Prescribing the Guidelines and Procedures for the Availment of Voluntary Assessment Program Granting Last Priority in Audit and Investigation of All Internal Revenue Taxes for the Taxable Year Ending December 31, 2000 and All Prior Years Under Certain Conditions

September 10, 2001 REVENUE MEMORANDUM ORDER NO. 21-01 SUBJECT : Prescribing the Guidelines and Procedures for the Availment of Voluntary Assessment Program Granting Last Priority in Audit and Investigation of All Internal Revenue Taxes for the Taxable Year Ending December 31, 2000 and All Prior Years Under Certain Conditions TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Objectives . 1.1 This Order is issued to: 1.1.1 Prescribe uniform guidelines and procedures for the availment of the Voluntary Assessment Program (VAP) granting last priority in audit and investigation of all internal revenue taxes of taxpayers for taxable year ending December 31, 2000 and all prior years, 1.1.2 Define the roles and responsibilities of all offices involved in the implementation of the VAP; 1.1.3 Prescribe documentary requirements that should be submitted by the taxpayer who would avail of the VAP; and 1.1.4 Prescribe reporting procedures and guidelines in the processing of applications for last priority in audit as allowed and granted under existing laws and regulations. SECTION 2 . Policies . 2.1 The last priority in audit and investigation shall apply to all internal revenue taxes for taxable year ending December 31, 2000 and all prior years, namely: 2.1.1 Income Tax (normal income tax or minimum corporate income tax, whichever is applicable, as reflected in the income tax return filed); 2.1.2 Improperly Accumulated Earnings Tax; 2.1.3 Value Added Tax; 2.1.4 Percentage Tax; 2.1.5 Excise Tax; 2.1.6 Documentary Stamp Tax; 2.1.7 Withholding Taxes (withholding tax on compensation, other creditable withholding taxes/expanded withholding tax, final withholding tax which includes tax on fringe benefits); 2.1.8 Taxes on one-time transactions such as estate tax, donor's tax, capital gains tax, expanded withholding tax, documentary stamp tax on the sale, exchange, disposition of real property and/or shares of stock not traded through the local stock exchange; and 2.1.9 Taxes imposed pursuant to special laws (i.e., R.A. 7227, R.A. 7916, E.O. 226, etc.) 2.2 The Program shall cover the following taxpayers liable to pay any of the above-cited internal revenue taxes for the above specified periods who, due to inadvertence or otherwise, have erroneously paid internal revenue tax liabilities or failed to file return and pay the tax due thereon: 2.2.1 Taxpayers paying taxes under the National Internal Revenue Code a. Individuals (including Estates and Trusts); b. Corporations as defined and subject to tax under the provisions of the National Internal Revenue Code of 1997; and 2.2.2 Taxpayers paying taxes under special laws (i.e., R.A. 7227, R.A. 7916, E.O. 226 or other special laws) 2.3 The following are not covered by the privilege of last priority in audit: 2.3.1 Those covered by a Preliminary Assessment Notice (PAN),or by a Final Assessment Notice (FAN),or by a Collection Letter issued on or before July 31, 2001; 2.3.2 Persons under investigation as a result of verified information filed by a Tax Informer under Section 282 of the National Internal Revenue Code of 1997, duly processed and recorded in the BIR Official Registry Book on or before July 31, 2001; 2.3.3 Tax fraud cases already filed and pending in Court for adjudication; and 2.3.4 Those with unpaid tax liabilities or previously recognized tax liabilities as reflected in the books of accounts/records or duly audited Financial Statements (FS)/Account Information Form (AIF) or tax return unless they pay the same prior to or at the time of availment, i.e.,DST payable, withholding tax payable and unpaid individual's second installment on income tax, etc.. 2.4 The Term "Taxable Year Ending December 31, 2000" and "All Prior Years" shall include all taxable years, calendar or fiscal, ending not later than December 31, 2000. 2.5 The term "Tax Due" or "Total Tax Due" shall include not only the tax paid and claimed tax credits in the original or amended return filed but also the tax payable or the unpaid tax relating to a particular taxable transaction or taxable year. 2.6 The term "annual gross sales/receipts" shall refer to the annual gross sales/receipts shown in the audited FS/audited AIF attached to the original tax returns or shown in the audited FS/audited AIF attached to the amended tax returns duly filed with the Bureau, whichever reflects the higher amount. In cases where no returns have been filed, "annual gross sales/receipts" shall refer to the annual gross sales/receipts as reflected in the books of accounts/records or duly audited FS/audited AIF of the taxpayer. For VAP implementation, "annual gross sales/receipts" shall mean the aggregate annual sales/receipts of all lines of business less sales returns, allowances and discounts. 2.7 For purposes of this Order, "one-time transactions" shall refer to transactions subject to estate tax, donor's tax, capital gains tax/expanded withholding tax and documentary stamp tax on the sale, exchange, or disposition of real property, or capital gains tax on the sale or exchange of shares of stock not traded through the local stock exchange, which occurred on or before December 31, 2000, irrespective of whether the corresponding returns and payment of such taxes falls due after that date. Example . Mr. X died last December 31, 2000. Pursuant to Section 90(B) of the Tax Code of 1997, the administrator of his estate is required to file estate tax return and pay the estate tax due thereon within 6 months from the death of Mr. X. In the above example, VAP may be availed under this Order because the transaction (i.e.,the death of Mr. X) occurred not later than December 31, 2000 even if the filing of the return and the payment of the estate tax is due on June 30, 2001. However, it Mr. X died on January 5, 2001, his estate shall no longer be qualified to avail of VAP in accordance with this Order. 2.8 For purposes of VAP availment for Improperly Accumulated Earnings Tax (IAET),improperly accumulated earnings derived for taxable year 2000 which is only determinable within a period of one year thereafter (i.e.,after calendar year 2001) shall not be covered by this Order. SECTION 3 . Conditions for the availment of the privilege of last priority of last in audit and investigation . 3.1 In case there are returns filed in the covered year (See Subsection 3.1 of Revenue Regulations No. 8-2001, as amended) . The following conditions shall be complied with for the purpose of availing VAP in all the types of taxes. However, it should be emphasized that the payment of the VAP amount computed in accordance with this Section shall not be allowed unless the unpaid tax liability is paid, meaning, taxes due per return filed and unfiled including tax liabilities recognized per accounting records and financial statements were paid . 