Pilot Test of the Computerized Withholding Tax System

February 22, 1982 REVENUE MEMORANDUM ORDER NO. 13-82 SUBJECT : Pilot Test of the Computerized Withholding Tax System TO : Acting Regional Director, Revenue Region 4-B Revenue District Officer, RD-35 Chief, Financial and Management Service Chief, Collection Office Chief, Withholding Tax Division Service Chief, Data Processing Center Information System Development Staff, and Withholding Agents of Revenue District 35 and Others Concerned SECTION 1 . Scope. Promulgated hereunder are the rules and procedures for the guidance of all concerned in connection with the pilot test of the Computerized Withholding Tax System designed and developed pursuant to the Five-Year Long Range Plan for Electronic Data Processing approved by the President on March 6, 1981. SECTION 2 . Pilot Test Objective . The objective of the pilot test is to determine the flaws and possible areas for improvement of the system by using a revenue district that covers a fairly large number of withholding agents and comprises a wide geographical area. Revenue District 35 (Pasig) was chosen because it is a microcosm of the Philippines as far as the Withholding Tax System is concerned. The exercise aims to evaluate the proposed system and to determine the optimum combination of procedures in the light of the circumstances prevailing in the pilot test area so that at any point in time, necessary changes in the procedures may be effected. The new procedures under the proposed system will not replace the existing procedures until nationwide implementation is ordered accordingly. acd SECTION 3 . Participants . The units of the Bureau directly involved in the project are: a) Revenue Region IV-B b) Revenue District No. 35 c) Withholding Tax Division of the Collection Office d) BIR Data Processing Center e) Information System Development Staff (Office of the Commissioner) Corollary to this, a Steering Committee composed of the representatives from the various units is hereby created, thus: Mr. Mauro G. Calaguio - Chairman Regional Director Mr. Abdon Mendigorin - Co-Chairman Chief, Collection Office Mr. Osmundo G. Umali Revenue District Officer Mr. Bernardo Frianeza Chief, Withholding Tax Division Mr. Dennis S. Deveza Information Systems Development Staff (ISDS) Mr. Benedicto Lorenzo ISDS Mr. Jose Reyes ISDS The Steering Committee shall monitor the progress of the pilot test, and shall approve whatever changes my be deemed necessary, in the mechanics of the implementation, as well as, in the procedures. SECTION 4 . Responsibility of Withholding Agents. Withholding Agents and Government offices whose legal residences, principal places of business, or principal offices are located in the municipalities of: 1. Angono 9. Montalban 2. Antipolo 10. Morong 3. Baras 11. Pasig 4. Binangonan 12. Pililia 5. Cainta 13. San Mateo 6. Cardona 14. Tanay 7. Jala-Jala 15. Taytay 8. Marikina 16. Teresa are required to accomplish and submit the following forms, in addition to the forms being used at present , in accordance with the following schedule: REF TITLE DATE 1) FORM W-1 Return of Income Tax On or before April 26 (Revised 12.81) Withheld Taxes on Wages This FORM shall be accomplished in triplicate, for each remittance. Thus, if there are remittances in February, in March and in April, three sets will be accomplished and submitted. The triplicate when stamped "RECEIVED" shall be the copy of the Withholding Agent. 2) FORM 1743A Return of Creditable On or before April 30 (Revised 12.81) Income Tax Withheld at Source This FORM shall be accomplished in triplicate, for each remittance. Thus, if there are remittances in February, in March and in April, three sets will be accomplished and submitted. The triplicate when stamped "RECEIVED" shall be the copy of the Withholding Agent. 3) FORM 1743C Return of Final Income On or before April 26 (Revised 12.81) Tax Withheld at Source This FORM shall be accomplished in triplicate for the 1st quarter remittance. Thus, only one set will be submitted. The triplicate when stamped "RECEIVED" shall be the copy of the Withholding Agent. 4) FORM 7.50A Return of Internal On or before April 10 (12.81) Revenue Taxes Withheld on Government Payments to Private Parties. This FORM shall be accomplished in triplicate, for each remittance. Thus, if there are remittances in February, in March and in April, three sets will be accomplished and submitted. The triplicate when stamped "RECEIVED" shall be the copy of the Withholding Agent. All these FORMS, shall be filed with the Revenue District Officer, Collection Agent, or duly authorized BIR Official assigned in the municipality where the Withholding Agent has his legal residence, principal place of business, or principal office. SECTION 5 . Responsibility of Collection Agents . The batching procedures to be followed by each collection agent are as follows: 1. Receive 3 copies of withholding tax return (WTR) from the Withholding Agent (WA). 2. Stamp RECEIVED on Copies 1 to 3 of WTR, and initial each copy on the space provided. 3. Return Copy 3 of WTR to the WA. 4. File temporarily Copies 1 and 2 of WTR by type of taxes withheld, and by month covered by the return. FOR EACH TYPE OF TAXES WITHHELD AND FOR EACH MONTH COVERED 5. Batch WTR by 50's. (A batch may contain less than 50 WTR) 6. On the basis of each Batch of WTR, prepare Batch Control Slip (BCS) in 2 copies. 7. Attach Copies 1 and 2 of BCS to each batch of WTR. 8. On the basis of BCS, prepare Transmittal Slip (TS) in 4 copies. 9. Forward Copies 1 to 4 of TS and all batches of WTR together with the respective Copies 1 and 2 of BCS to RDO-35. 