Preparation of a "Masterlist of Taxpayers" in pilot Revenue District Offices for the Integrated Tax Systems (ITS)

February 19, 1996 REVENUE MEMORANDUM ORDER NO. 04-96 SUBJECT : Preparation of a "Masterlist of Taxpayers" in Pilot Revenue District Offices for the Integrated Tax Systems (ITS) TO : All Revenue District Officers and Others Concerned I. OBJECTIVES a.) To prescribe procedures for purifying, updating and upgrading of existing taxpayer's information files in order to establish a "Masterlist of Taxpayers" compatible with the Integrated Tax System (ITS) in selected Pilot Districts. b.) To define the roles and specify the required actions of the participating offices in this endeavor to enable the undertaking to proceed in an orderly and coordinated manner. II. PILOT DISTRICTS This order covers the following Pilot Revenue District Offices. 1. RDO No. 30 Binondo District Revenue Region No. 6, Port Area, Manila 2. RDO No. 32 Quiapo-San Miguel-Sta. Mesa-Sampaloc District Revenue Region No. 6, Port Area, Manila 3. RDO No. 33 Ermita-Intramuros-Malate-Port Area District Revenue Region No. 6, Port Area, Manila 4. RDO No. 52 Paraaque District Revenue Region No. 8, Makati City 5. RDO No. 81 Cebu-North District Revenue Region No. 13, Cebu City III. PROCEDURES 1.0 The participants in the development of a Masterlist of Taxpayers are: The National Office, The Regional Data Centers (RDC); and the Pilot Revenue District offices whose functions in general are as follows: National Office Extract selected taxpayer's data from VATIS and TIN Master Files from which a report denominated as "Masterlist of Taxpayers "shall be prepared and then forwarded to the pilot RDOs for purification, and update. Pilot District Retrieves taxpayer's information from all sources within the district as specified in 1.3 and conducts purification procedures. Source documents must be used to confirm that a taxpayer belongs to that district. Regional Data Center (RDC) Updates taxpayer information in the Integrated Tax System (ITS) database based on data from the updated application forms submitted by the taxpayers at the pilot districts. 1.1 The following deadlines are set for the completion of the masterlist of taxpayers: Deadline for Inclusive Dates to Purify Business Entities February 19 to March 29, 1996 Employees March 01 to April 25, 1996 1.2 Each pilot district must ensure that all registered taxpayers in their respective areas of jurisdiction are captured in the ITS database by having their names included in the purified masterlist. 1.3 Individuals who were issued/assigned TIN thru their employers must be included in the said list. Non-individual and individual taxpayers engaged in business or in the practice of profession who were previously registered must also appear in the said list. The possible sources of information are enumerated as follows: 1.3.1.0 FOR INDIVIDUALS 1.3.1.1 Local employees or persons with fixed income . Data from the ISOS TIN Masterfile, Tax Returns, copies of BIR Form No. 1743-IR, and Alphalist of employees regularly submitted by employers. 1.3.1.2 Self Employed . Data from Registration Logbooks and index cards at the Registration and Regulatory Section (RRS). Other sources of information are Tax Return Logbook, and Returns Transmittal List. 1.3.1.3 Individuals with Mixed Income . Individuals who are employed and engaged in business and/or practice of profession at the same time must not be included in the list as employees . They should be advised to update their records at the Revenue District Office where their business address is located. Sources of information are: TIN Master File, VATIS, Registration Logbooks, Index Cards, Tax Returns Logbooks. 1.3.1.4 Overseas Contract Workers . OWCs except those who filed BIR Form No. 1710-C returns at Foreign Posts should be included in the masterlist. Sources of information are: TIN Master File from ISOS, index cards, Returns Transmittal List, Return logbooks and the duly filed BIR Form No. 1710-C returns. 1.3.2.0 FOR NON-INDIVIDUALS 1.3.2.1 Corporations, Partnerships, Cooperatives, Joint Ventures, Educational and Medical Institutions, Organization (Civic, religious and charitable), etc . Taxpayer's data may be gathered from Regional Logbooks and index cards at the Registration and Regulatory Section (RRS). Other sources of information are returns logbook, Returns Transmittal List and VATIS records. 1.3.2.2 Government Owned or Controlled Corporations (GOCCs), Government Agencies and Local Government Units . Taxpayer's data are available at the Withholding Tax Unit of the Document Processing Section. Information may also be retrieved from the registration logbooks, index cards, returns transmittal list TIN Master File and VATIS records. Government Agencies and Local Government Units (LGUs) are to be included in the listings inasmuch as under ITS they are required to register for being withholding agents. 2.0 SPECIFIC PROCEDURE 2.1.0 NATIONAL OFFICE 2.1.1 Extract selected taxpayer data from VATIS and TIN Master file and load them to a temporary file. These data include: * TIN Taxpayer Identification Number * Registered Name The taxpayer's name appearing in the TIN card and/or other registration outputs. * RDO Code The RDO number and the area covered (e.g. RDO No. 33 Ermita-Malate-Intramuros-Port Area). * Branch Code The branch number and the branch code, if available. * Address Individual address for individuals or registered address for non-individuals; 2. Business Address or 3. Branch Address whichever is applicable. Indicate the House/Street Number., Street Name, Barangay, District, City/Municipality, Province and Zip Code. * Registered Date The date of registration. * Sex Code Indicates whether a taxpayer is "Male" or "Female" * Birthdate Indicates the date of birth of the taxpayer. * Tax Type Refers to all internal revenue taxes for which a taxpayer is required to file a tax return and pay such taxes (e.g. income tax, excise tax, withholding tax, VAT, percentage taxes, etc.) * Taxpayer Classification Indicates whether a taxpayer is an individual (natural person) or non-individual (juridical person). From these files a masterlist of registered taxpayers will be automatically generated. 2.1.2 Forward the masterlist generated in 2.1.1 to pilot RDOs which shall initiate purification and cross checking procedures by verifying the taxpayer data against the source documents available at the pilot districts. 2.1.3 Receive the purified masterlist of registered taxpayers from the pilot RDOs. Data encoders shall immediately update these data into the temporary file using a program specifically developed for conversion purposes. Data encoding shall be done in accordance with the procedures prescribed during the training sessions in order to ensure the accuracy of taxpayer data transfer to the ITS database. 2.1.4 Generate Update Letters and send them to taxpayers concerned together with application forms and instruction booklets. 2.1.5 Perform task incident to conversion that might be identified later including the preparation of specific guidelines containing, among others, the detailed procedures in handling the generation and issuance of registration outputs enumerated in 2.3.4 hereof. These guidelines shall form part of this Order. 2.2.0 PILOT DISTRICTS 2.2.1 BUSINESS ENTITIES . Refers to all non-individual (Corp./Partnership/GOCCs/LGUs, etc.) and individual taxpayers engaged in business or practice of Profession. 2.2.1.1 Pilot district shall gather taxpayer data needed for conversion purposes from all possible sources within their respective jurisdiction. Sources of taxpayer information include all documents containing taxpayer data retrievable at the different sections/units of the district such as: Registration and Regulatory Section (RRS) * Registration Logbooks * Index Cards * Certificate of Registration (File Copy) * Masterlist of Registered Taxpayers (Latest) Document Processing Section (DPS) * Returns Transmittal List * Index Cards * List of Filers (Income Tax; Percentage * Tax; VAT) * Other sources available (e.g. physical files of tax returns) 2.2.1.2 Receive from the National Office the list referred to in 2.1.2 and purify the same by cross checking the data contained therein against sources of information from the district. Pilot districts shall, for every taxpayer name, 1) indicate in the list the source document where such name was verified; and, 2) put a check mark on the name recommended for inclusion in the list. 2.2.1.3 Note down taxpayer names which were not included in the list received from the National Office but which were verified to be duly registered and regularly filing returns as shown in the records of the RDO. A list containing the names and other selected data of these taxpayers should be prepared and appended to the original list provided by the National Office to ensure data capture of these taxpayers in the ITS Database. Records which appear in the masterlist but which cannot be verified by the RDO shall be tagged as deleted. The following procedures shall be adopted by Pilot Districts in registering walk-in taxpayers and/or transferees from other districts. * Supply taxpayer with the new ITS application form * Receive duly accomplished application form and verify completeness of all required information and attachments (e.g. photo/logo, etc.) * Issue a pre-generated TIN being used under the current system * Issue Certificate of Registration using the currently adopted form * Include taxpayer name in the list to be appended to the original list as required above. 2.2.1.4 Submit the purified list to the National Office after across checking and verification procedures are done. In no case shall a list be submitted later than the deadline set under 1.1 to give National Office encoders ample time to perform the tasks specified under 2.1.3 above. 2.2.1.5 Create a Front Desk Team which shall perform the following functions: * Establish a dropbox center to receive returned or duly updated application forms from the taxpayers; * Assist taxpayers in filling-up the application forms; * Perform quick checks on pre-submitted application forms; * Perform manual verification of all submitted application forms. This would entail checking the completeness of data and attachments. If incomplete, require the taxpayer to supply the needed information; * Coordinate with third party card generator for the payment of the fee for the TIN Card. * Other related function. 