3.1.1 Income tax. In order to avail of the last priority in audit and investigation for income tax, the taxpayer must pay a VAP amount which is the highest among the computed figures in all the following conditions: 3.1.1.1 Twenty percent (20%) for all 1999 and prior years, or thirty percent (30%) for all taxable years ending thereafter but not later than December 31, 2000, of the tax due per tax return filed in the covered year, if the ratio of the tax due per return over the annual gross sales/receipts for the covered year does not exceed two and one-half percent (2.5%), Ten percent (10%) for all 1999 and prior years, or fifteen percent (15%) for all taxable years ending thereafter but not later than December 31, 2000, of the tax due per tax return of the covered year, if the ratio of the tax due per return over the annual gross sales/receipts for the covered year exceeds two and one-half percent (2.5%); 3.1.1.2 For individuals. 0.5% of the total sales/receipts less tax due and paid per tax return filed in the covered year; For corporations. 1% of the total sales/receipts less tax due and paid per tax return filed in the covered year; 3.1.1.3 For individuals. Minimum VAP payment of P10,000; For corporations. Minimum VAP payment of P50,000; 3.1.1.4 The additional unpaid tax due for the covered year as computed by the taxpayer, but not yet recognized or recorded as unpaid tax liability in the accounting records. Example . Miss Evita P. Valenzuela owns an export garment business. For taxable year 1999, her accounting records show the following: 1999 Taxable Income (after deduction of personal exemption) per return P10,000,000 Sales for the Year P70,000,000 Gross Income P21,000,000 Income Tax Due per Return P3,260,000 Tax Paid Per Return (1,630,000) Amount of Income Tax to be Paid on Second Installment P1,630,000 ======= Miss Evita P. Valenzuela failed to pay her second installment amounting to P1,630,000 which was due on July 15, 2000. Aside from the failure to pay the second installment of the income tax due per return, based on Miss Valenzuela's own computation of the 1999 actual income tax liability due, she still owes the Government an additional tax amounting to P200,000. Based on the above information, the income tax for the year 1999 payable under VAP shall be computed as follows: (1) UNPAID TAX LIABILITY P1,630,000 PER 1999 INCOME TAX RETURN FILED (Using the VAP Payment Form) (2) VAP AMOUNT (Highest P326,000 Amount among (a),(b),(c) and (d) below) (Using the VAP Payment Form (a) 1999 Basic Income Tax under VAP (P3,260,000 x 10%) P326,000 Note: The rate used is 10% because the ratio of tax due over sales is more than 2.5%,computed as follows: (P3,260,000/P70,000,000) = 4.6% (b) 0.5% of 1999 Sales (P70,000,000 x 0.5%) P350,000 Less: Tax Due 3,260,000 0 (c) Minimum VAP requirements P10,000 for individuals (d) Additional unpaid tax due for the covered year per taxpayer's P200,000 computation not yet recognized or recorded in the accounting records TOTAL AMOUNT PAYABLE P1,956,000 (1) + (2) 3.1.2 Improperly Accumulated Earnings Tax . In order to avail of the last priority in audit and investigation for improperly accumulated earnings tax, the taxpayer must pay a VAP representing five percent (5%) of the improperly accumulated earnings tax due on improperly accumulated taxable income earned starting January 1, 1998. Example . On January 1, 1998, the beginning balance of WXY Corporation's stockholders' equity account based on its audited financial statements as of December 31, 1997 stood at P80,000,000, broken down as follows: TcaAID Stockholders' Equity Capital Stock Authorized Capital Stock P50,000,000 (50,000,000 shares @ P1.00 par value per share) Subscribed and Paid-Up Capital Subscribed Capital Stock P50,000,000 (50,000,000 shares @ P1.00/share) Less: Subscription Receivable (10,000,000) Subscribed and Paid-Up Capital P40,000,000 Retained Earnings Beginning Balance P32,500,000 Net Income for 1997 7,500,000 Total P40,000,000 Less: Dividends Declared 0 Accumulated Retained Earnings P40,000,000 TOTAL STOCKHOLDERS' EQUITY P80,000,000 ========= For the entire taxable year 1998, WXY Corporation incurred net operating loss amounting to P3,500,000 which in effect diminished its capital account to P76,500,000 as shown below: Stockholders' Equity Capital Stock Authorized Capital Stock P50,000,000 (50,000,000 shares @ P1.00 par value per share) Subscribed and Paid-Up Capital Subscribed Capital Stock P50,000,000 (50,000,000 shares @ P1.00/share) Less: Subscription Receivable (10,000,000) Subscribed and Paid-Up Capital P40,000,000 Retained Earnings Beginning Balance P40,000,000 Net Loss in 1998 (3,500,000) Total P36,500,000 Less: Dividends Declared 0 Accumulated Retained Earnings P36,500,000 TOTAL STOCKHOLDERS' EQUITY P76,500,000 ========= For taxable year 1999 however, it realized a net income of P 15,500,000 consisting of P13,500,000 which is the income derived from operations and P2,000,000 representing interest income subjected to final tax. The income tax due was accordingly computed as follows: Total Net Income P15,500,000 Less: Income Subjected to Final Tax (2,000,000) Taxable Income Before NOLCO P13,500,000 Less: NOLCO (3,500,000) Taxable Income P10,000,000 ========= Income Tax Due (P10,000,000 x 33%) P3,300,00 ========= In June 2000, WXY Corporation declared and paid cash dividends of P5,000,000 out of its earnings from taxable year 1999. Based on the foregoing information, WXY Corporation has improperly accumulated earnings of P3,700,000 for taxable year 1999. If it decides to avail of the VAP, it has to pay P370,000 IAET and an additional VAP amount of P18,500, as shown in the following computations: (1) COMPUTATION OF IMPROPERLY ACCUMULATED EARNINGS Taxable Income for Taxable Year (TY) 1999 P10,000,000 Add: (a) Income Subjected to Final Tax P2,000,000 (b) NOLCO 3,500,000 5,500,000 15,500,000 Less: (a) Income tax paid P3,300,000 (b) Dividends declared/paid 5,000,000 8,300,000 Total P7,200,000 Add: Retained Earnings from prior years 36,500,000 Accumulated Earnings as of Taxable Year P43,700,000 1999 Less: Amount that may be Retained (100% of paid-up capital as of TY 1999) P40,000,000 IMPROPERLY ACCUMULATED P3,700,000 EARNINGS (IAET) ========= (1) COMPUTATION OF IAET Improperly accumulated earnings P3,700,000 x IAET Rate x 10% IMPROPERLY ACCUMULATED P370,000 EARNINGS TAX ======== (2) VAP FOR IAET Improperly accumulated earnings tax P370,000 VAP rate for IAET x 5% VAP AMOUNT FOR IAET P18,500 ======== 3.1.3 Value-Added Tax . In order to avail of the last priority in audit and investigation for value added tax (VAT),the taxpayer must pay a VAP amount representing the highest amount computed in all of the following conditions: 3.1.3.1 Fifteen percent (15%) of the total output tax declared per VAT returns filed for the covered year if the ratio of the VAT payments over the gross sales/receipts subject to VAT for the covered year does not exceed two percent (2 %); Ten percent (10%) of the total output tax declared per VAT returns filed for the covered year if the ratio of the VAT payments over the gross sales/receipts subject to VAT for the covered year exceeds two percent (2%); 3.1.3.2 Two percent (2%) of the total sales or receipts subject to VAT per audited FS/AIF less VAT paid per VAT returns filed in the covered year; 3.1.3.2.1 VAT withheld by the withholding agent claimed as tax credit by the payee-taxpayer shall be considered as forming part of the VAT payment per return provided the same is supported by duly issued Certificate of Tax Withheld (Form 2307) signed by the withholding agent. Provided, however, that if the Certificate of Tax Withheld is later found to be spurious and the defect is ascribed to the payee-taxpayer, the Bureau shall collect the amount purportedly supported by said Certificate despite absence of tax audit. Nonetheless, if the fault is attributable to the withholding agent, i.e.,failure to remit the withholding tax, the Bureau shall collect said amount from the withholding agent. 