10. Receive duly acknowledged Copy 4 of TS from the RDO. SECTION 6 . Responsibility of Revenue District Office . The Revenue District Officer shall assign personnel who shall perform the following: FOR EACH TYPE OF TAXES WITHHELD AND FOR EACH MONTH COVERED 1. Receive Copies 1 to 4 of TS and all batches of WTR together with the respective Copies 1 and 2 of BCS from each Collection Agent. 2. Check the actual number of batches of WTR against the number of batches as indicated in the TS. 3. Acknowledge receipt of the batches of WTR by signing Copies 1 to 4 of TS on the space provided. 4. Return duly acknowledged Copy 4 of TS to the Collection Agent. 5. Separate Copy 1 from Copy 2 of BCS, as well as, Copy 1s from 2s of WTR. 6. Attach Copy 1 of BCS to the batch of Copy 1s of WTR, and Copy 2 of BCS to the batch of Copy 2s of WTR. 7. On the basis of each batch of Copy 1s of WTR, get the sum of each of the following: Total Taxes Withheld Adjustment Surcharge Interest Compromise 8. Indicate the sums on the spaces provided in Copies 1 and 2 of BCS. 9. On the basis of each Copy 1 of BCS, indicate in Copies 1 to 3 of TS the amount of Total Taxes Withheld on the space provided for that particular batch of WTR. 10. File the following: Copy 3 of TS Batches of Copy 2s of WTR with the respective Copy 2 of BCS. FOR ALL TYPES OF TAXES WITHHELD AND FOR ALL MONTHS COVERED 11. Prepare Documents Transmittal (DT) in 2 copies for transmitting Copies 1 and 2 of TS and batches of Copy 1s of WTR with the respective Copy 1 of BCS to the RR 4B. aisa dc 12. Forward to the RR 4B the following: Copies 1 and 2 of DT Copies 1 and 2 of TS Batches of Copy 1s of WTR with the respective Copy of BCS. 13. Receive duly acknowledged Copy 2 of DT and Copy 2 of TS from the RR 4B. SECTION 7 . Responsibility of Revenue Region IV-B . The Regional Director of Region IV-B shall assign personnel who shall: DOCUMENTS VERIFICATION AND CONTROL SECTION 1. Receive from the RDO the following: Copies 1 and 2 of DT Copies 1 and 2 of TS Batches of Copy 1s of WTRs with respective Copy 1 of BCS. 2. Check the actual number of batches of WTR against the number of batches as indicated in the TS. 3. Check also the number of TS against DT. 4. Acknowledge receipt of the batches of WTR by signing Copies 1 and 2 of TS, and Copies 1 and 2 of DT. 5. Return duly acknowledged Copy 2 of DT and Copy 2 of TS to the RDO. 6. Ensure that the TOTALS portion of DT is filled up. 7. Examine each BCS to make sure that all data to be encoded are indicated. These data are the following: RDO NO. TAXES WITHHELD MUN. NO. PERIOD BATCH NO. CONTROL TOTALS NO. OF WTR 8. Examine each WTR to make sure that all essential data, whether to be encoded or not, are indicated. ID NO. RTR/ROR NO. o amount(s) RTR/ROR NO. Those which are not to be encoded are: NAME OF WITHHOLDING AGENT ADDRESS SIGNATURE (of W-Agent's representative) STAMP OF RECEIVING BIR OFFICE 9. Segregate all returns where any one of the essential data which are not to be encoded, or the amount(s), is missing and send them back to District 35. Adjust NO. OF WTR and CONTROL TOTALS of BCS and the TOTAL portion of DT in view of the returns to be sent back to the district office. (Minor errors in source documents may be discussed with RDO 35 over the phone. Documents with more serious errors should be returned for correction to RDO 35). 10. Send edited batches to Machine Section for data capture. 11. Receive 'Error List' from ISDS. 12. Make necessary corrections and submit 'Error List' with correction to Machine Section for data capture. MACHINE SECTION 1. Receive edited batches of WTR from Document Verification and Control Section. 2. Capture data from source documents or 'Error List'. 3. Generate two (2) transaction tapes after data capture. 4. Send one (1) transaction tape to ISDS. SECTION 8 . Responsibility of the Withholding Tax Division . The Withholding Tax Division shall assign personnel who shall perform the following: 1. Observe and assist the Region's personnel in the conduct of the editing and control procedures as detailed in Section 7. (This is to familiarize the WTD staff in these procedures since upon full implementation of the proposed system, these functions will be done by them with respect to district offices whose respective regional offices have no data entry capabilities). 2. Analyze the Withholding Tax Reports, and come up with recommendations regarding implementation of withholding tax laws and regulations. SECTION 9 . Responsibility of the ISDS. The ISDS shall perform the following functions: 1. Receive transaction tape from Region 4B. (Machine Section) 2. Run validation module. 3. Produce the following: a) valid transaction tape b) Error List 4. Retain valid transaction tape. 5. Forward Error List to Documents Verification and Control Section. In addition, ISDS shall assist the officials and staff concerned in the implementation of all the foregoing procedures. SECTION 10 . Responsibility of Data Processing Center . The Data Processing Center (DPC) shall give priority to and shall make available Computer time and personnel needed for the pilot test. The machine section of the DPC branch at Region IV-B shall be responsible for the data entry requirement of the pilot test. aisa dc SECTION 11 . Budget and Resources . The Financial and Management Service is hereby directed to set aside and allocate a certain amount of the budget, subject to the normal government accounting procedures and auditing requirements, to be utilized in this Pilot Test as to assure the success of its implementation. SECTION 12 . Effectivity . This Memorandum Order shall take effect immediately. RUBEN B. ANCHETA Acting Commissioner