Printing, Distribution, Accountability and Issuance of Letters of Authority

July 1, 1967 REVENUE MEMORANDUM CIRCULAR NO. 27-67 SUBJECT : Printing, Distribution, Accountability and Issuance of Letters of Authority TO : All Internal Revenue Officers and Others Concerned This Office is in receipt of reports that numerous authorities have been issued by different units of the bureau to the extent that in some cases a taxpayer receives more than one authority covering the same period and the same kind of tax. There are even cases where the authorities are fake. In order to clearly define the responsibility for the issuance of letters of authority to investigate tax cases and to remove the causes of irritants between taxpayers and the Bureau of Internal Revenue, the following procedure is hereby promulgated for the compliance of all concerned: I. Authority of Investigate To be Considered as Accountable Forms . A. Heretofore, all letters of authority to investigate the tax liability of any taxpayer shall be printed forms with consecutive serial numbers boldly printed at the upper right hand corner thereof. Each of such forms shall be printed in five copies and bound in pads of fifty sets to each pad. Such forms shall be printed only upon the written authority and approval of the Commissioner of Internal Revenue and shall be similar to the samples hereto attached as Annexes 1 and 2 and which are made a part hereof. B. The Property Division in the National Office which is the custodian of the blank forms of letters of authority shall maintain a permanent record book where the entries are to be made on the issuance of the blank forms. The record book shall indicate therein the following data: 1. Date of Requisition 2. Requisitioning Office 3. Name and Designation of Requisitioning Officer 4. Serial numbers of the Authorities Issued II. Officers Authorized to Requisition Letters of Authority . A. Only Revenue Operations Heads and Revenue District officers are authorized to requisition letters of authority. General Form No. 8.05 used for requisitioning accountable forms shall be used for this purpose. All forms of letters of authority to investigate shall be accountable by the above-mentioned officials. B. Requisitions by Revenue Operations Heads must be coursed than the Deputy Commissioner for Approval and those by Revenue District Officers must be coursed thru the Regional Director likewise for approval. C. It shall be mandatory for the Chief, Property Division to fill up the requisitions for letters of authority as approved by the Commissioner of Internal Revenue and by the Regional Director, respectively, and to forward the requisitions blank forms of authority to the Revenue Operations Heads thru Deputy Commissioner, to Revenue District Officers through the Regional Director of the Region. III. Assignment of Returns, Cases and Dockets . A. All assignments of returns, cases and dockets either for original investigation or reinvestigation, shall always be accompanied by a pre-numbered printed letter of authority in the forms prescribed herein. The authority shall be in the form of a letter addressed to the taxpayer notifying him of the proposed investigation, the kind of tax or taxes to be investigated, the period or years to be covered by the investigation, and the name of the fieldman assigned or authorized to conduct the investigation. cdti B. In the National Office, wherein the returns are still to be requested from Regional Offices, the requisition for returns shall be made immediately after the letters of authority have been signed. The taxpayers to be investigated in accordance with the signed letters of authority shall be grouped by regions and the corresponding request for the duplicate copies of the return shall then be prepared for the signature of the Deputy Commissioner. Upon receipt of the duplicates from Regional Offices, the Revenue Operations Heads shall transmit the duplicates to the examiners concerned. C. No field audit report in the National Office or in the Revenue region shall be given due course by supervisory officials unless the duplicate copy of the return is attached thereto. D. No authority to investigate in the form of a memorandum addressed to the fieldman to investigate certain taxpayers shall be issued, and anyone found guilty thereof shall be administratively dealt with. Even if a memorandum is issued, it shall only be a basis for the issuance of a letter of authority. E. The previous practice of asking for immediate investigation on account of the fact that the taxpayer is leaving for abroad is hereby prohibited. It is only when a resident or nonresident alien is leaving for good without returning to the Philippines will immediate investigation be allowed, but it shall be subject to the approval of the Commissioner of Internal Revenue. IV. Checking of Records Before any authority is prepared, the records of the issuing office shall be checked to determine whether any previous authority have been issued covering the same years previously been issued, no new authority shall be issued unless prima facie evidence of fraud has been established in which case the procedure of referrals and investigation for criminal prosecution shall be followed. cdll V. Issuance of Letters of Authority . The following are the only officials who can issue letters of authority: A. The Commissioner of Internal Revenue for all investigations in the National Office, with the Revenue Operations Heads as recommending officer (Annex 1). B. The Revenue Regional Director for all investigations within or in the revenue district within the region, with the Revenue District Officer as recommending officer (Annex 2). VI. Manner of Preparation of Authorities . A. All letters of authority shall specify with particularity the years or periods to be investigated and the kind of tax to be investigated. The phrases "and other unverified years" and "prior years" with respect to the years to be investigated and "other taxes" with respect to the kind of tax to be investigated are expressly prohibited. B. The authority shall be carefully prepared and erasures must be avoided particularly with respect to the name and address of the taxpayer, periods or years to be investigated, the kind of tax and the name of the examiner to conduct the investigation. If it becomes necessary to make erasures on these items, the authority shall be cancelled and a