Cross-Checking of Recipients of Income Liable to File Income Tax Returns with the Master File of Taxpayers

March 1, 1968 REVENUE MEMORANDUM ORDER NO. 09-68 SUBJECT : Cross-Checking of Recipients of Income Liable to File Income Tax Returns with the Master File of Taxpayers TO : The Revenue Operations Heads (Special Operations and Assessment), Division Chiefs under the said Departments, Revenue Regional Directors, Chiefs of Assessment Branches, Revenue District Officers and Others Concerned To supplement the Tax Returns Compliance Program thru improvements in tax administration, the following procedures are hereby prescribed for the guidance of all concerned: cdt 1. In the submission of Field Audit Reports, the details of the deductions claimed which constitute income to the recipient such as salaries, bonuses, allowances, commissions, fees, rentals, interests, tenant's share, distribution of estate income, and income distribution like dividends, partner's share, etc. must be shown by the investigating examiner in the worksheet in accordance with the suggested format in the Handbook of Audit Techniques and Procedures. 2. For those employees who received salaries and other compensation, verification should be made whether the corresponding income tax returns have been filed; whether the employee has been given a taxpayer account number and to list down such numbers in the worksheet; and whether the taxes due from the employees have been withheld and paid by the employer to the Bureau of Internal Revenue. The official receipt numbers showing the payment of withholding taxes for the years under review or investigation should be noted down and included in the schedule of internal revenue taxes paid by the taxpayer during the period being investigated as required by Revenue Memorandum Order No. 8-67. 3. Determine from the records of the taxpayer whether B.I.R Form No. 17.01B's have been prepared for and issued to all those subject to the issuance thereof in accordance with Sec. 77 of the National Internal Revenue Code and whether copies of said forms were submitted to this Office. 4. For violations of the withholding tax regulations, and the provisions of the Code requiring the submission of information discussed in the preceding paragraphs and which have been settled thru compromise agreements, the information needed should nevertheless be required to be submitted. Payment of the compromise does not relieve the taxpayer concerned from the submission of the required reports of information. 5. If verification disclosed that the recipients of income failed to file the required returns, no investigation shall be conducted on these taxpayers, but such fact should be stated in his report and a request should be made for investigation of the taxpayers concerned if same is warranted. 6. All supervisory officials from the Group Supervisors up to the Revenue Regional Director or Revenue Operations Heads are hereby held responsible for the strict compliance by the fieldmen within their respective jurisdictions of the foregoing procedures. Any field audit report pending in their respective offices should be returned to the fieldmen concerned for fulfillment of the required information outlined in the preceding paragraphs and such reports should be called up within thirty (30) days from the receipt thereof. If the fieldmen who made the original investigation is no longer in the Revenue District, the Revenue District Officer shall assign the docket to another examiner for gathering the information required in this order. 7. Copies of the worksheets containing the reports required should be forwarded to the Data Processing Center. 8. In the case of the 1967 income tax returns which are now being filed, the original of form 17.01B should be detached from the income tax return by the Assessment Branch and forwarded to the Data Processing Center separately from the original of the income tax return. This Order shall take effect immediately. MISAEL P. VERA Commissioner of Internal Revenue