Prescribing the Procedure for the Accounting of the Second Installment Payments on Income Tax due from Individual Taxpayers

April 3, 1978 REVENUE MEMORANDUM ORDER NO. 13-78 SUBJECT : Prescribing the Procedure for the Accounting of the Second Installment Payments on Income Tax due from Individual Taxpayers TO : All Internal Revenue Officers and Others Concerned In order to determine immediately and accurately the second installments on income tax due from individual taxpayers, to account for the payments thereof and to set up as accounts receivable the amounts that remain unpaid, this Revenue Memorandum Order is hereby promulgated for the guidance of all concerned. I. BASIS : cdt A. Under Section 51(a)(2) of the National Internal Revenue Code of 1977, only individuals whose income tax due is in excess of P1,000.00 may elect to pay the tax in two equal installments, the first to be paid at the time the return is filed and the second on or before the 15th of July following the close of the calendar year. B. No demand for payment of the second installment is necessary. The taxpayer is only notified of the amount due for the second installment, with a reminder that the second installment is due on or before July 15. II. PROCEDURE : To achieve the purpose of this Revenue Memorandum Order, the following procedure is hereby prescribed: A. Assessment Branch : 1. Segregate the individual income tax returns with taxes due in excess of P1,000.00 and which contain indications that the tax due has not been paid in full. 2. Sort, classify, number and batch the abovementioned returns in accordance with existing procedures. However, if the returns available are not enough to make up a batch, these returns may be batched with other returns of the same classification, though not subject to installment payments, so as not to delay processing. 3. Prepare the reminders for the payment of the second installment on the attached form in quadruplicate, the copies to be distributed as follows: Original to Taxpayer Duplicate attach to original copy of return Triplicate Copy for the RDO/Collection Agent Quadruplicate Collection Branch 4. Transmit the signed original copies of the letter to the Administrative Branch in time for mailing not later than June 1st. 5. At the same time that the original copies are sent to the Administrative Branch, transmit the triplicate copies to the Revenue District Officer, who shall in turn transmit the same to the corresponding Collection Agents. In Revenue Region No. 4-A, the triplicate copies shall be transmitted direct to the Collection Agent. 6. In order to facilitate the transmittal of the letters, only the Assessment Numbers may be listed in the transmittal sheet. 7. Prepare a listing of taxpayers to whom reminders were issued in the form attached, in three copies. This listing shall be completed by July 15 of each year. 8. Assign a control number on the space provided in the form to facilitate cross-checking and identification of any taxpayer listed therein. 9. Transmit the original and duplicate copies of the list with the quadruplicate copies of the letter-reminder to the Collection Branch. B. Collection Agent's Office 1. Arrange the copies of the reminder letters in alphabetical sequence as soon as the same are received. The copies of the letters shall be used as basis for the issuance of the RTR or the ROR if a taxpayer loses his own copy. 2. Note on copies of the letter, the RTR or ROR number, as the case may be, the date of issue and amount. a. In places where payment of internal revenue taxes is made thru the banking system, forward the letters with the notations of payment in accordance with existing procedures. b. In places where the Revenue Official Receipt (ROR) is issued instead of RTR, forward the copy of the letter with the proper notations of payment to the Collection Branch. C. Collection Branch 1. Prepare control cards for each account listed and arrange the cards in alphabetical sequence by the name of the taxpayer, as soon as the list of qualified individual taxpayers who opted to pay their income tax liabilities by installment is received from the Assessment Branch. 2. Indicate the following information on the control card: a. Name and address of the taxpayer. b. Control Number of the list and the Item Number. c. Amount of second installment. 3. Post the payment data opposite the name of the taxpayer under the column provided for the purpose in the list received from the Assessment Branch upon receipt of the confirmation of payment from the agent bank on an RTR issued or the copy of the reminder with notation of the ROR number from the Collection Agent. In places where the ROR is issued, the ROR Number, date and amount should be confirmed by checking with entries in Form 1231. Use the control card for locating the Account in the lists to facilitate posting. Annotate the payment data also on the control card. 4. In case the amount paid differs from that shown in the list and/or the letter-reminder, refer the same to the Assessment Branch for the proper determination of the correct amount of tax. 5. Prepare a list in triplicate of all accounts which remain unpaid after August 31. Transmit two copies of the list with the corresponding quadruplicate copies of the letter-reminders to the Assessment Branch. D. Procedure in the Collection of Delinquent Second Installment Accounts . 1. Assessment Branch a. Prepare the letter of demand in three copies for the collection of the basic tax and the increments incident to delinquency based on the list received from the Collection Branch. b. Transmit the original copy of the letter to the Administrative Branch for mailing to the taxpayer. c. Attach the duplicate copy to the copy of the letter-reminder received from the Collection Branch. d. Transmit the triplicate copy to the Collection Branch. 2. Collection Branch a. Follow-up collection of the amount demanded until payment is actually made. III. EFFECTIVITY . The provisions of this Revenue Memorandum Order shall be applicable beginning with the 1977 returns and every year thereafter. EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8 ANNEX Republic of the Philippines Department of Finance BUREAU OF INTERNAL REVENUE Assessment No. _______ _______________, 1978 _______________ (T.A.N.) _____________ _______________ _______________ Sir/Madam: Our records show that income tax return filed by you for the calendar year ending December 31, 1977 shows the following information: Tax Due P__________ Tax Credit P__________ 1st Installment paid per RTR/ROR __________ __________ Total Credits __________ Balance Due P__________ You are, therefore, reminded that the balance of P______________ representing the second installment of your income tax liability for the taxable year 1977 is due on or before July 17, 1978. This reminder will serve as an authority for the Collection Agent to issue a Revenue Tax Receipt in favor of any authorized commercial bank to which you desire to make payment not later than July 17, 1978 or to issue an ROR If payment is not thru the RTR system. If you fail to pay the amount on or before the specified date, the delinquency interest of 14% per annum from July 18, 1978 to the date of payment, as well as the compromise penalty for late payment, shall be added to the amount due. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue By: