Prescribing the Procedures on the Processing of Value-Added Tax (VAT) Returns Originating from the Seven (7) NPCS Pilot RDOs

December 18, 1991 REVENUE MEMORANDUM ORDER NO. 04-92 SUBJECT : Prescribing the Procedures on the Processing of Value-Added Tax (VAT) Returns Originating from the Seven (7) NPCS Pilot RDOs TO : All Internal Revenue Officers and Others Concerned I. OBJECTIVE: This Order prescribes the detailed procedures and delineation of functions of each office/division involved in the processing of VAT returns received from the seven (7) pilot RDOs falling under the New Payment Control System (NPCS), as embodied in RMO No. 19-91. II. LIMITATION: This Order covers the processing of VAT returns received from taxpayers of the seven (7) NPCS pilot RDOs (310 - Mandaluyong, 240 - Quiapo, 351 - Marikina, 320 - East Makati, 321 - West Makati, 590 - Mandaue City, 890 - Davao City) for the period July to October, 1991. III. PROCEDURES: The following procedures on the processing of VAT returns are hereby prescribed for the guidance and compliance of all concerned. 1. ON PROCESSING ORIGINAL COPIES OF VAT RETURNS A. VAT DIVISION 1. Receive the originals of BCS-A, BCS-B or DRTL with attached original copies of VAT returns/ATAPs from PO/CR Monitoring Division; cd 2. Encode pertinent data from VAT returns/ATAPs and BCS-A and BCS-B; Note down any discrepancies or incompleteness which cannot be encoded; 3. Generate computer totals of different batches (payment total/batch total/document count) and match them with their respective BCS totals. 3.1 In case of mismatch, review encoded data and make the necessary corrections consistent with the information on the return/ATAP, particularly the machine validated amount; 4. Generate the following diskette/reports and transmit to offices concerned within the specified time frame: Diskette/Reports Destination Time Frame a. Diskette containing RISSI within 21 days all the encoded after the filing information deadline or 10 days after receipt of documents from PO/CR Monitoring Div. b. Batch Discrepancy RAD-Processing Not later than the Report (Annex A) Section 25th day of the following month for returns received in the preceding month. c. Report on Late PO/CR Monitoring - do - Batches (Annex B) Division d. Bank Collection PO/CR Monitoring - do - Control Ledger Division (Annex C) 5. Summarize discrepancies manually noted from returns/ATAPs and BCS received during the month and prepare exception reports using the format prescribed in "Annex D" for transmittal to PO/CR Monitoring not later than the 25th day of the following month. 6. Segregate the encoded ATAPs from the batch of original copies of VAT returns and forward together with a transmittal list to the issuing offices concerned not later than the 30th day of the following month, for verification of payments and attachment to the respective dockets; 7. Transmit the following listings to the RDO concerned upon receipt from RISSI: a. Original copy of the Monthly List of Stop-Filers/Non-Filers by TIN with three (3) copies of Reminder Letter to stop-filers/non-filers. b. Original copy of the Monthly List of Late-Filers by TIN. c. Duplicate copy of the Monthly Alphabetical List of VAT Filers. d. Follow-up List of Stop-filers/Non-Filers (after six (6) months). 8. Transmit the original copy of the Monthly Alphabetical List of VAT Filers and the original copies of BCS/DRTL with attached original copies of VAT returns to the Administrative Branch of the Regional Office concerned for safekeeping not later than the 30th day of the following month. B. REVENUE INFORMATION SYSTEMS SERVICES, INC. (RISSI) 1. Receive from VAT Division the diskette/tape of VAT returns field; 2. Generate the following listings within ten (10) days from receipt of diskette/tape, and transmit the same to the VAT Division together with the diskettes/tapes, to be distributed as follows: a. Monthly List of Stop-Filers/Non-Filers by TIN (Annex E) Original - RDO Duplicate - VAT Division b. Reminder Letter to Stop-Filers/Non-Filers (Annex E-1) Original - VAT Taxpayer Duplicate -RDO Triplicate - VAT Taxpayer (as follow-up letter in case taxpayer fails to respond to the original) c. Monthly List of Late-Filers by TIN (Annex F) Original - RDO Duplicate - VAT Division d. Monthly Alphabetical List of VAT Filers (Annex G) Original - Administrative Branch Duplicate - RDO Triplicate - VAT Division The list shall show the name of the taxpayer and the receiving bank code, BCS number and the taxpayer's TIN (e.g. 007012-91001-123450789) which shall correspond to the Document Locator Number (DLN) indicated in the triplicate copy of the return. 