Modification to RMO 12-86 and the Manner of Funding Tax Refunds on Excess of Withholding Taxes on Individual Income

February 9, 1988 REVENUE MEMORANDUM ORDER NO. 08-88 SUBJECT : Modification to RMO 12-86 and the Manner of Funding Tax Refunds on Excess of Withholding Taxes on Individual Income TO : All Revenue Officers and Others Concerned OBJECTIVES: This Order is issued: 1. To prescribe guidelines for the implementation beginning January 1, 1988 of the New Disbursement System (NDS) for funding the refund on excess taxes withheld on individual income and the withdrawal by PNB as the servicing bank for such refund which necessitated certain changes in the present procedures. aisa dc 2. To delineate the functions of each office/division/unit involved in the refund of excess taxes withheld in the meantime that the provisions of EO #127 reorganizing the BIR has not been fully implemented and operational. POLICIES: 1. Land Bank of the Philippines (LBP) shall be the new servicing bank for all tax refunds processed by the Revenue Computer Center (RCC) beginning January 1, 1988. 2. All refund documents pertaining to the servicing bank shall now be prepared and addressed to the Land Bank of the Philippines. 3. All payments for tax refunds shall be chargeable against a lump sum appropriation provided in the Annual General Appropriations Act. A separate current account with the LBP shall be opened and maintained for tax refund purposes. 4. Any balance of the allotment released for tax refunds which is in excess of the actual cash requirements for a certain quarter may still be utilized up to the end of the year when the allotment was released. However, unobligated allotment at year-end shall be reverted to the Unappropriated Surplus of the General Fund. Likewise, current account deposits equivalent to the unobligated allotment at year-end shall be remitted to the National Treasury thru the issuance of a commercial check in favor of the Treasurer of the Philippines. All amounts representing unclaimed refunds shall be adjusted to account 82-000. 5. The issuance of Tax Credit Certificate (TCC) is hereby discontinued. 6. All refunds above P10.00 will be paid in cash thru LBP while those amounting to P10.00 and below will no longer be refunded. 7. Since the fund to be used for refund purposes shall be drawn from the lump sum appropriation of the Bureau, using a new Fund Code 105, the responsibility for recording and accounting for the same shall be vested with the Disbursement Accounting Division (DA). 8. All unexpired tax refund notices (TRN) in the possession of tax refundees may still be presented to PNB for payment. However, after the expiry date, the refundee can claim his refund thru a written request addressed to the CIR attaching his expired TRN. If the TRN cannot be produced for any valid reason, a certification from DAD may be used as a substitute thereof. A new TRN will be issued payable thru the LBP. 9. All outstanding TCCs may still be encashed in the prescribed manner under RMO 12-86 provided the 5-year period from date of issuance has not lapsed. Corollary to this, the Trust Fund for TCCs (now as cash advance chargeable against Fund Code 105) shall be maintained until the expiration of the last batch of TCCs released. PROCEDURES: The following are the changes in the present procedure: 1. Revenue Computer Center (RCC) Generate the following reports: a) Tax Refund Payroll (TRP) not more than 2,000 refundees in a payroll Original Auditor Duplicate DAD Triplicate LBP All copies shall be transmitted to LBP first. The original and duplicate shall be returned to the BIR later duly signed by the individual payees and shall be used for liquidation purposes. b) TRP Summary per LBP Branch Original LBP Duplicate DAD Triplicate Budget Division Quadruplicate RCC c) Tax Refund Notices (TRN) one copy Tax Refundees d) TRN Transmittal List Original General Services Division Duplicate Withholding Tax Division e) List of Refundable ITRs (for attachment to each batch of ITRs) one copy Regional Office concerned At the end of the semester f) Report on Defective Refundable Returns One copy Office concerned g) Tax Refund Alpha List (overall and by region) Overall : one copy WTD By Region : one copy Regional Office concerned h) Reconciliation Report Original COA Duplicate DAD Triplicate RCC Forward to DAD three copies each of the TRP and TRP Summary per LBP Branch; Forward to General Services Division (GSD) the TRNs with the two copies of the TRN Transmittal List; Forward to the regions concerned the List of Refundable ITRs with the corresponding returns, for safekeeping; Forward at the end of the semester the other documents to the offices per distribution list. 2. Disbursement Accounting Division Receive from RCC and check the mathematical accuracy of the totals reflected on the TRP Summary per LBP Branch; Forward TRP Summary per LBP Branch to Budget Division; retain TRP; Certify to the availability of funds by signing on the appropriate space in the ROA and TRP; Prepare Request to Debit Current Account addressed to LBP, Q.C. for the signature of the Asst. Commissioner (Financial Service) or his authorized representative; Receive from Personnel & Administrative Service the approved TRP with attachments; Forward to LBP the original, duplicate and triplicate copies of the TRP, the original copy of the TRP Summary per LBP Branch and the original and duplicate copies of signed Request to Debit Current Account as basis for the payment of tax refund; Follow the same accounting procedures as those for general fund transactions. 3. Financial Service Review documents and sign on the certification portion of the TRP. cd 4. Internal Control Unit Pre-audit the TRP with its attachments coming from Financial Service. 5. Budget Division Prepare in 7 copies and sign Request for Obligation of Allotment (ROA) based on Summary; Original DAD Duplicate BD (suspense file) Triplicate DAD Quadruplicate BD (with obligation no.) Quintuplicate to be attached to TRP Sextuplicate DAD Sextuplicate COA Forward the ROA with the TRP Summary per LBP Branch to DAD; retain office copy of the ROA and TRP Summary; 6. General Services Division Receive from RCC the TRNs in window envelopes with the TRN Transmittal List; Seal envelopes and mail to the refundees two weeks after the request to Debit Current Account and other tax refund documents have been transmitted to LBP, Q.C. branch office; Furnish WTD a copy of the TRN Transmittal List after mailing the notices, 7. Land Bank of the Philippines Process all refund documents received from BIR; Pay in cash the refundees upon 1. presentation of the original TRN 2. satisfaction of the requirements for identification purposes 3. signature on the three (3) copies of the TRP Return to the BIR (DAD) the original and duplicate copies of the TRP duly signed by the refundees within sixty (60) days after the expiration date of the TRNs or earlier in case all the refundees in the TRP have been paid. REPEALING CLAUSE: Portions or provisions of RMO 12-86 dated April 23, 1986 and all other issuances, orders, circulars which are inconsistent with this order are hereby repealed and/or modified accordingly. EFFECTIVITY CLAUSE: This Order shall take effect January 1, 1988. BIENVENIDO A. TAN, JR. Commissioner