Performance Measurement for Regional Directors, Revenue District Officers, Group Supervisors and Revenue Enforcement Officers in the Regional and District Offices

February 28, 1990 REVENUE MEMORANDUM ORDER NO. 09-90 SUBJECT : Performance Measurement for Regional Directors, Revenue District Officers, Group Supervisors and Revenue Enforcement Officers in the Regional and District Offices TO : All Internal Revenue Officers and Others Concerned I. Purpose This revenue memorandum order prescribes a more equitable and objective method of determining the performance of revenue regional directors (RRD), revenue district officers (RDO), group supervisors (GS) and revenue enforcement officers (REO) performing assessment functions in the regional and district offices, for purposes of promotions, transfers and assignments. cd II. Performance criteria In measuring the performance of internal revenue officers mentioned above, the following factors will be taken into account: 1. Revenue Enforcement Officer-audit effort ratio 2. Enforcement revenue effort ratio 3. Group Supervisor-audit effort ratio 4. Revenue District Officer-audit effort ratio 5. Excess collection effort ratio 6. Revenue Regional Director-audit effort ratio 7. Criminal tax prosecution effort 8. VAT establishment closure effort bonus 9. Program accomplishment effort bonus The performance rating computed by applying the preceding criteria will be subject to demerit for non-compliance with existing issuances and directives determined thru management audit to be conducted from time to time. Any REO, Group Supervisor or RDO who obtains an unsatisfactory score as determined under this RMO will be required to undergo further training. For purposes of promotions, the combined overall weight of the above factors shall be consolidated with the efficiency rating criteria prescribed under the rules of the Commission on Civil Service. III. Definition of terms The term " Revenue Enforcement Officer-audit effort ratio " (REO-AER) means the ratio of the total deficiency taxes determined upon field audit by an individual REO under a duly issued Letter of Authority (L/A) to the total correct internal revenue tax due from the same taxpayers who were audited by the same REO. " Deficiency tax " means - [A] deficiency tax found due (excluding penalties) as a result of the audit to which the taxpayer may or may not have agreed but has not been paid as of the end of the month during which the report was submitted to the RDO and for which a notice of assessment and a letter of demand will be issued in accordance with RMO No. 27-85 (referred to as "Assessment" in the formula) and [B] deficiency tax similarly found due (including penalties) but paid as of the end of the month for which the report is made without the issuance of a notice of assessment and letter of demand (referred to as "Collection" in the formula). For purposes of these criteria, the term "assessment" includes the amount by which a taxpayer's claim for refund or tax credit was reduced upon audit conducted under an L/A. Under the above definition, tax collection arising from audit not covered by L/A, such as capital gains tax on real property and stock transactions, and collections from delinquent accounts are not considered deficiency taxes. If a deficiency tax determination is reported as "Assessment" for a particular month, any portion thereof which may be paid in subsequent month, whether a notice of assessment therefor is issued or not, shall not be accounted for again as "Collection" in the month of payment. If an audit report is reviewed by the RDO or Assessment Branch or other reviewing unit and the same is returned to the REO, any revision of the original findings previously reported as "Assessment" and "Collection", shall not be considered again as "Assessment" and "Collection", as the case may be. The term " correct internal revenue tax due " means the sum of (1) the tax voluntarily declared and/or paid and (2) the total amount of deficiency tax determined as defined above. The term " taxes voluntarily declared and/or paid " includes internal revenue taxes only which are specified (and in fact should be specified) in the L/A, such as income tax, withholding tax, value-added tax, other percentage taxes and miscellaneous taxes, and which are paid with or without the requirement of filing an internal revenue tax return, undiminished by any form of tax credits. In the case of value added tax, however, the net amount of VAT due after crediting the input tax (allowed under Section 104 of the Tax Code) against the output tax shall be considered as VAT "voluntarily declared and/or paid". It shall be the responsibility of the revenue enforcement