Clarification of Revenue Memorandum Circular Nos. 15-91 and 34-91 and Revenue Audit Memorandum Order No. 2-91

May 2, 1991 REVENUE MEMORANDUM CIRCULAR NO. 43-91 SUBJECT : Clarification of Revenue Memorandum Circular Nos. 15-91 and 34-91 and Revenue Audit Memorandum Order No. 2-91 TO : All Internal Revenue Officers and Others Concerned There have been reports reaching in this office that Revenue Memorandum Circular Nos. 15-91 and 34-91 and RAMO 2-91, which were recently issued by this Bureau, should be clarified in order to prevent irritations between revenue officers and taxpayers due to conflicting interpretations and to achieve uniform application of the rules prescribed therein. This Circular is hereby issued to provide additional guidelines in the implementation of the policies and rules embodied in the above-stated circulars and order. 1. RMC 15-91 dated March 11, 1991: This Circular subjects to the 5% lending investor's tax the gross income of pawnshops pursuant to Section 116 of the Tax Code, and it thus revokes BIR Ruling Nos. 6-90, and VAT Ruling Nos. 22-90 and 67-90. In order to have a uniform cut-off date, avoid unfairness on the part of taxpayers if they are required to pay the tax on past transactions, and so as to give meaning to the express provision of section 246 of the Tax Code, pawnshop owners or operators shall become liable to the lending investor's tax on their gross income beginning January 1, 1991. Since the deadline for the filing of percentage tax return (BIR Form No. 2529A-0) and the payment of the tax on lending investors covering the first calendar quarter of 1991 has already lapsed, taxpayers are given up to June 30, 1991 within which to pay the said tax without penalty. If the tax is paid after June 30, 1991, the corresponding penalties shall be assessed and computed from April 21, 1991 . cd i Since pawnshops are considered as lending investors effective January 1, 1991, they also become subject to documentary stamp taxes prescribed in Title VII of the Tax Code. BIR Ruling No. 325-88 dated July 13, 1988 is hereby revoked. RMC 34-91 dated April 8, 1991: This Circular prescribes the rule against ante-dating of sales documents for sales, exchanges or transfers of real properties. The same rule has been extended to transactions involving motor vehicles pursuant to RMC 35-91 dated April 1, 1991. In order to remove doubts as to what rules to apply and when to impose penalties for late filing of tax return and payment of tax, the following rules are hereby prescribed: a. When there is only a delay in the presentation of sales document, the rules on the kind of tax, rate of tax, zonal or fair market value, obtaining at the date of notarization shall be applied but the penalties for late filing of return and payment of tax shall be imposed. There is a delay in the presentation of sales document when the taxpayer submit said document to the BIR after 30 days from date of notarization. The delay could be in terms of days, months or even years. For this purpose, taxpayers have the burden of proving by the submission of other documents such as cancelled checks, official receipts, contract to sell, or certification of the archive official, to show that there is no ante-dating of public instrument . cd i b. When the document is presented to the BIR after three months from date of notarization and the taxpayer cannot present additional receipts or documents to show that the same is not ante-dated, then the rules applicable at the time of presentation of the document shall be applied but no penalty shall be imposed. It is expected that by applying the current rules, a higher tax will be collected from the taxpayer than when the old rules plus penalties had been followed. 3. RAMO 2-91 dated February 18, 1991: The revised rules in determining the taxable base for sales, transfers or other disposition of real property including improvements thereon, shall be applied to transactions consummated and documents notarized on or after June 1, 1991. This Circular should be given the widest publicity as possible. (SGD.) JOSE U. ONG Commissioner of Internal Revenue