Guidelines and Procedures on the Processing of Summary Lists of Sales and Purchases in Magnetic Form

February 10, 1999 REVENUE MEMORANDUM ORDER NO. 16-99 SUBJECT : Guidelines and Procedures on the Processing of Summary Lists of Sales and Purchases in Magnetic Form TO : All Regional Directors, Revenue District Officers and Other Internal Revenue Officers Concerned I. BACKGROUND In order to strengthen and enhance the assessment functions of the Bureau, the utilization of its information technology has been identified as an effective tool to improve tax administration through the development of a computer program called the Reconciliation of Listings for Enforcement (RELIEF) System. The RELIEF system was created using the Integrated Tax System National Office Management Information System (ITS-NOMIS) modules catering to the enhancement of voluntary assessment programs of the Bureau through the cross-referencing of third party information from the Taxpayer Summary List of Sales and Purchases prescribed to be submitted on a quarterly basis pursuant to Revenue Regulations No. 13-97. Computerized VAT taxpayers are required to submit their Summary List of Sales and Purchases to the Bureau in magnetic form or thru Electronic Data Transmission (EDT). This information will be submitted based on a prescribed magnetic file format to facilitate consolidation of and matching with other externally sourced data using the RELIEF System. The consolidation and matching of information will detect possible underdeclaration of revenues, thus resulting to greater tax potential. The system's capability and the reports that will be generated may be utilized by management and all investigating offices in the Bureau in the planning and implementation of assessment and enforcement activities, respectively. II. OBJECTIVES This Revenue Memorandum Order is issued to prescribe the guidelines and procedures in the processing of Summary Lists of Sales and Purchases in magnetic form in order to: 1. Ensure monitoring and immediate processing of data from computerized VAT taxpayers; 2. Delineate the functions of each office/division/unit in the processing of diskettes containing Summary Lists of Sales and Purchases; and 3. Provide timely and accurate reports for investigation purposes. III. DEFINITION OF TERMS The following terms shall be used in this Order as follows: 1. Computerized VAT Taxpayer Refers to a taxpayer whose record-keeping and accounting system on sales and purchases are computerized. 2. Magnetic Form Refers to a 3.5" floppy diskette. 3. " Good " diskette Refers to a diskette which is free from virus(es) and in good condition. 4. " Defective " Diskette Refers to a diskette which is infected with irremovable virus(es) (DV), and/or whose files are inaccessible or not readable by the system (DR). IV. POLICIES 1. The Revenue District Officer (RDO)/Chief, Large Taxpayers Division (LTD) shall ensure the compliance of taxpayers within their jurisdiction in the submission of the prescribed Summary Lists of Sales and Purchases in magnetic form or diskettes or through Electronic Data Transmission (EDT) prescribed in Revenue Regulations No. ___. 2. The RDOs/LTD shall transmit the diskettes to the Information Systems Operations Service (ISOS) on the first working day after the close of the week of receipt from the taxpayer and shall forward to the Assessment Service quarterly report on RELIEF data on or before the 25 th day of the second month following the end of each calendar quarter. 3. The ISOS shall receive directly from the taxpayers data on sales and purchases which are transmitted electronically and shall provide the concerned RDO/LTD with a report on taxpayers' compliance. 4. The Assessment Service shall consolidate RELIEF data received into its Third Party Information (TPI) database, utilize these data in referring cases for investigation to the investigating offices within the Bureau, monitor and evaluate results of audit by the investigating offices and render a monthly report on RELIEF and TPI programs to the Management Committee. 5. Any unauthorized divulgence or retrieval of RELIEF data and/or TPI by any revenue official employee shall be referred to the concerned offices in the Bureau for imposition of administrative sanctions and filing of appropriate charges. V. PROCEDURES A. Document Processing Section (DPS) , Revenue District Office (RDO)/Large Taxpayers Division (LTD) , National Office (NO) : 1. Receive the Summary Lists of Sales and Purchases in magnetic form from VAT taxpayers and acknowledge the receipt of the same by affixing signature on the Diskette Acknowledgment Form (ANNEX "A") in duplicate, as follows: Original - To the taxpayer Duplicate - RDO/LTD file copy 2. Prepare a Weekly Transmittal Report (ANNEX "B") in duplicate and forward the original report together with the good diskettes to the Chief, Systems Operations Division (SOD), Information Systems Operations Service (ISOS), on the first working day after the close of the week when the diskettes were received from the taxpayer. dctai B. Systems Operations Division (SOD) , ISOS : 1. Data received thru diskettes 1.1 Receive the Summary Lists of Sales and Purchases in magnetic form from the RDO. 1.1.1 Verify diskette information against Weekly Transmittal Report. 1.1.2 Acknowledge receipt of the diskette/s on the receiving copy of the Weekly Transmittal Report. 