3.1.3.2.2 For this purpose, sales or receipts subject to VAT shall not include sales or receipts subject to the 0%. 3.1.3.3 Additional unpaid tax due for the covered year/period as computed by the taxpayer not yet recognized or recorded in the accounting records. Example . XYZ Company's accounting records for taxable year 1999 show the following pertinent information: Total Sales for 1999 P6,500,000 *Sales subject to 10% VAT P5,500,000 Sales subject to 0% VAT 1,000,000 Output taxes declared in 1999 VAT returns P550,000 Input Tax P100,000 VAT Withheld by government claimed as tax credit per return P150,000 VAT Payments per return in 1999 P300,000 (*Net of Output Tax) XYZ Company believes that it has erroneously understated its VAT for 1999 in the amount of P50,000 by overclaiming allowable input taxes. If it decides to avail of the VAP for taxable year 1999, its VAP payment shall be computed as follows: (1) 1999 Output taxes shown in the VAT Returns multiplied by the appropriate rate P55,000 (P550,000 x 10%) Note: The rate used is 10% because the ratio of VAT payment to gross sales is 8.20%,computed as follows: (P150,000 + P300,000) /P5,500,000 = 8.20% (2) 2% of 1999 Total Sales Subject to VAT (P5,500,000 x 2%) P110,000 Less: VAT payments in 1999 (300,000 + 150,000) (450,000) -0- (3) Additional unpaid VAT due for the covered year per taxpayer's computation not yet recognized or recorded P50,000 in the accounting records MINIMUM VAP PAYMENT REQUIRED [Item (1)] P55,000 3.1.4 Percentage Tax . In order to avail of the last priority in audit and investigation for percentage tax, the taxpayer must pay a VAP amount which is the highest among the computed figures in all the following conditions: 3.1.4.1 Fifteen percent (15%) of the total percentage tax due per percentage tax returns filed in the covered year if the ratio of the percentage tax due over the gross sales/receipts subject to percentage tax does not exceed two percent (2%); Ten percent (10%) of the total percentage tax due per percentage tax returns filed in the covered year if the ratio of the percentage tax due over the gross sales/receipts subject to percentage tax exceeds two percent (2%); 3.1.4.2 Two percent (2%) of the total taxable sales or receipts subject to percentage tax per audited FS/AIF less percentage tax due per percentage tax returns filed in the covered year; For this purpose, taxable sales or receipts subject to percentage tax shall not include sales or receipts subject to the 0%. 3.1.4.3 Additional unpaid tax due for the covered year as computed by the taxpayer not yet recognized or recorded in the accounting records. Example . Ding Nelson Banking Corporation's accounting records for the taxable period October 1, 1999 to September 30, 2000 show the following information: Gross Revenue P20,000,000 Gross Receipts subject to percentage tax Gross receipts GRT P6,000,000 @ 5% P300,000 12,000,000 @ 3% 360,000 4,000,000 @ 1% 40,000 3,000,000 @ 0% 0 P25,000,000 P700,000 Percentage Tax Paid (Oct. 1, 1999-Sept. 30, 2000) P700,000 Percentage Tax Payable/Unpaid-Per books P60,000 Ding Nelson Baking Corporation recomputed its percentage tax liability and found out that in addition to the unpaid percentage tax of P60,000 recognized per books, it still owes the Government additional tax amounting to P72,000 due to erroneous classification of taxable receipts. Should it decide to avail of the VAP for the taxable year 2000, it has to pay P60,000 and P72,000 or a total of P132,000 representing the unpaid as percentage tax liability and VAP payment computed as follows: (1) Unpaid Tax Liability per books as of fiscal P60,000 year ending September 30, 2000 (2) VAP Amount (Item c) 72,000 (a) 2000 Percentage Tax under VAP P70,000 (700,000 x 10%) Note: The rate used is 10% because the ratio of tax due per return over gross receipts subjected to percentage tax is 3.20%,computed as follows: (P700,000/P22,000,000) (b) 2% of 2000 Gross Receipts less tax due per 0 percentage tax return [(P22,000,000 x 2%) - P700,000] 440,000-700,000 (c) Additional unpaid tax due for the covered 72,000 year per taxpayer's computation not yet recognized or recorded in the accounting records Total Amount Payable (1) + (2) 132,000 3.1.5 Excise Tax . In order to avail of the last priority in audit and investigation for excise tax, the taxpayer must pay a VAP amount representing the higher amount computed in the following two (2) conditions: 3.1.5.1 Three percent (3%) of the total excise tax due for the covered year; 3.1.5.2 Additional unpaid excise tax due for the covered year as computed by the taxpayer not yet recognized or recorded in the accounting records. Provided, however, that any previously recognized excise tax liability which remained unpaid as of the date of availment must be paid first before availment of the VAP. Example . For taxable year 2000, the total excise tax due and paid (either through actual tax payment, application of advance payment, or through use of TDM) by X Petroleum Corporation amounted to P50,000,000. There is no recorded excise tax liability per books. Neither is there any pre-determined unpaid excise tax not yet recognized or recorded in the accounting records. If X Petroleum Corporation wants to avail of VAP, the VAP amount to be paid is P1,500,000 (P50,000,000 x 3%). Note: If the company has an outstanding balance of advance excise tax payment, the same shall not be utilized, for purposes of VAP availment. 3.1.6 Documentary Stamp Tax. In order to avail of the last priority in audit and investigation for documentary stamp tax (DST),the taxpayer must pay a VAP amount representing the higher amount computed in the following two (2) conditions: 3.1.6.1 Twenty percent (20%) of the total tax due during the year (covered year); 3.1.6.2 Additional unpaid tax due as computed by the taxpayer not yet recognized or recorded in the accounting records. Example . GHI Corporation books of accounts as of December 31, 2000 show a DST Payable of P250,000 and Subscription Receivable (Shares of Stocks) of P78,000 (GHI paid DST on the paid-up portion only).During the year its DST purchases and affixture on all taxable transactions amounted to P500,000. However, based on its current analysis of the transaction for the covered year, an additional amount of P150,000 is determined to be still an unrecognized liability. Should it decide to avail of the VAP, it has to pay P400,780 computed as follows: (1) Unpaid Tax Liability as of December 31, 2000 (a) DST Payable per books P250,000 (b) DST on Subscription Receivable (P78,000 x P2/200) 780 P250,780 (2) VAP Amount [Item (b)] P150,000 (a) 20% of Total Tax Due 100,000 (P500,000 x 20%) (b) Additional Unpaid Tax for the 150,000 covered year per company's computation not yet recognized or recorded in the accounting records Total Amount Payable P400,780 ======== 3.1.7 Withholding Tax . In order to avail of the privilege of last priority in audit and investigation for withholding tax, the taxpayer must pay a VAP amount equal to twenty percent (20%) of the total tax due in the covered year or the additional unpaid tax for the covered year as determined by the taxpayer not yet recognized or recorded in the accounting records, whichever is higher. Example . For the taxable year 2000, Sister Company granted fringe benefits to its manager and supervisors in the form of housing privileges with a total monthly rental of P120,000. Fringe benefit tax in the amount of P254,117.65 for the last three (3) quarters have been paid by the company but failed to remit/pay the fringe benefit tax due for the first quarter. Aside from the fringe benefit tax liability, the company likewise owes the government expanded withholding tax on its warehouse rental payment totaling P1,500,000.00 in 2000 which was already withheld per records but still unremitted. No other account subject to final and expanded withholding tax was noted per books. Moreover, it has withheld and remitted the correct withholding tax on compensation. If the company decides to avail of the VAP for both final and expanded withholding tax liabilities for the year 2000, the computation shall be as follows: (a) Fringe Benefit Tax Fringe Benefit Tax (P120,000 x 12 x 50%) 68% = P1,058,823.53 x 32% Note: The basis for the gross-up monetary value of the Fringe Benefit (House Rental) P338,823.53 is 50% of the rental value of the house (See Revenue Regulations No. 3-98) Less: Fringe Benefit Tax Paid for the last 3 quarters (P120,000 x 9 x 50%) 68% = P794,117.65 x 32% 254,117.65 (a) Unpaid Fringe Benefit Tax P84,705.88 (b) VAP Amount 20% x 338,823.53 67,764.71 (c) Total Amount Payable P152,470.59 ========== (b) Expanded Withholding Tax. (a) Expanded Withholding Tax = P1,500,000 x 5% (5% is the expanded withholding tax rate for rental) Unremitted expanded withholding tax on rental P75,000 (b) VAP Amount P75,000 x 20% 15,000 (c) Total Amount Payable P90,000 ======== The taxpayer may opt to avail of just one type of withholding and not the others. Thus, if he has paid withholding tax on compensation, expanded withholding tax and final withholding tax, he may decide to avail of VAP just for the expanded withholding tax. 3.1.8 Refundable returns or when there is a pending request for tax refund/credit . In cases where VAP is availed on refundable returns or on excess/erroneous payments where there is a pending request for tax refund/credit, such availment of VAP shall not constitute an automatic approval of said refund or tax credit. Should the taxpayer insist on the grant of refund or tax credit, he may request that the tax type being claimed be processed/audited solely for purposes of the refund case. 3.1.9 When there is an unpaid balance on the tax due per return filed in the covered year . If the taxpayer filed a return but nevertheless failed to pay the balance due thereon, VAP availment shall consist of paying the unpaid balance per return and the additional VAP amount computed in accordance with the conditions set forth in Subsection 3.1. 3.2 In case no return was filed in the covered year . If the taxpayer was required under the law to file a tax return and pay the tax but did not actually file and pay the same, the VAP availment shall consist of paying the basic tax due on such unfiled return and the additional VAP amount computed in accordance with the conditions set forth in Subsection 3.1 above. In no case, however, shall the additional VAP payment be allowed unless the tax due for the unfiled and unpaid return has been paid. Once the taxpayer has paid the basic tax due on the unfiled and unpaid returns and the corresponding VAP amount due thereon, he is still required to accomplish the required tax return (BIR Form 1701, 1702, 2550Q, 2551, etc.) and manually file (meaning not passing through the banks) the same with the concerned BIR office, together with the VAP application form and validated payment form/revenue official receipt duly filed with the appropriate Accredited Agent Bank (AAB),or Revenue Collection Officer (RCO)/Deputized Municipal Treasurer (DMT),in places where there are no AABs. 3.3 VAP availment for one time transactions such as estate tax, donor's tax, or capital gains tax, etc . VAP may be availed of for one-time transactions such as estate tax, donor's tax, capital gains tax or expanded withholding tax and documentary stamp tax on the sale, exchange, or disposition of real property, or capital gains tax on sale of shares of stock not traded through the local stock exchange. 3.3.1 In case returns have been previously filed. VAP availment shall consist of the filing of the prescribed VAP application form and the payment of a VAP amount using the VAP payment form with the appropriate collection agent (AAB or RCO/DMT, whichever is applicable) based on the following conditions: 3.3.1.1 Twenty percent (20%) of the basic tax computed based on the tax return originally filed; or 3.3.1.2 The additional unpaid tax due for the covered transaction as determined by the taxpayer, whichever is higher. 3.3.2 If no return has been filed and no payment has been made . The VAP may be availed of in accordance with the conditions set hereunder: 3.3.2.1 Payment of one hundred twenty percent (120%) of the basic tax due computed based on the rates applicable and in accordance with the statutes/laws in force at the time the taxable transaction or event occurred, using the prescribed BIR Form (VAP Application Form and VAP Payment Form) filed with the appropriate collection agent (AAB or RCO/DMT, whichever is applicable); 3.3.2.2 Manual filing (meaning not passing through the banks) of the required return/s with the concerned BIR office (e.g.,Form 1801 for estate tax, Form 1800 for donor's tax, Form 1706 for capital gains tax on real property, etc.) 3.3.2.3 In the case of transfers of property, the correct application of the rule on tax base as well as prescribed valuation rules, for the purpose of determining the tax base shall be observed in computing the basic tax due and the additional VAP amount of twenty percent (20%);and 3.3.2.4 Full compliance with the documentary requirements set forth in Section 5 hereof. 3.4 VAP availment for taxpayers subject to preferential tax rates under special laws . VAP availment for these taxpayers shall be effected by paying a VAP amount equivalent to Twenty Percent(20%) of the tax due per returns filed for the covered year, or the additional unpaid tax due for the covered year, not yet recognized in the accounting records, as determined by the taxpayer, whichever is higher. Provided, however, that no payment of VAP shall be allowed unless the recognized unpaid tax liability due on such filed return/books of account/records/audited FS or AIF, or unpaid tax liability on the unfiled return, has been correspondingly paid. For this purpose, tax due shall mean the tax due, applying the total tax rate applicable to the taxpayers' taxable income regardless of the distribution of the tax collection to the appropriate government units (e.g., 5% preferential rate on PEZA-registered companies). 