Priority Guidelines in the Investigation of Taxpayers Who Did Not Avail of the Tax Amnesty under PD 1740 Dated September 17, 1980 or PD 1840 Dated September 19, 1981

May 10, 1982 REVENUE MEMORANDUM ORDER NO. 16-82 SUBJECT : Priority Guidelines in the Investigation of Taxpayers Who Did Not Avail of the Tax Amnesty under PD 1740 Dated September 17, 1980 or PD 1840 Dated September 19, 1981 TO : The Service Chiefs of the Sector Operations and National Assessment Office, Regional Directors, Chiefs of Assessment Branches, Revenue District Officers and Others Concerned To ensure a strict and thorough investigation of the tax cases of individual taxpayers who did not avail of the tax amnesty under either PD 1740 or PD 1840, in spite of the full opportunity afforded them to come within the fold of the tax reforms, the following guidelines are hereby promulgated in the investigation of their income tax returns for 1981 and prior years. A. First Priority. Taxpayers who should have filed the tax amnesty returns but refrained from availing of the tax amnesty and whose gross income is at least P36,000.00 . Before the examination of a taxpayer's 1981 income tax return, verification should be made as to whether or not he has availed of the tax amnesty for 1980 and any of the prior years. Investigation should cover the 1981 and uninvestigated prior year(s) for which no tax amnesty was filed. acd Income tax returns filed for 1980 and prior years by individual taxpayers should be checked against the lists of taxpayers who availed of the tax amnesty to ensure that only non-filers of tax amnesty returns will be subjected to investigation. Computer outputs in the form of alpha lists of the tax amnesty filers and relevant data on the statements of assets, liabilities and networth filed for 1973 and 1980 should be furnished the Sector Operations Office, the National Assessment Office, and the Regional Directors, Attention: Chiefs, Assessment Branches and the RDOs. Other relevant data such as income, investments, and other assets particularly those outside the Philippines shall likewise be provided to these offices. The income tax return of an individual taxpayer for the particular year in which the tax amnesty was availed of should be set aside for file, pending determination of the validity of the tax amnesty availment. 1. Strict and thorough investigation should be conducted as regards the income tax returns of individuals who did not avail of the tax amnesty and who derived gross income of at least P36,000.00 for 1981. 2. As much as possible, the examination of the 1981 income tax returns should include examination of all uninvestigated prior years' returns which have not yet prescribed. cdt 3. Data from the 1973 and 1980 Statement of Assets, Liabilities and Networth, including information on foreign assets, should be extensively utilized and whenever feasible, the use of the networth method of investigation should be resorted to. 4. Serious efforts should be made so as to come up with deficiency assessments which must be higher than what the taxpayer should have paid had he availed of the tax amnesty. B. Second Priority. Those who did not avail of the tax amnesty and whose gross income falls below the cut-off-amount of P36,000.00 1. Those with assets of P50,000.00 and above - A comparison should be made between the Statements of Assets, Liabilities and Networth filed for 1973 and 1980 and the income tax returns for the intervening years should likewise be considered in order to determine whether there is unexplained increase in networth which could be a basis, among others, for assessment of deficiency taxes. 2. Those with assets below P50,000.00 - Since taxpayers under this category were not required to file Statements of Assets, Liabilities and Networth, routine examination should be made of their income tax returns for 1981 and unverified prior years. aisa dc Strict compliance herewith is enjoined. RUBEN B. ANCHETA Acting Commissioner