Extending the period for implementing letter of Instructions No. 308

December 29, 1975 REVENUE MEMORANDUM ORDER NO. 01-76 SUBJECT : Extending the period for implementing letter of Instructions No. 308 TO : All Internal Revenue Officers and others concerned In view of the increasing clamor coming from tax practitioners, from taxpayers with delinquent accounts and as recommended by revenue officials who observed that more time is needed by taxpayers concerned to study and prepare their respective compromise proposals on controverted deficiency assessments which constitute the bulk of the Bureau's inventory of outstanding tax accounts, the period for implementation of Letter of Instructions No. 308, issued August 22, 1975, is hereby extended up to the end of March, 1976. Accordingly, the existence and work of the National and Regional Review Committees, their review officers and other supportive assignments as well as the observance and compliance of the rules, procedures, guidelines and reports of accomplishments as organized and prescribed in Revenue Memorandum Orders Nos. 45-75, 45(A)-75 and 50-75, including related subsequent instructions, are hereby similarly extended, except the provisions of III-A and III-B of Revenue Memorandum Order No. 45-75 which are amended hereunder. 1. Cases of delinquent accounts where the compromise offer is made during the period of extended implementation, i.e., from January to March 31, 1976, shall be settled and closed as follows: a. Those falling under III-A of RMO 45-75 may be settled by the payment of an amount which shall not be less than 60% of the total tax liability. b. Those falling under III-B of RMO 45-75 shall be settled and closed by the payment of an equivalent sum falling within the range of the following minimum and maximum percentages of the total tax liability as defined in RMO 50-75: Settlement Acceptable Based on Total Amount Due 1. Where taxpayer is insolvent or otherwise suffering from financial distress 25-40% 2. Where the corporate taxpayer has been dissolved and no successor-in- interest has been ascertained or is ascertainable, except the board of directors and other officials who continue to remain liable under existing jurisprudence 20-40% 3. Where evidence is insufficient or hard to obtain 20-40% 4. Where taxpayer's property is outside the territorial jurisdiction of the country 20-40% 5. Where collection enforcement would be difficult because of prior adverse claims on taxpayer's assets 20-40% 6. Where the assessment/s are of doubtful validity 20-40% 7. Where the interest of the government is best served by avoiding long, tedious and costly litigation 25-45% 2. Delinquent accounts of taxpayers who were duly advised of the provisions of LOI 308, either through written notices, call-up collection letters or personal contacts or interviews, received by or effected on such taxpayers on or before December 31, 1975, where such particular taxpayer or authorized representative ignored such notice or letter, or refused or failed to offer or signify an intention to make a compromise settlement as of said December 31, 1975, shall, upon the offer being made during the period of the extension, be settled in the same way as Nos. 1 (a) and (b) hereinabove. 3. Delinquent accounts where the offer of compromise was made on or before December 31, 1975, as determined hereunder, shall be settled within the range of percentages prescribed in III-GUIDELINES of Revenue Memorandum Order No. 45-75, notwithstanding the fact that the process of evaluation or the Memorandum of recommendation is made or submitted after December 31, 1975. The date when a written offer of compromise was made shall be primarily determined by the date of its receipt in a BIR office as stamped or noted on the face thereof. An offer made or signified verbally shall be proven by a certification of the internal revenue officer to whom made, stating the exact date and the circumstances under which the verbal offer was made. 4. With respect to delinquent accounts involving bouncing checks, their settlement under LOI 308 should conform to the policy and schedule laid down by the Commissioner in his 1st indorsement, dated December 10, 1975 to the Chief, Prosecution Division, regardless of the date the offer of compromise was made in those permissible cases. The policy is to the effect that bouncing checks issued in payment of strip, documentary and science stamps or other accountable properties or forms cannot be the subject of compromise settlement. Other kinds of taxes covered by bouncing checks may be settled for at least 80% of face value where no case for prosecution or collection is pending in a court or fiscal's office, and not less than 100% if such a case is pending. 5. Accomplishments that could be claimed under LOI 308 shall consist only of cases of delinquent accounts reviewed and evaluated pursuant to its provisions and those of paragraphs III-A, B, C and D of Revenue Memorandum Order No. 45-75. The practice of some regional offices reporting as accomplishments under LOI 308 those delinquent accounts paid even before August 25, 1975 (the date of the first memorandum of instructions to regional offices), and those cancelled by reason of lost or missing docket/papers which are beyond reconstitution or retrieval should be stopped. The actions closing those accounts are no doubt accomplishments under Operation Clean-Up Receivable Accounts (CURA), to be evaluated as such and credited accordingly, or as part of the collection output in the regular course, but obviously not under LOI No. 308. However, a delinquent account that is subsequently determined to be uncollectible or deemed extinguished by reason of taxpayers immunity under any of the tax amnesties falls under the "similar circumstances" provision of LOI No. 308, and paragraph III-C of RMO 45-75, and, therefore, the action recommending and approving the cancellation is a valid accomplishment under LOI No. 308. An earnest and faithful implementation of LOI 308, and compliance of its implementing rules and procedures by all concerned are hereby enjoined. EFREN I. PLANA Acting Commissioner