3.5 VAP availment for individuals with mixed income . VAP availment for income tax may cover one or both income of the individual. Taxpayers deriving income from compensation and business income may choose to avail of VAP for both or one of such income only. Example . The income tax return and audited financial statements of Anton Fabon for the calendar year 2000 show the following: Income from Compensation P540,000 Income from Business Sales P2,850,000 Cost of Sales (1,700,000) Administrative and Other Expenses (300,000) Net Income 850,000 Total Income before personal and additional exemptions P1,390,000 ========= Tax Due P394,440 Tax Withheld from Compensation (115,600) Income Tax Paid P278,840 ========= Anton Fabon is married, with two (2) dependent children ages five and six. His wife is not employed, neither is she engaged in business. He has no unpaid liability per return/books, and even based on his own recomputation, he has no additional unpaid liability. If he avails of the VAP on income tax for his business income only, the computation shall be: Income Tax Due applicable/proportionate to Compensation P540,000/P1,390,000 x P394,440 = P153,236 Income Tax Due applicable/proportionate to Business P850,000/P1,390,000 x P394,440 = P241,204 VAP AMOUNT [Highest Amount among (a),(b) & (c)] P36,181 (a) 2000 Basic Income Tax under VAP 15% x P241,204 36,181 Note: The rate used is 15% because the ratio of the tax due over sales is more than 2.5% computed as follows: (241,204/2,850,000) = 8.46% (b) .5% x 2,850,000 = P14,250 Less: Tax Due 241,204 0 (c) Minimum VAP requirement for individuals P10,000 3.6 VAP availment for husband and wife . Husband and wife may avail of VAP by filing separately VAP application forms and VAP payment forms. One spouse may avail of VAP even if the other spouse would not avail. 3.7 VAP availment of taxpayers retiring from business or business entities already closed or dissolved . Taxpayers retiring from business or business entities already closed or dissolved may avail of the VAP provided that the last day of his/its operation is not later than December 31, 2000. The Tax Clearance Certificate shall be released by Large Taxpayer Service (LTS) or Large Taxpayer District Office (LTDO) or Revenue District Office (RDO),whichever is applicable, after the Certificate of Qualification has been issued by the appropriate BIR Office. 3.8 If Letter of Authority (LA)/Audit Notice (AN),Tax Verification Notice (TVN) or Mission Order (MO) had already been issued .VAP may be availed of even if an LA, TVN or MO had already been issued by the BIR for as long as no Preliminary Assessment Notice (PAN) or Final Assessment Notice (FAN) or Collection Letter has yet been issued as of July 31, 2001. 3.9 Treatment of the VAP payment . The VAP payment can neither be used as tax credits in the year of payment as well as in the returns for subsequent year/s, nor as a deduction for internal revenue tax purposes, except as provided for in Section 6.8 hereof. 3.10 Excess tax credits on the returns filed for the covered year/s and unutilized balance of TCCs . Excess tax credits appearing on the returns filed in the covered year/s as well as unutilized balance of tax credit certificates (TCCs) shall not be allowed as payment under this Program. SECTION 4 . Payment of the VAP amount and/or the unpaid basic tax due or unpaid balance on returns for the covered year/s . As required under existing laws and regulations, the VAP-applicant taxpayer shall pay the required VAP amount and/or the basic tax on unfiled returns/unpaid taxes or the unpaid balance on the return/s filed for the covered year/s with the concerned AAB or RCO/DMT in the absence of AAB, of the RDO/LTS where the taxpayer is required to register and to file his/its regular returns, by filing the prescribed VAP application and payment forms which must be accomplished in triplicate copies. Photocopied or computer-generated forms may be used by taxpayers provided the same are originally filled out and signed. Upon payment, the AAB shall machine validate all the copies of the VAP payment form and issue bank official receipt to acknowledge receipt of payment. The RCO/DMT, on the other hand, shall issue a Revenue Official Receipt (ROR),also, to acknowledge the receipt of payment. Both AAB and RCO/DMT shall retain the duplicate copy of VAP Application Form and the duplicate and triplicate copies of VAP Payment Form/ROR after the same has been duly stamped as "received" and initialed by them. The original copy of the VAP Payment Form/Official Receipt (bank official receipt or ROR, whichever is applicable) and the original and triplicate copies of the VAP Application Form as validated, stamped "received" and initialed by the concerned employee of the AAB/RCO/DMT shall thereafter be returned/given to the taxpayer. When the VAP availment covers more than one (1) tax type or one (1) taxable year, there shall be accomplished as many sets, in triplicate copies, of the application and payment forms corresponding to the tax types or taxable years covered by the availment. Example. Mr. A is availing of VAP on the following: (1) Income tax for 1998; (2) VAT and income tax for 1999; and (3) Withholding tax on compensation for 1997. In this case, Mr. A has to accomplish four (4) sets in triplicate copies of VAP application and four (4) sets of payment forms for each of the following types of tax and taxable years covered by the VAP availment: (1) 1998 income tax; (2) 1999 income tax; (3) 1999 VAT; and (4) 1997 withholding tax, on compensation In preparing the Batch Control Sheet-A (BCS-A) for summaries of tax payments received on returns filed with and received by the AABs/RCOs/DMTs, the AABs/RCOs/DMTs concerned should segregate or prepare a separate BCS-A (VAP Payment Form 0607) exclusively pertaining to VAP payments. In fine, in preparing the BCS-A, VAP payment forms should not be co-mingled with the regular returns/payment forms (e.g. 1701Q, 1702Q, 2550Q, 2551, 1600, 0605, etc.) received by the AABs/RCOs/DMTs. 4.1 Information required in the VAP application form . The VAP Application Form shall be accomplished by indicating among others, the tax type intended for availment, the particular year to be covered by the availment, the basic tax due for the unfiled returns/unpaid tax or unpaid balance still due on the return filed for the covered year and the individual computations made using the conditions set forth in Subsection 3.1 hereof to arrive at the required VAP amount to be paid. 4.2 Venue for payment . 4.2.1 In general . The VAP-applicant taxpayer shall pay the corresponding VAP amount/unpaid basic tax/unpaid balance to the AAB within the revenue district where such applicant-taxpayer is required to register. In the absence of any AAB, payment should be made to the authorized RCO/DMT of the RDO where the applicant-taxpayer is required to register and/or file the return. 