Prescribing the Procedures for Receiving and Processing of Value-Added Tax Returns Filed Thru the Banking System under the New Payment Control System (NPCS)

June 10, 1991 REVENUE MEMORANDUM ORDER NO. 19-91 SUBJECT : Prescribing the Procedures for Receiving and Processing of Value-Added Tax Returns Filed Thru the Banking System under the New Payment Control System (NPCS) TO : All Internal Revenue Officers, Bank Officials and Employees, and Others Concerned I. Objectives: This Order is issued to: A. Establish a new payment control system for VAT and eliminate the use of Confirmation Receipts (CRs) for VAT payments; B. State the revised delineation of functions of each office/division/unit involved in the receipt and processing of VAT returns; and C. Further improve the BIR - Taxpayers relations through streamlined VAT return filing and payment procedures. II. Policies: A. The procedures prescribed herein shall cover only VAT payments made by the taxpayers in the pilot area of RDO No. 31 - San Juan, Mandaluyong. B. The use of Confirmation Receipts for VAT payments shall be discontinued. The VAT return (Annex A) and the Authority to Accept Payment (ATAP) (Annex B) in case of deficiency assessment, shall be the only documents to be used and validated by the bank teller as evidence of the filing of return and the payment of tax. C. All VAT returns, whether there is payment or non-payment, shall be filed with and received directly by the accredited banks located within the RDO. However, in case a Tax Credit (Certificate (TCC) is used for payment of tax due, the taxpayer shall secure a Tax Debit Memo (TDM) from the Accounts Receivable/Billing Division (AR/BD), National Office per RMO No. prior to filing the return/ATAP with the accredited bank. D. Receipt of tax returns/ATAPs shall be evidenced as follows: 1. For returns/ATAPs with cash and/or check payments - By two (2) types of validation: a. Machine Validation reflecting date of payment, amount paid and transaction code; and b. Stamp pad mark showing the name of the bank and branch code, teller's code and teller's initial. 2. For returns/ATAPs fully paid thru TDM or returns without payments - By stamp pad mark showing the word "RECEIVED", bank name and branch code, teller's code, teller's initial and date of receipt. E. Accredited banks shall be authorized to compute and collect surcharges/penalties from the taxpayers for out-of-district and late filing of returns or late payment of deficiency assessment. F. The accredited bank head office shall submit to the Committee on Simplification of Tax Payment Procedures, a List of Validating Machines (Annex C) to be used by its bank branch(es) showing the brand name, model and serial number with attached facsimile print-out of each machine. Computer terminals shall be accepted as validating machines. Check-writers shall not be allowed. acd III. Procedures: The Offices concerned shall follow the succeeding steps in receiving and processing VAT returns/ATAPs under the new payment control system: A. ACCREDITED BANK BRANCH 1. Check the label sticked on the original copy of the return/ATAP to ascertain that the taxpayer filing the return/ATAP falls within the jurisdiction of Revenue District Office serviced by the bank branch. Deny acceptance of return/ATAP without label and inform the taxpayer to secure the label from the RDO; 2. Check if the taxpayer is a late-filer. 3. Inform taxpayer that there are penalties imposed for out-of-district and late filing; 3.1 If the taxpayer is willing to pay penalties, compute the corresponding amount and add to tax due; 3.2 If not, stamp "Increments Not Paid" on every copy of the return; 4. Stamp "RECEIVED" on all copies of the VAT return/ATAP; 4.1. For return, without tax due, indicate the date of receipt, bank name, branch code, teller's code and initial; 4.2. For return with tax due/ATAP, check the total amount due and determine mode of payment whether cash, check or TDM (see Annex D for a sample TDM). 5. Accept payment. Machine validate the date of payment, amount paid and the transaction code and stamp the bank name, branch code, teller's code and sign the teller's initial on every copy of the return/ATAP. Validate separately by machine the payments in part cash and part check; 5.1. If payment is in check, require the taxpayer to write his name, address, telephone number, TIN and signature at the back of the check (Accommodation checks (i.e. checks issued by a person other than the taxpayer) and out-of-town checks are not acceptable); 5.2. If payment is partly with a TDM, verify balance of tax due to be paid in cash or check. Deny acceptance of returns/ATAPs without the appropriate TDM annotations; 5.3 If payment is to be made wholly with a TDM, stamp only the bank name, branch code, teller's code and sign the teller's initial on the return/ATAP; 6. Release to the taxpayer the duplicate copy of the return/ATAP and the original copy of TDM, if any; 7. Prepare the Batch Control Sheets (BCS-A and BCS-B, Annexes E and F, respectively) with a maximum of 25 returns/ATAPs per batch and fill-up all the applicable information required; Note: For banks submitting reports in magnetic media, follow procedures in Attachment A. 7.1. For returns/ATAPs paid in cash, check or part TDM, accomplish BCS-A in six (6) copies to be