Audit/Investigation of Cooperatives

February 10, 2020 REVENUE MEMORANDUM ORDER NO. 007-20 SUBJECT : Audit/Investigation of Cooperatives TO : All Regional Directors, Revenue District Officers, Chiefs of the Assessment Divisions of Regional Offices, Revenue Officers and Others Concerned I. Background Republic Act (RA) No. 10963, otherwise known as the "Tax Reform for Acceleration Inclusion" (TRAIN) Law, has amended Section 6 (A) of the National Internal Revenue Code under RA No. 8424, now authorizing the Commissioner or his duly authorized representative to examine any taxpayer and the assessment of the correct amount of tax, notwithstanding any law requiring the prior authorization of any government agency or instrumentality . Thus, the requirement of securing authorization from the Cooperative Development Authority (CDA) before the examination of the books of accounts and other accounting records of the cooperative as provided under Section 61 (3) of RA No. 9520 otherwise known as the "Philippine Cooperative Code of 2008" is no longer applicable. II. Objective 1. To ensure the correctness of availment of tax exemptions/incentives of cooperatives pursuant to Republic Act No. 9520; and 2. To effectively monitor tax compliance of cooperatives. III. Coverage This Order shall cover the issuance of electronic Letters of Authority (eLAs) for the audit/investigation of cooperatives for taxable years 2018 and onwards. IV. Audit Policies and Guidelines 1. Cooperatives which transact business with both members and non-members whose accumulated reserves and undivided net savings is more than Ten Million Pesos (Php10,000,000.00) shall be prioritized for audit/investigation by Revenue District Offices having jurisdiction over the said cooperatives. Further, other cooperatives with income not related to the main/principal business/es under their Articles of Cooperation shall likewise be among those covered for priority audit, whether such cooperatives deal purely with members or both members and non-members. 2. The policy on the maximum workload of thirty (30) cases per Revenue Officer (RO) shall not be applicable to the audit of cooperatives under this Order. 3. The Selection Code to be used for cases covered by this Order shall be "COOP." 4. The Electronic Letter of Authority Monitoring System (eLAMS) shall be used in the request, approval and issuance of eLAs, as well as in reporting the accomplishments on eLAs issued. 5. To ensure the close monitoring of cooperatives audited under this Order, the following reports shall be prepared and submitted by the Revenue District Officers to the Assistant Commissioner-Assessment Service, Attention: The Chief, Audit Information Tax Exemption & Incentives Division through email address [emailprotected], not later than the 10th day of each month: Name of Report Annex 5.1 List of Cooperatives with Electronic Letters of Authority (eLAs) Issued A 5.2 Monthly Summary of Accomplishment on Audit of Cooperatives B V. Repealing Clause All other issuances and/or portions thereof inconsistent herewith are hereby repealed, modified or amended accordingly. VI. Effectivity This Order shall take effect immediately. (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue ANNEX A List of Cooperatives with Electronic Letters of Authority (eLAs) Issued ANNEX B Monthly Summary of Accomplishment on Audit of Cooperatives