4.2.2 VAP payment for Large Taxpayers . VAP applicant-taxpayers classified as large taxpayers by the Bureau shall pay the VAP amount/unpaid basic tax/unpaid balance to the AAB located at the BIR National Office Building. In case of taxpayers under the jurisdiction of the LTDO, payment shall be made with the AABs of the LTDO. 4.2.3 VAP payment of capital gains tax, creditable withholding tax and documentary stamp tax on the sale, exchange or disposition of real property . For the availment of VAP pertaining to capital gains tax, creditable withholding tax and documentary stamp tax on the sale, exchange, or disposition of real property, the VAP amounts shall be paid to the AAB or RCO/DMT, in the absence of AAB, within the revenue district where the real property is located. SECTION 5 . Requirements to be attached to the VAP application form . After the original and triplicate copies of the VAP Application Form have been duly stamped "received" and returned to the taxpayer by the concerned AAB/RCO/DMT, one copy shall be filed in accordance with Subsection 6.1 hereof for processing and approval together with the following documents: 5.1 Fully accomplished required tax return (e.g. Form 1701, 1702 2550Q, 2551, 1800, 1801, 1706, 1606) for the taxable period covered by VAP availment in case no returns have been filed (Duly audited FS/AIF should be attached except if VAP availment covers tax on one-time transactions); 5.2 A copy of the tax return originally filed, if any, together with duly filed audited FS/audited AIF for the taxable period covered by the VAP availment. In case the duly filed audited FS/AIF does not reflect the specific type of liability, a detailed schedule under oath of all the liabilities must be submitted. Tax liability should be enumerated by tax type; 5.3 For estate tax, donor's tax, capital gains tax/expanded withholding tax on the sale or exchange of real properties or capital gains tax on transfer of shares of stocks not traded thru the local stock exchange, there shall be attached to the VAP application form/return filed, documentary proofs such as: 5.3.1. Estate Tax . 5.3.1.1 Proofs of all deductions and tax credits claimed; 5.3.1.2 Certified true copy of Death Certificate; 5.3.1.3 A copy of the notarized Deed of Extra-Judicial Settlement of the Estate/Affidavit of Self Adjudication, if the estate is settled extrajudicially; 5.3.1.4 Statement of Assets and Liabilities; 5.3.1.5 Court Order/Decision, if estate is settled judicially; 5.3.1.6 Certified true copy/ies of the Transfer/Original/ Condominium Certificate of Title/s of real properties (front and back pages),if applicable; 5.3.1.7 Certified true copy of the latest Tax Declaration of real properties at the time of death (front and back pages),if applicable; 5.3.1.8 "Certificate of No Improvement" issued by the Assessor's Office where declared properties have no declared improvement; 5.3.1.9 Certificate of Deposit/Investment/Indebtedness owned by the decedent and surviving spouse, if applicable; 5.3.1.10 Photocopy of Certificate of Registration of vehicles and other proofs showing correct value of the same, if applicable; 5.3.1.11 Proof of valuation of shares of stocks at the time of death, if applicable: 5.3.1.11.1 For listed stocks newspaper clippings or certification from the Stock Exchange; 5.3.1.11.2 For unlisted stocks latest (at the time of death) audited FS of issuing corporation with computation of book value per share; 5.3.1.12 Xerox copy of certificate of stock, if applicable; 5.3.1.13 CPA Certification on the itemized assets of the decedent, and itemized deductions from gross estate, if the gross value of the estate exceeds two million pesos (P2,000.000);and 5.3.1.14 Duly notarized Promissory Note for "Claims Against the Estate" arising from Contract of Loan, if applicable. 5.3.2 Donor's Tax . 5.3.2.1 Proofs of all deductions and tax credits claimed; 5.3.2.2 A copy of the notarized Deed of Donation; 5.3.2.3 Sworn statement of the relationship of the donor to the done; 5.3.2.4 Certified true copy/ies of the Original/Transfer /Condominium Certificate of Title (front and back pages) of the donated property, if applicable; 5.3.2.5 Certified true copy/ies of the latest Tax Declaration (front and back pages) of lot and/or improvement, if applicable; 5.3.2.6 "Certificate of No Improvement" issued by the Assessor's Office where the donated real property/ies have no declared improvements, if applicable; 5.3.2.7 Proof of valuation of the shares of stock at the time of donation, if applicable: 5.3.2.7.1 For listed shares newspaper clippings or certification issued by the Stock Exchange as to the value per share 5.3.2.7.2 For unlisted shares latest audited FS of the issuing corporation with computation of the book value per share 5.3.3 Capital Gains Tax/Expanded Withholding Tax . 5.3.3.1 On Real Properties . 5.3.3.1.1 A copy of notarized Deed of Sale or Exchange; 5.3.3.1.2 Certified true copy of the Original/Transfer/Condominium Certificate of Title (front and back pages); 5.3.3.1.3 Certified True Copy of the Latest Tax Declaration (lot and/or improvement) (front and back pages); 5.3.3.1.4 If what is sold is lot only, a Certification from the Assessor's Office that there is no existing improvement on the lot being sold/transferred; 5.3.3.1.5 Proof that the seller is habitually engaged in real estate business, if applicable; and 5.3.3.1.6 Proof of DST payment. 5.3.3.2 Shares of Stock not Traded Thru the Local Stock Exchange . 5.3.3.2.1 Certified true copy of the Certificate of Stock/s; 5.3.3.2.2 Proofs of all deductions claimed; 5.3.3.2.3 Copy of the notarized Deed of Sale or Exchange; 5.3.3.2.4 Copy of the audited FS of the issuing corporation/institution or other relevant evidence to prove the fair market value of the shares sold; and 5.3.3.2.5 Proof of DST payment. 5.4 Proof of payment of tax liabilities reflected in the books/records and/or financial statements paid after the close of the covered taxable period; and 5.5 Copy of VAP Application Form and photocopy of duly validated VAP Payment Form and AAB Official Receipt/ROR issued by the concerned RCO/DMT as proof of VAP payment, whichever is applicable. In lieu of the certified true copy of the documents requested, photocopy thereof as verified and signed by the evaluation officer may be submitted. SECTION 6 . Processing of VAP applications . 6.1 Filing of VAP applications . For VAP applications on covered years where returns have been filed, such applications and VAP payment forms, after having been duly stamped "received" by the appropriate BIR collection agent (AAB or RCO/DMT, whichever is applicable),together with the required attachments, shall be filed with the Technical Working Group (TWG) of the Regional Office having jurisdiction over the place where the VAP-applicant taxpayer is required to register. However, if the taxpayer availing of VAP is registered in a RDO located outside the province where the Regional Office is situated, such VAP application, duly stamped, "received" by the appropriate BIR collection agent, may be filed with the said RDO for pre-processing. Within seven (7) days after the taxpayer has complied with all the requirements and conditions for availment, the same shall be transmitted to the Regional Office for final processing. If the application is approved, a Certificate of Qualification duly signed by the Regional Director shall be issued to the taxpayer, otherwise, a Notice of Disqualification shall be issued. In the case of