1.2 Check the diskette/s whether good or defective and label the same to indicate its status (GD, DV or DR). 1.2.1 If diskette has virus, remove the virus using anti-virus softwares. 1.2.2 If diskette is defective, return said diskette to the RDO concerned and require him to request for a replacement from the taxpayer. The replacement for the defective diskette shall be transmitted by the RDO to the National Office not later than ten (10) working days from the date of return to the taxpayer. 2. Data received thru Electronic Data Transmission (EDT). 2.1 Retrieve files from the mail server. 2.2 Check the files whether it is good, defective or the file format is invalid. 2.2.1 If the file has virus, remove the virus/es using anti-virus softwares. 2.2.2 If the file is defective or the file format is invalid, forward said file to the taxpayer thru EDT, and request the taxpayer to transmit a valid one. 2.3 Acknowledge receipt of good files from taxpayers by transmitting an acknowledgment file, bearing the following information. LibLex 2.3.1 Acknowledgment Transmittal Date 2.3.2 TIN of Taxpayer 2.3.3 Taxpayer's Registered Name 2.3.4 Taxpayer's Address; and 2.3.5 Transaction Type (Purchases and/or Sales) 3. Copy files from diskettes into a common repository for files received from taxpayers thru diskettes and EDT. 4. Upload the data from the good diskette(s) into the RELIEF System's database on or before the end of the week following the receipt of the diskette(s) from the RDOs/LTD. 5. Ensure successful loading of information utilizing system prompting which will indicate the number or records successfully loaded. 6. Maintain a Diskette Register containing the following information: 6.1 TIN of Taxpayer 6.2 Taxpayer's Registered Name 6.3 Taxpayer's Address 6.4 Transaction Type ("P" for Purchases/"S" for Sales) 6.5 Transaction Date (Quarter and Year) 6.6 RDO Code 6.7 Number of Diskettes 6.8 Date Received from RDO 6.9 Date Scanned 6.10 Date Loaded 6.11 Status (GD, DV, DR, RF for invalid file format, and LD for loaded to RELIEF); and 6.12 Remarks 7. Ensure proper labeling and recording of good diskette(s) for easy retrieval, and keep the same in secured area under the accountability of the Chief, SOD. llcd 8. Prepare the following reports in triplicate: 8.1 SOD Quarterly Summary of Rejected and Successfully Loaded Diskettes (Annex "C") 8.2 SOD Quarterly RDO's/LTD's Non-Compliance Report (Annex "D") 8.3 SOD Quarterly Report on Taxpayers who Submitted Summary Lists of Sales and Purchases thru EDT (Annex "E") The report shall be distributed as follows: Original - SOD Duplicate - Assessment Service Triplicate - Regional Director/ACIR, Collection Service 9. Print the following quarterly reports and forward the same to the Assessment Service on or before the 25 th day of the second month following the calendar quarter, to wit: 9.1 Individual Summary Report on Sales and Purchases 9.2 System Consolidated Summary on Sales and Purchases Ranking shall be based on the percentage of variance or value of discrepancies. 10. Perform quarterly back-up and other housekeeping activities for the following RELIEF components in accordance with the Guidelines and Procedures provided for in the RELIEF System Operator's Manual for RELIEF users, to wit: 10.1 RELIEF System date files 10.2 RELIEF System database 10.3 RELIEF System report files The Operator's Manual contains guidelines and procedures on virus scan, data uploading, reports generation, data files, database, report files maintenance and data back-up. C. Assessment Service (AS) 1. Acknowledge receipt of the following quarterly reports from the SOD: 1.1 SOD Quarterly Summary of Rejected and Successfully Loaded Diskettes (Annex "C") 1.2 SOD Quarterly RDO's/LTD's Non-Compliance Report (Annex "D") 1.3 Individual Summary Report on Sales and Purchases 1.4 System Consolidated Summary on Sales and Purchases 2. Prepare Summary Report of Non-Compliance based on 8.1 and 8.2. and forward the same to the Assistant Commissioner, Intelligence and Investigation Service (IIS) for appropriate action. 3. Evaluate the reports in 9.1 and 9.2 to determine the audit potential of the data and ascertain whether a tax fraud investigation or regular audit is required or whether no action will be taken. 4. Refer tax fraud cases for investigation to Tax Fraud Division (TFD), Legal and Enforcement Group, or to the Special Investigation Division (SID), Revenue Regional Office. Cases requiring regular audit shall be referred to the Revenue District Office (RDO) concerned. 5. Monitor and evaluate audit results within sixty (60) days from receipt of the TPI by the TFD/SID/RDO; and 6. Submit a written report on RELIEF and TPI programs to the Management Committee (MANCOM) every 15 th day following the end of each month. VI. REPEALING CLAUSE This Order supersedes all revenue issuances or portions thereof inconsistent therewith. VII. EFFECTIVITY This Order takes effect immediately. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue ANNEX A Diskette Acknowledgment Form ANNEX B Weekly Transmittal Report ANNEX C Quarterly Summary of Rejected and Successfully Loaded Diskettes ANNEX D Quarterly Revenue District Office/Large Taxpayer Division Non-Compliance Report ANNEX E List of Taxpayers Who Submitted Summary Lists of Sales and Purchases thru EDT