3. Generate Monthly Alphabetical List of VAT Taxpayers with payments by Regional Office (RO)/National Office (NO) for ATAPs, following the BCS-A format/to be distributed as follows: Original (by RO/NO) - Collection Service (all listings) Duplicate (by RO) - Collection Branch Concerned 4. Generate and transmit to VAT Division, two (2) copies of follow-up List of Stop-Filers for a particular month showing the names of taxpayers who after six (6) months (two quarters) have not yet filed the required return. C. REVENUE DISTRICT OFFICE (RDO) 1. Receive from VAT Division the original copy of the Monthly Alphabetical List of Stop-Filers/Non-Filers and Late-Filers together with the reminder letters; 2. Deliver personally to stop-filer(s)/non-filers the original copy of the reminder letter(s). Mail the triplicate copy fifteen (15) days after in case the taxpayer fails to respond to the original letter; 3. Conduct inquiry with the bank branch concerned in case taxpayer shows proof/evidence of having filed a return. Report to PO/CR Monitoring Division the non-transmittal/reporting of return filed if the return presented by the taxpayer is authentic. Otherwise, conduct investigation of the taxpayer to determine his source of fake validated return; 4. Submit to the Revenue Regional Director a list of stop-filers/non-filers who failed to respond to the two (2) reminder letters fifteen (15) days after mailing the second reminder letter; 5. Conduct field verification of these stop-filers/non-filers; 6. Prepare and submit to VAT Division a report on taxpayers who stopped filing due to business closure as discovered during the verification stage; 7. Update the Monthly Alphabetical List of Stop-Filers/Non-Filers on the compliance of taxpayers to the filing of tax returns, based on the validated/received copy of return presented by the taxpayer or the List of Late-Filers received from VAT Division; cd i 8. Receive from VAT Division a follow-up List of Non-Filers/Stop-Filers for a particular month after six months (two quarters). And, based on the field verification conducted on the listed taxpayer, prepare and send a memorandum to the Chief, VAT Division citing the reasons why said taxpayers are still included in the list. D. ADMINISTRATIVE BRANCH 1. Receive the batches of original copies of VAT returns and the Monthly Alphabetical List of VAT Filers from the VAT Division for future reference; 2. File the batches of VAT returns according to RDO, receiving bank branch and BCS number. 2.A. REVENUE DISTRICT OFFICE (RDO) 1. Pick up daily the quadruplicate and duplicate copies of BCS-A and BCS-B, respectively, or the duplicate copies of DRTL with attached triplicate copies of VAT returns/ATAPs from the accredited bank branch; 2. Segregate out-of-district returns; 3. Prepare transmittal list for out-of-district returns received during the week and forward the same with attached copies of said returns to the respective RDOs not later than Friday of the following week; 4. Assign a document locator number (DLN) on the returns filed by simply indicating the Bank Code, BCS Number and the TIN of the taxpayer on the space provided for DLN; 5. Fill-up part IV on Value-Added Tax returns of the Monthly Summary of Tax Returns Filed (Annex H) and furnish the Statistical Analysis Division, the RISSI and the Assessment Branch a copy of said Monthly Summary not later than the 20th day following the end of each month. 6. Check notation of payments on the returns and send the necessary demand letters to taxpayers with tax balances and/or unpaid penalties for out-of-district, late filing of return and late payment of tax due; 7. Segregate returns listed for selective audit by the Special Operation Service (SOS), National Office (NO) and those selected for field audit by the RDOs in accordance with the selective audit program prescribed in RMO No. 36-90; 8. Prepare separate transmittal list(s) for returns listed for selective audit by SOS, NO and for those not selected for field audit by the RDO. Transmit the same with attached copies of corresponding returns to SOS, NO and the Assessment Branch, RO, respectively not later than thirty (30) days from the end of the month when the returns were received; (The Regional Director shall be copy furnished with the transmittal list(s). 9. Assign to Revenue Officers the tax cases selected for field audit, investigation of which must be completed within 120 days from date of issuance of LAs; 10. Forward all field audit reports to Assessment Branch for review. B. ASSESSMENT BRANCH 1. Receive from various RDOs the VAT returns not selected/listed for field audit by either SOS or the RDOs; 2. Segregate from the returns received those listed as office audit cases, in accordance with the selective audit program prescribed under RMO No. 36-90; 3. File other returns not selected for audit for future reference; 4. Assign to Revenue Officers tax cases selected for office audit, investigation of which must be completed within 120 days from date of issuance of LAs; 5. Transmit audit reports/sheets and Transcript of Assessment of tax cases which resulted in deficiency assessments to Collection Branch for issuance of the necessary collection letters/notices; 6. Review reports of investigations of field audit cases and forward the same to the Regional Director for approval of tax case within the jurisdiction of the Regional Office; or for endorsement to the National Audit Review Division of cases falling within the jurisdiction of the National Office for final review and approval by authorized officials. C. SPECIAL OPERATIONS SERVICE (SOS) 1. Receive from the RDOs the VAT returns selected for audit by the National Office pursuant to the RMO approved by the CIR. 2. Distribute said returns to the divisions under SOS for field audit. cd i IV. REPEALING CLAUSE: All orders, circulars and other issuances or portions thereof inconsistent with this RMO are hereby amended or modified accordingly. V. EFFECTIVITY: This Order shall cover VAT returns received by all RDOs participating in the pilot implementation of the New Payment Control System beginning July 1, 1991. (SGD.) JOSE U. ONG Commissioner of Internal Revenue