large taxpayers including those under the jurisdiction of the LTDO, such applications shall be filed with the LTS at the National Office. Provided, however, that for VAP applications on covered years where no returns have been filed, the same shall be filed and submitted to the TWG of the Regional Office, or RDO (for districts located outside the province of the region) or LTS, as the case may be, for processing and evaluation. For this purpose, Metro Manila is considered a province. Within seven (7) days after evaluation of VAP applications and complete attachments, these Offices shall forward these documents and their recommendations to the TWG of the Assessment Service (National Office) for further review and evaluation. After review, the TWG shall forward the same to the Management Committee (MANCOM) for approval or disapproval. Once approved, a Certificate of Qualification shall then be prepared for the signature of the Commissioner of Internal Revenue (CIR).If the application is disapproved, a Notice of Disqualification (Annex "A") shall accordingly be prepared for the signature of the CIR. 6.2 Creation of Technical Working Groups. The Regional Director, and ACIR-LTS shall each create two (2) TWGs consisting of members representing each of the revenue districts/divisions under their jurisdiction. One TWG shall be assigned to receive, process, and evaluate VAP applications on availments for covered year/s where returns have been filed while the other TWG shall be assigned to receive, process and evaluate VAP applications on availments for covered year/s where no returns have been previously filed. These applications processed by the second group shall thereupon be recommended for approval or disapproval by the TWG under the Assessment Service. In those instances where processing shall start at the RDO level, two (2) equivalent TWGs performing the functions and activities of the TWGs at the regional office as discussed in the preceding paragraphs shall likewise be created in the RDO. A TWG under the Assessment Service shall on the other hand, be comprised of personnel selected/appointed by the ACIR-Assessment Service. This Group shall be tasked to review VAP availments where no returns have been previously filed and shall then submit its recommendation to the MANCOM. 6.3 Duties of the Technical Working Groups . The TWGs in the Regional Offices and LTS or RDO, in some instances as mentioned in the preceding paragraph, shall be responsible in receiving VAP application forms and attachments. The members thereof shall see to it that the required VAP amount as well as the unpaid tax liability/unpaid balance, if any, had been correctly computed and paid and that all the information and documents required as well as other conditions for availment have been fully complied with. ScaEIT On the basis of the verification and evaluation made, the teams shall likewise be responsible in recommending the issuance of a Certificate of Qualification, in case of full compliance, or a Notice of Disqualification, in cases where the VAP application is disapproved based on the grounds provided under Subsection 6.7 hereof. For VAP availments where no returns have been previously filed, the said TWGs assigned to process and evaluate the same shall have the duty to transmit the same together with the attachments and their recommendations to the TWG of the Assessment Service for further review and evaluation before the same are forwarded to the MANCOM for approval. The TWG of the Assessment Service shall, within seven (7) days from receipt of the VAP applications, attachments and recommendations of the TWGs of the Regional Office and LTS, review the same and on the basis thereof shall submit its recommendation to MANCOM. Upon approval/disapproval of MANCOM, said TWG shall prepare the Certificate of Qualification or Notice of Disqualification, as the case may be, for the signature of the CIR. 6.4 Defects and omissions in the application . If defects and omissions are noted in the application, the taxpayer must be notified in writing of such defects and deficiencies within fifteen (15) days from receipt of the application. 6.5 Duty of taxpayer to submit additional requirements. The taxpayer, on the other hand, should submit all the documentary requirements to the appropriate BIR office within fifteen (15) days after receipt of such notice or thirty (30) days after filing of the VAP application form with the concerned BIR Office, whichever comes earlier. 6.6 Proof of full compliance . Upon submission of all the necessary documentary requirements, the concerned member of the respective teams should indicate in the appropriate box provided in the VAP application form that such application is "COMPLETE AS TO DOCUMENTARY REQUIREMENTS",further affixing thereto his full name and signature. The same information shall likewise be indicated on the VAP-applicant taxpayer's copy (triplicate copy ) of the VAP application form for his file and reference. 6.7 Grounds for disqualification . The following shall constitute grounds for disqualification of VAP applications: 6.7.1 If the taxpayer failed to submit the documentary requirements within the reglementary period provided hereof, unless he asks for an extension in writing; 6.7.2 In case of defects/omissions on the face of the VAP application/VAP payment form which the taxpayer has failed to rectify within the period prescribed or agreed upon; 6.7.3 In case of failure to pay the previously recognized unpaid tax liability; 6.7.4 In case of failure to pay the VAP amount in accordance with this Order (e.g.,use of TDM or excess tax credits in the payment of the VAP amount);and 6.7.5 In case VAP is availed on those cases not covered by the Program. 6.8 Effect of disqualification. If disqualified, his payment under the VAP shall be credited against his deficiency tax liability, in case of audit. 6.9 Issuance of Certificate of Qualification or Notice of Disqualification . After evaluation of the taxpayer's availment of the privilege of last priority in audit and investigation, the respective TWGs shall prepare three (3) copies of the Certificate of Qualification or Notice of Disqualification, as the case may be, to be attached to the VAP application form and attachments, and shall be forwarded to the following Revenue Officials for their approval and signature: 6.9.1 Those with previously filed returns Regional VAP Applications Regional Director LTS VAP Applications ACIR, LTS 6.9.2 Those without previously filed returns Applications with unfiled/unpaid returns CIR The Certificate of Qualification shall indicate among others, the name of the taxpayer, TIN, address, the tax types and the taxable years for which the VAP availment was approved. In case there are more than one tax type and taxable year availed for VAP, Certificate of Qualification/Notice of Disqualification shall be issued for each tax type and taxable year covered by the availment. No Certificate of Qualification shall be recommended for issuance unless the VAP payment has been validated with the summary report furnished to the concerned TWG by the ACIR, ISOS or Head, ISOS-DC or RCO/DMT in accordance with Subsection 7.1 hereof. The Notice of Disqualification, on the other hand, shall