2.2.1.6 Manually batch by fifties duly accomplished application forms and submit them to the Regional Data Center (RDC) concerned for updating. Incomplete application forms shall not be forwarded to the RDC until all the pertinent data are completely supplied by the taxpayers concerned. 2.2.1.7 Monitor the taxpayers who failed to update records after the conversion period. Take appropriate actions and make the necessary recommendation. 2.2.1.8 Perform other conversion related tasks which might be identified later. This would entail error handling and cleanup procedures . 2.2.2. EMPLOYEES Taxpayers deriving purely compensation income arising from an employer-employee relationship as defined and implemented by Revenue Regulations No. 4-93 are classified under this category. The following shall be followed: 2.2.2.1 Gather all possible sources of taxpayer information retrievable at the different sections/units of the district such as BIR Form No. 1743-IR together with the alphalist of employees submitted yearly by employers to the Withholding Tax Unit, index cards, List of tax filers and the physical tax returns filed by taxpayers available at the Document Processing Section. 2.2.2.2 Purify the list referred to in 2.1.2 provided by the National Office by cross checking the data contained in the list against the sources of data gathered. Pilot districts shall for every taxpayer name: 1) indicate in the list the source document where such name was verified; and, 2) put a check mark on the name/s that are finally recommended for inclusion in the list. 2.2.2.3 Take note of taxpayer names that are not in the list but should have been there as they are regularly filing tax returns. A list containing the names and other selected data of these taxpayers should be prepared and appended to the original list provided by the National Office to ensure data capture of these taxpayers in the ITS Database. In cases where a taxpayer name appeared in the list provided by NO but could not be traced from the source documents available at the district, such name should be marked " deleted " so that the same will not be captured by the NO data encoders. The procedures specified for business entities under 2.2.1.3 above in handling registration of walk-in taxpayers and transferees shall also be adopted for employees, except for the issuance of certificate of registration since employees do not need this upon registration. 2.2.24 Submit the purified list to the National Office after cross checking and verification procedures were done. In no case shall a list be submitted later than the deadline set under 1.1 give National Office encoders ample time to perform the tasks specified under 2.1.3 above. 2.2.2.5 Taxpayer assistance service should be extended to the taxpayers (employees) who need to be clarified either on the registration application form or on the mechanics of "taxpayer record update". This type of service can be delivered effectively by selecting large employers and assigning RDO personnel who shall assume the following functions: * Coordinate with third party TIN card generator for the payment of the fee. * Explain to employees the mechanics and benefits of taxpayer record update . * Assist employees in filling up the application forms correctly. * Conduct quick checking procedures (check completeness of data and attachments). All employers including those who do not belong to large employers shall collect the duly accomplished application forms from their respective employees and subsequently submit them together with the corresponding Transmittal List of Employees direct to the Front Desk Team of the pilot district concerned created under of the 2.2.1.5 above for further appropriate action. 2.2.2.6 Manually batch duly accomplished application forms by fifties and submit them to the Regional Data Center (RDC) for updating. Incomplete application forms shall not forwarded to the RDC until all pertinent data are completely supplied by the taxpayers concerned. 2.2.2.7 Monitor taxpayers who failed to update records after the conversion period. Take appropriate actions and make necessary recommendations. 2.2.2.8 Perform other conversion related tasks that might be identified later. This would entail error handling and cleanup procedures . 2.3.0 REGIONAL DATA CENTER (RDC) 2.3.1 Receive manually batched application forms from Pilot Districts. 2.3.2 Assign the batched application forms for encoding. 2.3.3 Update taxpayer information in the ITS database with the data from the updated Application forms. 2.3.4 Generate the following registration outputs: * New Registrants Report * Taxpayer Identification Number (TIN) card * Certificate of Registration * Permit to Operate for excise taxpayers 2.3.5 Issue the outputs generated above to the taxpayers except the New Registrants report. 2.3.6 Perform tasks incident to conversion that might be identified later. IV. REPEALING CLAUSE All other existing issuances inconsistent herewith are hereby repealed, amended or modified accordingly. V. EFFECTIVITY This Order shall take effect immediately upon approval. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue