Develop and recommend policies, work programs, standards, guidelines and procedures for the effective enforcement of tax lien; 3) Coordinate with other offices, divisions, units of the Bureau and other government entities for the proper and effective enforcement of tax lien; 4) Issue, serve and/or execute warrants of distraint and/or levy or warrants of garnishment to enforce tax lien and/or the settlement of delinquent taxes; 5) Direct and supervise public auction sale of properties of delinquent taxpayers, to account for the fruits of forfeited properties and the transfer of such properties, if not sold, to Public Estate Authority; 6) Enforce the collection of tax due from dishonored checks involving national accounts and monitor the redemption of dishonored checks charged to the Regional Offices; 7) Safeguard the dockets while they are in the possession of the division and control all data and communications received and attach them to the corresponding dockets; 8) Submit to Receivable Accounts Division quarterly inventory of dockets for reconciliation purposes; and 9) Perform such other related functions as may be assigned to it. cd i B-1 Warrant Preparation Section a) Analyze dockets with delinquent accounts to determine the most effective means of collecting such delinquents; b) Evaluate information/data on tax cases as reported by fieldmen for warrant preparation and attach such communications to corresponding dockets; c) Prepare documents preparatory to the enforcement of tax lien such as notice of tax lien, notice of levy, warrants of distraint or levy, and warrants of garnishment; d) Forward to the regional offices warrants of distraint and/or levy to enforce collection of delinquent accounts (less than P20,000) for taxpayers residing within their jurisdiction and require a status report on these cases; e) Evaluate and act on taxpayer's request for compromise, reinvestigation and installment payment; f) Prepare schedule of installment payments requested by taxpayers if warranted, and maintain a control register for accounts granted installment payments; g) Prepare communications to taxpayers, to other agencies and to other divisions within the Bureau relative to the expeditious collection of delinquent accounts; h) Keep and maintain history cards (BIR Form 27.06) to record all actions taken on each docket or case; acd i) Maintain special logbooks to record dockets charged out of the division for action by other units; and j) Perform such other related functions as may be assigned to it. B-2 Warrant Service and Enforcement Section a) Serve warrants of distraint and/or levy, notices of tax lien, and warrants of garnishment issued by the Warrant Preparation Section against taxpayers' properties or property rights to enforce collection of their delinquent accounts; b) Search and ascertain the whereabouts of delinquent taxpayers falling within the jurisdiction of the National Office; c) Execute summary processes within the period prescribed by tax code to satisfy taxpayers' delinquent accounts and/or dishonored checks; cd i d) Serve and execute writs of execution issued by the Court of Tax Appeals and submit corresponding report of the action taken thereon to the Legal Service; e) Coordinate with government agencies (National Bureau of Investigation (NBI), Securities and Exchange Commission (SEC), Bureau of Land Transportation (BLT), Register of Deeds, Police Agencies, Bureau of Immigration and Deportation, Intelligence Offices and others) in gathering information on taxpayers with pending tax liabilities and dishonored check cases in enforcing their tax lien; and f) Perform such other related functions as may be assigned to it. B-3 Seized and Forfeited Properties Section a) Supervise and control properties declared forfeited to the government, including their disposition thereof; b) Recommend guidelines and procedures on the handling and disposition of said properties; c) Take necessary steps to effect transfer of titles of real properties declared forfeited in favor of the Republic of the Philippines; d) Maintain and update the inventory and records of all seized and forfeited properties of the Bureau; e) Conduct field inspection to verify whereabouts, status, inventory and civil fruits of seized and forfeited properties; aisa dc f) Prepare required reports on seized and forfeited properties for submission to the Commission on Audit; and g) Perform such other related functions as may be assigned to it. C. The Collection Performance Evaluation Division shall have the following functions: 1) Develop and recommend policies, work programs, and work standards for the evaluation and appraisal of the collection performance of revenue personnel, revenue regions including their districts, and the divisions under the Collection Service; 2) Evaluate revenue regional collection performance to determine adherence to standards, guidelines and procedures; 3) Collate collection reports/data from all collection units and other divisions to generate necessary statistics needed for the evaluation and appraisal of collection personnel performance and methods and systems operation; 4) Determine and analyze problems on collection and recommend solutions thereof; 5) Render technical assistance to Regional Offices in the implementation of new standards, procedures or techniques to improve collection; 6) Act as liaison between the national and field offices and government agencies to