officer to ascertain the amount of internal revenue taxes voluntarily paid by the taxpayer as covered by the L/A. The term " Group Supervisor-audit effort ratio " (GS-AER) means the ratio of the total deficiency taxes as defined above and determined by the individual REOs assigned under a Group Supervisor to the total correct internal revenue tax as defined above due from the taxpayers whose tax returns were audited by the same REOs. The term " Revenue District Officer-audit effort ratio " (RDO- AER) means the ratio of the total deficiency taxes as defined above and determined by the individual REO's assigned in the district to the total internal revenue tax collections as reported in BIR Form No. 12.09. The term " Revenue Regional Director-audit effort ratio " (RRD-AER) means the ratio of the total deficiency taxes determined thru [a] field audit by all REO's assigned in the revenue district offices and by the Special Investigation Branch (if directed by the Commissioner) under a duly issued L/A and [b] office audit conducted by the Assessment Branch, to the total internal revenue collections in the same revenue region as reported in BIR Form No. 12.09. cd i The term " Excess Collection Effort Ratio " (EC-ER) means the sum of the ratios of: (a) excess internal revenue collections (of a revenue district office or revenue region, as the case may be,) over the revenue goal to the revenue goal assigned to the same revenue district office or revenue region and (b) excess internal revenue collections (of a revenue district office or revenue region, as the case may be) over the collections of the same period for previous year to the collections of the same period for the previous year. The term " VAT establishment closure effort bonus " (VC-EB) means the number of VAT registered business establishments (including branches) closed as a result of surveillance or otherwise undertaken by REOs in a revenue district office or revenue region as the case may be. A VAT registered establishment is deemed to have been closed as a result of surveillance in case the Commissioner has entered into a compromise with the taxpayer, instead of actually closing the said establishment. The term " Criminal tax prosecution effort " (CP-E) means the number of criminal tax evasion cases recommended by REOs in a revenue district office or revenue region, as the case may be, and approved by the Commissioner for filing with the appropriate fiscal's office. A tax case recommended for criminal prosecution shall be deemed to have been approved by the Commissioner for filing with the appropriate fiscal's office even if the same is compromised under Section 204 of the Tax Code. For purposes of this criterion, the term "criminal tax evasion" means the willful non-declaration or under-declaration of taxable income, sales, revenue and/or overstatement of deductions, credits or exemptions for the purpose of reducing tax liabilities. The Assistant Commissioner (Legal Service) shall, within 5 days after the end of each month, report to the RDO concerned and to the Assistant Commissioner (Planning and Research), Attn: Chief, Management Information and Data Control Systems Division, information prescribed in Annex "A-2 (II)" about criminal tax cases which were compromised or approved by the Commissioner for filing with the appropriate fiscal's office. The term " Enforcement revenue effort ratio " (ER-ER) means the ratio of the excess of the sum of (a) deficiency tax referred to as "Collection" as defined above and (b) the amount of delinquent tax actually collected over the enforcement revenue goal to the enforcement revenue goal assigned to the REO. For purposes of this criterion, the enforcement revenue goal for each REO shall be three percent (3%) of the RDO collection goal divided by the number of REOs assigned to perform assessment function in the same RDO as of the end of the month. The term " Program accomplishment effort bonus (PA-EB) " means a performance bonus which will be determined by the Management Information and Data Control Systems Division on the basis of actual accomplishment of an approved tax enforcement program initiated and submitted by the Revenue District Officer or Revenue Regional Director. IV. Reporting requirements - revenue enforcement officers assigned in RDOs All REOs assigned to perform assessment functions shall prepare a monthly report. If more than one revenue enforcement officer is assigned to audit a taxpayer as in the case of a team or group audit or joint and coordinated examination, the deficiency taxes and the correct internal revenue taxes due shall be equally apportioned and reported in Annex "A" for each REO. The audit performance report should be