new one shall be prepared. C. All copies of cancelled authority shall be forwarded by Revenue Operations Heads, and Revenue District Officers, thru the Revenue Regional Director, to the Commissioner of Internal Revenue. A list of the serial numbers of the authorities cancelled shall be attached thereto. A copy of the list prepared by Revenue District Officers shall be forwarded to the Regional Director of the district. D. All divisions in the National Office authorized to conduct field investigations and revenue district officers shall keep an authority register book wherein all authorities issued or cancelled shall be entered. E. The disposition of the five (5) copies of each letter of authority shall be as follows: 1. Original Taxpayer's Copy 2. Duplicate Attached to the report 3. Triplicate Revenue Operations Head's or Regional Director's copy 4. Quadruplicate Division Chief's or Revenue District Officer's copy 5. Quintuplicate Commissioner's copy F. The divisions in the National Office and Revenue District Offices shall keep their copies of the authority in an active file. When the report is submitted and the confirmation letter is released, the copy of the confirmation for the division or district office shall be attached to the corresponding authority in the active file and placed in a permanent file. The active file shall then show at all times the authorities which have not been reported. VII. Service of Authority . The letter of authority shall be served on the taxpayer within ten (10) days after the issuance thereof, and the investigation must proceed continuously after the service until termination. llcd VIII. Confirmation Letter . A. Nature 1. In order to insure the reporting of all tax cases and to protect the taxpayer from unwarranted and unscrupulous investigations, the confirmation letter (Annexes 4 & 5) will be sent to the taxpayer within thirty (30) days from the termination of the investigation. 2. The confirmation letter shall inform the taxpayer that the corresponding report of investigation of his tax liabilities has been submitted to proper revenue officials and that the recommended discrepancies and corresponding deficiency taxes, if any, are being reviewed and processed by supervisory officials. 3. Fieldman conducting investigations are expressly prohibited from signing the books of the taxpayer or issuing a certification of their investigation. b. Confirmation Letter To Be Considered As An Accountable Form . 1. Like the letter of authority, the confirmation letter shall be in printed form with the same serial number as the numbers of the letters of authority. Each of such forms shall be printed in five copies and bound in pads of fifty sets to each pad. The said forms shall be printed and accounted for in the same manner as the letter of authority. It shall be printed in accordance with the samples hereto attached (Annexes 4 & 5) and which are made part of this circular. 2. In sending the letters of authority requisitioned, the Property Division shall see to it that the corresponding quantity and serial numbers of the confirmation letters are also sent with the letters of authority. 3. Revenue Operations Heads and Regional Directors, in transmitting to the Division Chiefs and Revenue District Officers, respectively, the signed letter of authority shall attach thereto the corresponding letter of confirmation. C. Officials Authorized To Issue Confirmation Letters . The Chiefs of Divisions and the Revenue District officers shall be the officials charged with the preparation, signing and releasing of letters of confirmation. D. Cancelled Confirmation Letters . Confirmation letters corresponding to cancelled authorities shall likewise be cancelled and attached to the cancelled authority and forwarded to the Office of the Commissioner. E. Disposition . The manner of disposition of the five copies of the confirmation letter shall be as follows: 1. Original Taxpayer's copy 2. Duplicate Attached to the report 3. Triplicate Revenue Operations Head's or Regional Director's copy 4. Quadruplicate Division Chief's or Revenue District Officer's copy 5. Quintuplicate Commissioner's copy F. The copy of the confirmation letter for the Division or district office shall be attached to the corresponding copy of the letter of authority in the active file of the said offices and transferred to a permanent file. LLphil IX. Reports To Be Submitted . A. Letters of Authority Issued 1. Within five days after the end of each month, a list in quadruplicate shall be prepared by the Revenue Operations Head and Revenue District Officers, of all authorities issued during the preceding month based from the authority register, showing the following information: a. Authority number b. Date of Issue c. Name of Taxpayer d. Address of Taxpayer e. Years or periods covered by the investigation. f. Kind of tax g. Name and Code number of Fieldman assigned. 2. The original and duplicate copies of the list, together with the quintuplicate copy of the authority shall be forwarded to the Commissioner. 3. The original of the list received by the Office of the Commissioner shall be forwarded to the Secretary of Finance, and the duplicate shall be filed with the National Tax Fraud Unit. 4. The triplicate copy of the list prepared by Revenue District Officers together with the triplicate copies of the letters of authority, if they are with the said officer, shall be forwarded to the Regional Director concerned. 5. The remaining copies of the list shall be kept in the division or district office as its file copy. B. Confirmation Letter . 1. Within the same period for the submission of the report on letters of authority issued, a list in triplicate shall be prepared by the Division Chief or Revenue District Officer of all letters of confirmation issued during the preceding month, showing the following information: a. Letter of Confirmation Number b. Date of Letter c. Name of Taxpayer d. Address of Taxpayer e. Years or periods covered by the report f. Name and Code Number of the fieldman who submitted the report. 2. The original of the list together with the quintuplicate copy of the confirmation letter shall be forwarded to the Office of the Commissioner. a. The copy of the confirmation letter shall be matched with the corresponding copy of the letter of authority and placed in a separate file. b. The list shall be used in checking up whether the reports have been forwarded by the division or revenue district office concerned and for compiling statistics on the activities of fieldman. 3. The duplicate of the list shall be forwarded to the Revenue Operations Heads or Regional Director as the case may be, together with the copy of the confirmation letter for the said officials. a. The copy of the confirmation letter shall be matched with the corresponding copy of the letter of authority and filed separately. b. The list shall be used in following up the cases reported and in preparing statistics on the activities of fieldmen. 4. The triplicate copy shall be kept by the division or district office as its file copy. X. Repealing Clause . All revenue circulars, orders or memoranda or portions thereof which are inconsistent with this circular shall be deemed to have been nullified by this Revenue Memorandum Circular and are, therefore, hereby declared without force and effect. LibLex XI. Effectivity This Circular shall become effective upon approval. (SGD.) MISAEL P. VERA Commissioner of Internal Revenue APPROVED: (SGD.) EDUARDO Z. ROMUALDEZ Secretary of Finance ANNEX 1 Republic of the Philippines Department of Finance BUREAU OF INTERNAL REVENUE Manila No. ___________ ________________, 19 _____ ________________________ ________________________ Sir/Madam/Gentlemen : The bearer hereof, Revenue _____________________________________ of the _________________________ Division, whose signature appears hereunder, is authorized to examine your books of accounts and other accounting records for ______________ tax purposes for the year(s)/period(s) ______________. He is provided with an identification card issued by this Office, which shall be presented to you upon request. Only the above-named fieldman shall be allowed to have access to your books of accounts subject to the supervision of his Group Supervisor. cdt It is requested that all facilities be afforded the fieldman in order that the examination which must be done continuously can be expedited. A letter of confirmation on the result of the investigation made hereon will be sent to you within thirty (30) days upon termination thereof, instead of your books of accounts and/or other records being signed by the abovementioned examiner. Should you fail to receive such confirmation, you are requested to inform this Office in writing immediately. Very truly yours, __________________________ Commissioner of Internal Revenue RECOMMENDED BY: _____________________ ____________________________ Revenue Operations Head Fieldman Code No. _________ IMPORTANT : In any communication relative to this subject matter, please address it to the Revenue Operations Head (_________________) or the Chief, ____________________ Division, or call up Telephone Numbers _____________ or _____________________. ANNEX 2 Republic of the Philippines Department of Finance BUREAU OF INTERNAL REVENUE Revenue Region No. _____ Revenue District No. _____ _____________________ (Station Town) No. __________ ________________, 19 _____ _________________________ _________________________ Sir/Madam/Gentlemen : The bearer hereof, Revenue Examiner _________________________ of Revenue District No. _____, whose signature appears hereunder is authorized to examine your books of accounts and other accounting records for ___________________ tax purposes for the taxable year(s)/period(s) ___________________. The examiner is provided with an identification card issued by this office, which shall be presented to you upon request. Only the abovenamed examiner shall be allowed to have access to your books of accounts subject to the supervision of his Group Supervisor or Revenue District Officer. It is requested that all facilities be afforded the examiner in order that the examination which must be done continuously can be expedited. A letter of confirmation on the result of the investigation made hereon will be sent to you by the Revenue District Officer within thirty (30) days upon termination of the investigation, instead of your books of accounts being signed by the abovementioned examiner. Should you fail to receive such confirmation, you are requested to inform this Office in writing immediately. Very truly yours, _______________ Regional Director RECOMMENDED BY: ___________________ ________________________ Revenue District Officer Examiner Code No. ____ IMPORTANT : In any communication relative to this subject matter, please address it to Revenue District Officer or Regional Director or call up Telephone No. __________. ANNEX 3 Republic of the Philippines Department of Finance BUREAU OF INTERNAL REVENUE Manila ________________, 19 _____ ______________________ ______________________ Sir/Madam/Gentlemen : With reference to our letter of authority No. ________, dated _________________, please be informed that the investigation thereof has been terminated and the corresponding report of Revenue ________________ of the ___________________ Division, for the taxable year(s)/period(s) ___________________ has been submitted to this Office. aisadc The findings as reported are subject to review and final approval by the proper officials, of this bureau and final decision thereon will be communicated to you. Very truly yours, _______________________ Chief, ___________ Division IMPORTANT : This letter of confirmation should be posted on the inside cover of the ledger for the year or period investigated. ANNEX 4 Republic of the Philippines Department of Finance BUREAU OF INTERNAL REVENUE OFFICE OF THE REVENUE DISTRICT OFFICER Revenue District No. _____ _____________________ (Station Town) No. ___________ ____________________, 19 _____ ________________________ ________________________ Sir/Madam/Gentlemen : With reference to our letter of authority No. ____________, dated ____________________, please be informed that the results of the investigation thereof has been terminated and the corresponding report of Revenue Examiner ____________________ of this Revenue District Office, for the taxable year(s)/period(s) _______________________ has been submitted. The findings as reported are subject to review and final approval by the proper officials of this bureau and final decision thereon will be communicated to you. Very truly yours, _____________________ Revenue District Officer IMPORTANT : This letter of confirmation should be posted on the inside cover of the ledger for the year or period investigated.