Collection of Delinquent Tax Returns (Trial Run. Phase II of Tax Returns Compliance Program)

January 11, 1968 REVENUE MEMORANDUM ORDER NO. 01-68 SUBJECT : The Collection of Delinquent Tax Returns (Trial Run. Phase II of Tax Returns Compliance Program) TO : The Regional Director of Regional Office No. 6, Revenue District Officer of Revenue District No. 25 and all others concerned I. PURPOSE: To put to the test the quality of data gathered and the effectiveness of procedures and controls for the collection and processing of delinquent returns. cdta II. SCOPE: 1. Area of operation to be limited to Revenue District No. 25 (Caloocan City). 2. It shall cover all internal revenue taxes determinable. III. PERIOD: The period for accomplishing this project shall be from January 15 to February 15, 1968 scheduled as follows: January 15, 1968 Briefing, orientation and assignment of cases to fieldmen. Jan. 16 to Feb. 9 Field contact of non-filers by the fieldmen to collect delinquent tax returns. Feb. 12 to 15 Winding up, evaluation and submission and final reports. IV. POLICY STATEMENTS: 1. (a) All persons required under the law to file tax return(s) shall be given a chance to file said return(s) voluntarily in which case the compromise to be imposed incident to delinquency shall be nominal only and in accordance with existing circular. However where a person is discovered to have accumulated extensive property holdings, no compromise should be accepted. Instead the case should be referred immediately to the case should be referred immediately to the National Tax Fraud Unit as a fraud case. (b) If a person required by law to file a tax return, upon apprehension and notice by an internal revenue officer, still refuses to file the required tax return(s), he shall be prosecuted to the fullest extent the law shall allow. 2. (a) The performance of all revenue officials and employees participating in this program shall be taken into consideration in the advancement and/or transfer of the personnel concerned and his record of performance should be included in his 201 file for consideration in rating his efficiency. (b) All the fieldmen in Revenue District No. 25 (Caloocan City) shall be utilized in the field contact of non-filers along the same organizational and functional lines as presently constituted. Fieldmen having in their possession tax cases in danger of prescribing shall submit their respective lists to the Revenue District Officer who shall take appropriate action to prevent prescription. V. PROGRAM OF RESPONSIBILITY: The Assessment Department shall monitor the program and take charge of the over-all management and must ensure that all supervisory officials at National and Regional levels participating therein fully understand their respective duties as required in the program and that they carry them out completely and satisfactorily. The Collection Department shall provide assistance, through the Collection Branch in the regional office concerned and through the collection agents and cash clerks stationed within the jurisdiction of the revenue district concerned and must ensure that all collection personnel participating therein fully understand their respective duties and that they are carried out completely and satisfactorily. The Management Planning Department shall provide guidance and technical assistance and such active participation by service units under its supervision as needed in the program. It shall develop the necessary procedures and controls for effective implementation of the program and at its termination conduct a study for re-defining and improving, if and where necessary, said procedures and controls for nation-wide application. The Regional Director of Regional Office No. 6, must ensure that the branch offices and the revenue district office participating in the program fully understand their respective functions and that they are carried out completely and satisfactorily. The Revenue District Officer of Revenue District No. 25, shall be fully responsible, for the operation of the program within the revenue district. This shall include such factors as the indoctrination and orientation of revenue examiners, assignment of cases and their timely completion, case control and prompt and correct reporting on the program. Group Supervisors to be involved in the program shall be responsible for the operation of the program within their respective groups. This shall include such factors as prompt assignment and action on cases, counseling in interview techniques concerning the contact of non-filers, timely completion and correctness of reports submitted, and all other aspects of the program which would normally be considered as a group function. They must ensure that revenue examiners under them fully understand the objectives of the program and the important part they shall perform to assure its success. VI. COMPLIANCE ANALYST TEAM (CAT): In order to give substance and attract favorable reception from the tax-paying public and so as to incite the highest degree of dedication to the service from the officials and employees who shall participate in the program, there should be created, a Compliance Analyst Team which shall report directly and be responsible to the Deputy Commissioner of Internal Revenue. Its function is to inquire, evaluate and submit, where necessary, remedial and/or recommendatory measures on the following points: 1. Performance of personnel assigned to the program. Commendations and incentive awards shall be given for outstanding performance while a study should be undertaken to look into the cause or causes why other employees do not have the motivation to work with equal fervor. 2. Compliance with policy statements, instructions and procedures. If there is a breakdown or failure, studies should be made to determine why there was indifference or failure on the part of the employee concerned to understand and carry out his duties as required in the program. 3. Effectiveness of the data utilized, procedures and controls used in the collection of delinquent tax returns, to determine its adequacy and whether they will fit when applied on a long-range implementation. 4. Public reaction to the behavior of the fieldmen during the interview or contact of non-filers. VII. EFFECTIVITY: This Order shall take effect immediately. MISAEL P. VERA Commissioner of Internal Revenue Republic of the Philippines DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE MANILA December 28, 1967 MEMORANDUM for The Revenue Operations Head (Management Planning) In connection with the attached memorandum of the Chief, Tax Information Division relative to the proposed plans to give greater publicity to the taxpayer account number (TAN) referred to this Office for study, hereunder are our comments and recommendations: This Office concurs with the plans enumerated by the project coordinator in his memorandum except for the following observations and suggestions: Item I This plan is quite vague as presented. It is not explicit on the content of the memorandum and how it shall be distributed. It is suggested that instead of a memorandum, a letter be sent to every establishment requiring them to indicate in their respective annual list of employees containing the amount of taxes withheld from each employee (W-1), to be submitted to the Withholding Tax Division, the corresponding TAN of every employee listed therein. Item 4 The Demand Receipt poster should not be cluttered with boxed reminders or markings about TAN. It will only distract the attention of the taxpayers from the real purpose of the poster since its subject matter is not in any way related to the use of the TAN. The reader might be confused thereby defeating the purpose and the intention to publicize the importance of TAN's, besides the unsightly effect it will produce on the posters. It would therefore be much better if a separate sticker or poster exclusively about the TAN and its uses be printed and posted in public places. Item 7 We are proposing the issuance of the attached memorandum order instead of a circular since the Commissioner is issuing instructions to be followed by the field offices. The uses or importance of TAN's are also included in this Order. Item 8 The statement on the proposed rubber stamp is incomplete. It does not state when the TAN shall be used. It is suggested that the statement to be superimposed on the envelopes of every outgoing correspondence should be complete in itself. "Always use your TAN when filing Income Tax Returns" or "Indicate your TAN in replying to this letter" are samples of such statements. They are at least definite and direct to the point. Lastly, it is suggested that the Demand Receipt poster be revised to make it look more interesting and attractive. As it is now designed, the poster looks drab and does not easily attract the attention of the taxpayers. The use of color scheme and short sentences would be more pleasing and attention getting. However, before revising the poster, the remaining 6,500 should first be exhausted. LLjur MELCHOR S. RAMOS Acting Chief, O & M Division