facilitate submission of collection reports/data needed by top management; 7) Monitor the reports received from the field offices on the unreconciled payment orders and take appropriate action thereof; 8) Reconcile POs submitted by the Accounts Receivable/Billing Division (AR/BD), International Tax Affairs Division (ITAD), and Insurance Commission against reports made under BIR Form 12.56 submitted by the banks; and 9) Perform such other related functions as may be assigned to it. C-1 Collection Systems Evaluation Section a) Recommend policies, guidelines, standards and procedures on the evaluation and appraisal of revenue collection systems and procedures; b) Conduct field systems audit to check the extent of compliance to or deviation from the standard operating procedures; c) Determine and analyze the problems on collection systems discovered during the systems audit which resulted in the failure of the systems and recommend solutions thereto; d) Prepare systems audit guides to be followed during systems audit; e) Maintain a system of controlling, monitoring and inspecting metering machines used in the revenue regions; f) Conduct inventory of collection tax dockets and dishonored checks to determine losses and prescription of cases and to report to superior officers personnel responsible for such losses; g) Prepare and submit collection systems audit reports; and h) Perform such other related functions as may be assigned to it. C-2 Collection Performance Evaluation Section a) Recommend policies, guidelines, standards and procedures on the evaluation and appraisal of collection performance of all collection personnel; b) Monitor the reports and activities of revenue collection officers and other collection personnel; c) Maintain complete and updated records of assignments, transfers, promotions, etc. of all collection personnel; d) Recommend for punitive action collection personnel whose reports are perenially and frequently delayed and/or erroneous; e) Conduct periodic personnel performance audit in field offices to determine adherence to set standards and establish factors that induce effectiveness and efficiency and those which adversely affect performance; f) Review and evaluate dockets including cases on dishonored checks placed under suspense file where the whereabouts of the delinquent taxpayers are reported to be unknown, to find out whether the fieldmen assigned to handle them had performed their jobs according to standards; g) Determine level of competence and/or training needs of collection personnel; cdt h) Validate outstanding performance of collection personnel reported by field units; i) Identify revenue collection personnel deserving promotions or transfers/reassignments based on their performance; and j) Perform such other related functions as may be assigned to it. C-3 Reports Consolidation and Administration Section a) Monitor and consolidate by type of collection reports submitted by field offices to the Collection Office; b) Reconcile Payment Orders POs submitted by Accounts Receivable/Billing Division (AR/BD), International Tax Affairs Division (ITAD) and Insurance Commission against reports made under BIR Form 12.56 submitted by the banks; c) Monitor the number of Revenue Official Receipts and/or payment orders issued by the Revenue Collection Officer assigned in the Collection Station in order to determine the number of personnel needed in each Collection Station; d) Conduct research on the need for office equipment and facilities for each Collection Station; e) Prepare and maintain Reports of Collection (F12.33) and Abstract of Collections of reconciled Payment Orders (POs) and Confirmation Receipts (CRs) to be submitted to Accounting Division; f) Reconcile Premium Tax Returns attached to the POs sent by the Insurance Commission, to be forwarded to Regional Office concerned; g) Monitor reports of collection by kind of tax under Revenue Memorandum Order No. 32-84 as amended by RMO 4-88; h) Monitor and consolidate reports submitted by Regional Offices regarding the number of taxpayers and the amount of income tax paid and unpaid for second installment; and i) Perform such other related functions as may be assigned to it. D. The Withholding Tax Division shall have the following functions: 1) Develop and recommend policies and work programs for an efficient and effective implementation of the withholding tax system of the Bureau; 2) Set up standards, guidelines, procedures and techniques relating to withholding tax operations and activities; casia 3) Administer, implement and enforce all laws, rules and regulations pertaining to the withholding of taxes on the following categories of income payments: a) Compensation income; b) Income payments covered by the expanded withholding tax system; c) Income payment subject to final taxes; c-1) non-resident c-2) passive income d) Money payments by the government to private persons/entities; 4) Coordinate and monitor the implementation of the Withholding Tax System in the regional offices and in other offices/divisions within and outside the Bureau to determine adherence to standards, guidelines and procedures; 5) Conduct evaluation and analysis of programs, procedures, standards and problems on the withholding tax system to recommend necessary tax legislations, regulations, improvements and solutions thereto; cd i 6) Conduct field verification of withholding agents to determine compliance with withholding