distributed as follows: Original (with original VAT returns/ATAPs) VAT Division Duplicate RAD Processing Section Triplicate COA Resident Auditor Quadruplicate (with the triplicate copies of VAT returns) RDO 7.2. For returns/ATAPs fully paid by TDM and zero-rated, even, refundable and no transaction returns, accomplish BCS-B in four (4) copies to be distributed as follows: Original (with original VAT returns/ATAPs) VAT Division Duplicate (with the triplicate copies of VAT returns) RDO Triplicate Bank Head Office Quadruplicate Bank Branch File copy 8. Number consecutively by the type of BCS (BCS-A or BCS-B) prepared starting with 001 for the first batch of 25 returns for each BCS type received during the year second batch of 25, 002 and so on, regardless whether there are less than 25 returns/ATAPs received per banking day; Note: BCS number shall be preceded with the year of receipt of returns. 9. At the end of the banking day, report to the Bank Head Office by fax, telephone, telex, radiogram, or any means of fast communication the total amount of taxes collected during the day; 10. Segregate the quadruplicate and duplicate copies of BCS-A and BCS-B, respectively with the attached triplicate copies of VAT returns for pick-up by the RDOs representative within three (3) days from date of collection/receipt; 11. File its copies of the BCS and forward to the Head Office the remaining copies within three (3) days from date of collection/receipt. B. BANK HEAD OFFICE (BHO) 1. Submit to the Committee on Simplification of Tax Payment Procedures, NOB the List of Validating Machines to be used by its branches. Indicate on the list the brand name, model and serial numbers of the validating machines and attach a sample print-out of each machine; 2. Consolidate the advance report of collections of its branches and send to BIR-RAD processing Section and to Bureau of Treasury thru fax/telex the Advanced Report of Daily Collections (ARDC) (Annex G) within three (3) days from date of collection. (This is in lieu of BIR Form No. 1255). In case there is no collection in a given day, submit report stating that no tax payments were received on such specified day; 3. Report to BIR-RAD Processing Section using BIR Form No. 1258 (Annex H) any returned/dishonored checks in accordance with Revenue Regulation No. 5-84; 4. Prepare the Consolidated Report of Daily Collections (CRDC-Annex I) in 4 copies to be distributed as follows within eleven (11) days from date of collection: Original Central Bank Accounting Dept. Duplicate Revenue Accounting Division Triplicate Bureau of Treasury Quadruplicate Bank Head Office (This is in lieu of BIR Form Nos. 1257 and 1257A). In case there is no collection in a given day, prepare and submit the CRDC stating that there were no tax payments received on such specified day. 5. Segregate documents (BCS, CRDC, BIR Form No. 1258, and returns/ATAPs) according to their office destination and forward to BIR Receiving Unit, CB Complex the segregated documents intended for the BIR on a continuing basis; Note: a. The originals of the BCS and returns/ATAPs for the VAT Division must be bundled together with the BCS and CRDC for RAD and the Auditor's copy placed outside but on top of their respective bundles. b. All documents for a certain collection day shall be forwarded to the BIR Receiving Unit, CB Complex within eleven (11) days from date of collection/ receipt of returns/ATAPs. 6. Notify the BIR-RAD and other offices concerned (COA, CB, BTr) in case error is discovered, including over or under reporting/remittance of revenue collections by using/submitting the same collection report form(s) indicating the word "SUPPLEMENTAL" or "ADJUSTMENT" opposite the affected collection date. C. BIR RECEIVING UNIT, CB COMPLEX 1. Stamp "RECEIVED" the segregated documents from the Bank Head Office; 2. Deliver the reports/documents to the PO/CR Monitoring Division on the first hour of the following day of receipt. D. PO/CR MONITORING DIVISION 1. Receive documents from the BIR Receiving Unit, CB complex and distribute said documents within the day of receipt to the following offices: a. VAT Division - Originals of BCS-A/BCS-B - Originals of returns/ATAPs b. RAD Processing Section - Duplicates of BCS-A - Duplicates of CRDC c. COA Resident Auditor - Triplicates of BCS-A 2. Receive exception reports from VAT Division, Revenue Accounting Division and RDOs; 3. Communicate to the bank any exception report received and bill the bank of corresponding penalties, if necessary; E. VAT DIVISION 1. Receive the originals of BCS-A, BCS-B and respective returns/ATAPs from PO/CR Monitoring Division; 2. Check the number of returns/ATAPs attached against respective BCS and note down any inconsistency or incompleteness; 3. Encode data from VAT returns/ATAPs; 4. Generate computer totals of the different batches and match them with their respective BCS totals. Note any discrepancy discovered between them; 5. Summarize and generate exception reports within ten (10) days from receipt of the documents to be distributed as follows: Original RAD Processing Section Duplicate PO/CR Monitoring Division Triplicate VAT Division Quadruplicate - BHO (thru PO/CR Monitoring Division) 6. Generate Bank Collection Control Report (Annex J) and forward to PO/CR Monitoring Division; 7. Send the diskette/tape of encoded data to RISSI immediately after generating the exception reports; 8. Segregate the ATAPs from the batch of original copies of VAT returns and transmit together with a transmittal list to the issuing offices concerned, for attachment to the dockets; 9. Transmit the original copies of BCS or Diskette/Return Transmitted List (DRTL) (Annex R of Attachment A) with the corresponding original copies of VAT returns to the Administrative Branch of the Regional Office concerned for safekeeping not later than twenty (20) days from receipt of the said documents; 10. Transmit the original copy of the Monthly Alphabetical List of Stop-Filers/Non-Filers and Late-Filers with three (3) copies of Reminder Letter to stop-filers/non-filers to the RDO concerned immediately upon receipt from RISSI; 11. Receive and process claims for VAT refunds/credits including those from the VAT Units of Revenue District Offices/ Assessment Branches; 12. Issue Tax Credit Certificate for approved tax credit claims and record on the TCC Register such issuance in accordance with the provision of RMO No. Submit a Monthly List of TCCs Issued to RAD as required under said RMO No. 13. Refer to the Revenue District Office through the Revenue Regional Office, discrepancies reported by RISSI or as disclosed in the application for VAT refund/credit; F. REVENUE INFORMATION SYSTEMS SERVICES, INC. (RISSI) 1. Receive from VAT Division the diskette/tape of VAT returns filed; 2. Generate two (2) copies of the Monthly Alphabetical List of Stop-Filers/Non-Filers by RDO with three (3) copies of reminder letters to stop-filers/non-filers within ten (10) days from receipt of diskette/tape, to be distributed as follows: Monthly Aphabetical List of Stop-Filers/Non-Filers and Late-Filers Original RDO Duplicate VAT Division Reminder Letter: Original VAT taxpayer Duplicate RDO Triplicate VAT taxpayer (as follow-up letter in case taxpayer fails to respond to the original) 3. Forward the copies of the above listing and reminder letters to VAT Division with the diskette/tape. 4. Generate Monthly Alphabetical List of VAT Taxpayers by Regional Office (RO)/National Office (NO) in case of ATAPs following the BCS-A format, to be distributed as follows: Original (by RO/NO) Collection Service (all listings) Duplicate (by RO) Collection Branch concerned G. REVENUE DISTRICT OFFICE (RDO) 1. Pick-up daily the quadruplicate and duplicate copies of BCS-A and BCS-B, respectively, or the duplicate copy of DRTL with attached triplicate copies of VAT returns from the accredited bank branch; 2. Evaluate the returns for selective audit purposes and conduct investigation of selected taxpayers; 3. Receive from VAT Division the original copy of the Monthly Alphabetical List of Stop-Filers/Non-Filers and Late-Filers together with the reminder letters; 4. Deliver personally to stop-filer(s)/non-filer(s) the original copy of the reminder letter(s). Mail the triplicate copy fifteen (15) days after in case the taxpayer fails to respond to the original letter; 5. Conduct inquiry with the bank branch concerned in case taxpayer shows proof/evidence of tax return filed. Report to PO/CR Monitoring Division the non-transmittal/reporting of return filed in case the return presented by the taxpayer is authentic. Otherwise, conduct investigation of the taxpayer; 6. Submit to the Revenue Regional Director a list of stop-filers/non-filers who failed to respond to the two (2) reminder letters fifteen (15) days after mailing the second reminder letter; 7. Conduct verification of stop-filers/non-filers. H. REVENUE ACCOUNTING DIVISION (RAD) 1. Summarize the advance collection reports received thru fax/telex from Bank Head Office and generate the Daily Report of Collection per ARDC (Annex K), to be distributed as follows: Original RAD Accountability Section Duplicate Statistical Analysis Division 2. Process daily the BCS and CRDC reports received thru PO/CR Monitoring Division or VAT Division as to mathematical accuracy and completeness of data; 3. Encode data on collections from BCS and CRDC reports. Match computer totals of BCS against CRDC; 4. Generate Daily Collection Reports per BCS and CRDC (Annexes L and M, respectively); 5. Reconcile exception reports on inaccurate BCS-A received from VAT Division against its copies of BCS and the corresponding CRDC and make the necessary adjustments; 6. Receive Central Bank Credit Advice (CBCA) on remittances of collection per RR No. 5-84; 7. Reconcile CBCA against corresponding CRDCs; 8. Generate the Monthly Report of Collections per CRDC and BCS (Annexes N and N.1, respectively) with adjustment, if any and the Monthly Report of Remittances per CBCA (Annex O) and forward to RAD-Bookkeeping Section and RAD-Accountabilities Section respectively, for recording in the books of accounts; 9. Prepare exception reports on inaccurate/late reporting and remittances of collections using the Schedule of Delayed Reporting/Remittances of Internal Revenue Tax Collections thru Banks (Annex P) and submit to PO/CR Monitoring Division. IV. Amendment Clause: Any change/modification in the provisions of this Order shall be issued by the Project Management Office under as NPCS Memorandum Order. V. Effectivity: This Order shall take effect on July 1, 1991. (SGD.) JOSE U. ONG Commissioner of Internal Revenue