accomplished by the revenue enforcement officer only for cases, the audit of which are already terminated and the report actually received by the revenue district officer. V. Reporting requirements - Group Supervisors in RDOs All group supervisors shall prepare a monthly report in a form prescribed in Annexes "B" and "B-1" . VI. Reporting requirements - RDOs, Chiefs, Office Audit Section, and Chiefs, Special Investigation Branches All RDOs, Chiefs, Office Audit Section, and Chiefs of Special Investigation Branches, shall prepare a monthly report in a form prescribed in Annexes "C" and "C-1" . VII. Reporting requirements - Regional Directors All Regional Directors shall prepare a monthly report in a form prescribed in Annexes "D" and "D-1" . VIII. Reporting requirements in case of reassignments In cases of transfers or reassignments, the group supervisor or revenue district officer or regional director who is the incumbent as of the end of the month shall accomplish the appropriate Annexes. If a REO is reassigned to another audit office or unit during the month, he should accomplish two sets of Annexes "A" , "A-1" and "A-2" for the same month - one set for audit reports submitted to his former audit office or unit and another for audit reports submitted to his present audit office or unit. IX. Reporting requirements for PA-EB A Revenue Regional Director (RRD) or Revenue District Officer may submit a written tax enforcement program which will supplement the activities already covered by the performance factors prescribed in this RMO. However, any program initiated by the RRD or RDO shall be subject to the workload limitations prescribed in RMO No. 10-90. Each strategy, activity or other element of the program proposed to be undertaken should be feasible of being quantified and monitored. The tax enforcement program shall be submitted to the Assistant Commissioner, Assessment Service, before the beginning of each semester or year (if the program covers the whole year). Any program submitted during a semester or year shall be applicable for the succeeding semester or year, as the case may be. The tax enforcement program shall be submitted to the Assistant Commissioner (Assessment Service) who, after evaluating its feasibility, will recommend its approval to the Commissioner, after which the same will be forwarded to the Assistant Commissioner (Planning and Research Service), Attn: Chief, Management Information and Data Control Systems Division, who in turn will prescribe a separate set of suitable performance factors to each component of the program. On the basis of such separate set of performance factors for each program, the RRD and the RDO will be required to report in a form prescribed therefor for consolidation of the other performance factors prescribed in this RMO. X. Submission of reports The Regional Directors shall submit the monthly reports, to the Assistant Commissioner (Planning and Research), Attention: Chief, Management Information and Data Systems Control Division, within 20 days following the end of the month. The Assistant Commissioner (Planning and Research Service) shall submit the evaluation report to the Assistant Commissioner (Assessment Service) who will make the appropriate recommendations to the Commissioner. XI. Points for each performance factor The following number of points are hereby assigned to and shall be multiplied by the performance factors computed in accordance with the formula prescribed above in evaluating the performance of the revenue officers: cd REVENUE ENFORCEMENT OFFICERS ASSIGNED IN RDOs REO-AER 70.0 points ER-ER 20.0 " CP-E 10.0 " VC-EB(Bonus for VAT-registered establishment closed) 1.0 " GROUP SUPERVISORS ASSIGNED IN REVENUE DISTRICT OFFICES GS-AER 70.0 points ER-ER 20.0 " CP-E 10.0 " VC-EB 1.0 " REVENUE DISTRICT OFFICERS RDO-AER 45.0 points EC-ER 45.0 " CP-E 10.0 " VC-EB 1.0 " REVENUE DIRECTORS RRD-AER 45.0 points EC-ER 45.0 " CP-E 10.0 " VC-EB 1.0 " Performance of Assistant Regional Directors and Assistant RDO shall be evaluated in the same manner as their respective Regional Directors and RDOs. Performance measurement criteria for internal revenue officers not covered by this Revenue Memorandum Order will be prescribed in a separate revenue memorandum order. XII. Repealing clause The provisions of Revenue Memorandum Order No. 42-87, 39-88, 6-89, 20-89, 38-89, and other issuances which are inconsistent herewith are hereby amended or revoked accordingly. XIII. Effectivity This revenue memorandum order shall take effect immediately. However, the reports for the month of January, February and March, 1990, shall be submitted not later than April 20, 1990. (SGD.) JOSE U. ONG Commissioner of Internal Revenue