"No Discrepancy" Reports of Tax Investigation

April 12, 1980 REVENUE MEMORANDUM ORDER NO. 14-80 SUBJECT : No Discrepancy Reports of Tax Investigation TO : All Internal Revenue Officials and Employees Concerned Our records indicate that a considerable number of reports of tax investigation submitted by examiners particularly in the regional offices are "No Discrepancy" reports, that is, all deductions claimed are allowed , no undeclared income is discovered and therefore no deficiency tax is imposed. In a number of cases, these reports have been found to be erroneous and have been modified. aisa dc The prevalence of such reports that produce no revenue in the form of deficiency taxes, either through oversight or collusion, does not speak well of the quality of tax investigation in general. If we are to collect the revenues rightfully belonging to the government, sufficient to meet the requirements for national development, there must be thoroughness and probity in the examination of income, business and other internal revenue tax returns. In view thereof, all examiners, supervising examiners, Asst. Revenue District Officers, Revenue District Officers, Assessment Branch Chiefs, Chiefs and Assistant Chiefs of Investigating Divisions in the Central Office and Asst. Regional Directors and Regional Directors and others concerned are hereby directed that effective immediately, all "no discrepancy" reports of investigation, especially those involving huge gross income where the ratio of tax due per return to gross income is unreasonably low , must be scrutinized minutely. Moreover, any claim for deduction of any category of expense such as interest, in excess of P10,000.00 which is wholly or almost wholly allowed and passed in audit must be supported by a memorandum report indicating the basis for the allowance, including specifically an indication of documentary support to justify such allowance. cdt Immediate and strict compliance herewith is enjoined. (SGD.) EFREN I. PLANA Acting Commissioner