tax laws and regulations; 7) Keep file of original copies of Annual Withholding Tax Returns (BIR Form 17.43B), Batch Control/Transmittal Slip Withholding Tax Returns (BIR Form W-6), and Monthly Withholding Tax Reports (BIR Form W-7); 8) Monitor reports of withholding tax collection submitted by regional offices; 9) Monitor the receipt, transmittal and processing of withholding tax returns; 10) Monitor and maintain an updated register of withholding agents by kind of withholding tax; and 11) Perform such other related functions as may be assigned to it. D-1 Field Verification Section a) Conduct actual field audit verification of withholding agents to determine their compliance to withholding tax laws and regulations; b) Review payroll, allowance and pension accounts of withholding agents as against monthly, quarterly and annual returns filed and the remittance thereon to establish correct payroll taxes due; acd c) Review accounts of withholding agents representing income payments subject to final withholding tax to establish correct final liabilities and to determine compliance with the required filing of returns and remittance of taxes withheld; d) Review income payment accounts of withholding agents as classified against monthly, quarterly and annual returns filed and the amount paid to the Bureau; e) Review accounts of government bureau offices and instrumentalities to determine compliance with withholding tax laws and regulations as well as compliance with the provisions of Republic Act 1051, including the return (BIR F 7.50, Withholding Tax Return) and remittances of taxes withheld; f) Prepare and submit memorandum reports of verification, findings of facts, applicable laws and regulations, conclusions and recommendations for the assessment and collection of deficiency withholding taxes on withholding agents verified; g) Prepare assessment notices, demand letters, authority to change assessments and F40.00 Report as a result of the pre-audit of the withholding tax returns filed by the withholding agents; and g) Perform such other related functions as may be assigned to it. D-2 Expanded Withholding Tax Section a) Audit and process withholding tax returns on expanded withholding tax system (BIR Form 17.43B, Annual Return of Creditable Income Tax Withheld); b) Prepare assessment notices, demand letters, authority to change assessments and BIR Form 40.00 Report as a result of the pre-audit of the withholding tax returns filed by the withholding agents; c) Keep file of original copies of Annual Withholding Tax Returns (BIR Form 17.43B), Batch Control/Transmittal Slip Withholding Tax Returns (BIR Form W-6), and Monthly Withholding Tax Reports (BIR Form W-7); d) Verify taxes withheld under the expanded withholding tax system with respect to corporate taxpayers claiming tax credit as refund; e) Monitor reports of withholding tax collections submitted by regional offices; f) Monitor the receipt, transmittal and processing of withholding tax returns; and g) Perform such other related functions as may be assigned to it. casia D-3 Final Tax and Government Money Payment Withholding Tax Section a) Audit and process annual withholding tax returns (BIR Forms 17.43B, Annual Return of Final Income Tax Withheld and 17.45A, Annual Return of Taxes Withheld on Interest Paid on Deposits and Yield on Deposit Substitutes/Trusts/etc.), quarterly returns (BIR Form 17.45, Quarterly Return of Taxes Withheld on Interest Paid on Deposits and Yield on Deposit Substitutes/Trusts/etc.) and monthly returns (BIR Form 7.50A, Monthly Return of Internal Revenue Taxes Withheld on Government Money Payments; b) Prepare assessment notices, demand letters, authority to change assessments and BIR Form 40.00 Report as a result of the pre-audit of the withholding tax returns filed by the withholding agents; c) Keep file of original copies of Annual Withholding Tax Returns (BIR Form 17.43B), Batch Control/Transmittal Slip Withholding Tax Returns (BIR Form W-6), and Monthly Withholding Tax Reports (BIR Form W-7); d) Monitor reports of withholding tax collections submitted by regional offices; e) Monitor the receipt, transmittal and processing of withholding tax returns; f) Maintain an updated register of withholding agents of final tax and government money agents; and g) Perform such other related functions as may be assigned to it. D-4 Compensation Income Withholding Tax Section a) Audit and process withholding tax returns on compensation (BIR Form W-3, Annual Return of Income Tax Withheld on Compensation); b) Prepare assessment notices, demand letters, authority to change assessments and F40.00 Report as a result of the pre-audit of the withholding tax returns filed by the withholding agents; c) Keep file of original copies of Annual Withholding Tax Returns (BIR Form 17.43B), Batch Control/Transmittal Slip Withholding Tax Returns (BIR Form W-6), and Monthly Withholding Tax Reports (BIR Form W-7); d) Monitor reports of withholding tax collections submitted by regional offices; e) Monitor the receipt, transmittal and processing of withholding tax returns; aisa dc f) Maintain an updated register of withholding agents on compensation; and g) Perform such other related functions as may be assigned to it. IV. Repealing Clause : This Order supersedes all revenue issuances or portion thereof inconsistent herewith. V. Effectivity : This Order shall take effect immediately. casia BIENVENIDO A. TAN, JR. Commissioner