indicate among others, the name of the taxpayer, TIN, address, the tax type/s and taxable year/s disqualified for VAP availment and the reason/s for disqualification. The Certificate of Qualification or the Notice of Disqualification, as the case may be, shall be issued as follows: Original copy Taxpayer Duplicate copy Issuing Office Triplicate copy Filed with the docket of the case A Control Number shall be assigned to each Certificate of Qualification or Notice of Disqualification, as the case may be, following these series: the first two (2) digits for the Revenue Region/LT number, the next three (3) digits for the district/office/division number, the next four (4) digits for the year covered, the next for the taxes covered, (IT for income, IAET for Improperly Accumulated Earnings Tax, VT for VAT, PT for Percentage, DS for documentary stamp tax, WC for withholding tax on compensation, CG for capital gains tax on real property, etc.) and the last for the numerical number assigned. Example: RR 8 Makati RDO 048 West Makati Year Covered 1999 Tax Type Covered Income The control number for the Certificate of Qualification/Notice of Disqualification to be issued shall be: CQ No. 08-048-1999-IT-001 for the Certificate of Qualification NDQ No . 08-048-1999-IT-001 for the Notice of Disqualification For Certificate of Qualification issued by the TWG-Assessment Service, letters AS shall be added after the last numerical numbers such that the control number shall be: CQ No. 08-048-1999-IT-001-AS for the Certificate of Qualification NDQ No. 08-048-1999-IT-AS for the Notice of Disqualification The Certificate of Qualification shall be issued within thirty (30) days after the taxpayer has complied with all the requirements and conditions herein set forth. If no Certificate of Qualification is issued, the said Certificate is deemed approved, thus, the Certificate of Qualification should be issued as a matter of course. The Notice of Disqualification, on the other hand, shall be issued within thirty (30) days after the lapse of the period required from the taxpayer to fully comply with the requirements or upon discovery by the concerned TWG of any circumstance that would constitute a ground for disqualification as mentioned in Subsection 6.7 hereof. Within fifteen (15) days from receipt of the Notice of Disqualification, the taxpayer may submit a formal appeal or request for reconsideration with the concerned TWG, and submit the documents necessary for the approval of his application. The concerned TWG shall be given fifteen (15) days from receipt of the request/appeal and documents within which to re-evaluate the application and to submit to its approving officer its recommendation. Within the same period, the taxpayer must likewise be informed of the final resolution of his appeal by the Regional Director, ACIR-LTS, or the CIR, as the case may be. The TWGs/Regional Director/ACIR-LTS, ACIR-Assessment Service, who fails to evaluate and recommend action and/or issue the Certificate of Qualification or Notice of Disqualification, as the case may be, within the prescribed period shall be required to submit a memorandum to the CIR stating the reason for the non-issuance. Said memorandum shall be the basis for any future action the CTR may deem proper. 6.10 Issuance of Certificate Authorizing Registration/Tax Clearance Certificate (CAR/TCL) on VAP availments for one-time transactions . 6.10.1. Where no returns have been filed . Since these types of VAP availments are reviewed and evaluated by the TWG of the Assessment Service, once the same have been verified and evaluated as correct and complete as to the substantiation requirements and the Certificate of Qualification thereof has been duly issued, a Letter of Confirmation shall be issued by said TWG to be signed by its Chairman, confirming the approval of VAP availment on the type of tax and taxable year covered, thus, allowing for the issuance of the corresponding CAR/TCL on the properties covered by the availment. Such Letter of Confirmation (LC) shall be furnished by the TWG of the Assessment Service to the concerned RDOs or to the concerned Office/s under the LTS, for the issuance of the corresponding CAR/TCL. Subsequently, the entire docket shall be forwarded to the Regional Office or ACIR-LTS, as the case may be, for safekeeping. 6.10.2. Where returns have been filed . Accordingly, for these types of VAP availments which are processed and evaluated by the TWG of the Regional Office/LTS, it shall be the Regional Director/ACIR-LTS who shall sign the Letter of Confirmation allowing for the issuance of the CAR/TCL on the properties covered by the availment which shall in turn be forwarded to the concerned RDOs for the issuance of the corresponding CAR/TCL. [Attached are VAP Period flowcharts (Annexes "K-1" and "K-2") for ready reference] SECTION 7 . Reports on VAP collections and availments . 7.1 Reports on VAP collections . For VAP payments made thru AABs by taxpayers under the jurisdiction of the Regional Offices, the ACIR-Information Systems Operations Service (ACIR-ISOS) shall furnish the Regional Directors with VAP summary reports detailing therein the amount of VAP collected by their respective Regions (Annex "B").A consolidated summary report of VAP collections for all Regions shall likewise be furnished by the ACIR-ISOS to the DCIR-Operations Group, ACIR-Collection Service, and ACIR-Assessment Service (Annex "C"),attaching, thereto the supporting Annex "B". The Chief of the ISOS-DC, on the other hand, shall be responsible in furnishing the ACIR-Large Taxpayer Service (ACIR-LTS),ACIR-Assessment Service, ACIR-Collection Service and the DCIR-Operations Group summary reports of VAP amounts collected thru AABs from taxpayers under the jurisdiction of the Large Taxpayer Service (Annex "D"). For VAP amounts collected other than thru AABs (i.e.,thru RCOs or DMTs) in the Regional Offices, the RCO/DMT should submit weekly reports to the RDO (Annex "E").On the other hand, the RDO should submit weekly summary report (Annex "F") to the Regional Director. The Regional Directors concerned shall be the ones to furnish the DCIR-Operations Group, the ACIR-Assessment Service and the ACIR-Collection Service summary reports thereof (Annex "G"),together with the supporting RDO summary reports as reflected in Annex "F". The above-mentioned summary reports and/or consolidated summary reports of VAP collections shall be submitted to the aforementioned Revenue Officials within five (5) days after the end of each week until the Program is completed. It should be noted that in recording VAP collections from taxpayers belonging to ITS districts, VAP payment should not be entered in the taxpayers' ledger. 7.2 Reports on VAP availments. The Regional Director, ACIR-LTS, thru their respective TWGs, as well as the TWGs of the Assessment Service shall make summary reports of availments and the corresponding additional collection realized from the Program, as well as VAP availments which have been issued with Certificates of Qualification and those which have been denied, by using the attached Report Form (Annexes "I" & "J"),and submit the same to the DCIR-Operations Group and ACIR-Collection Service every 5th and 20th day of each month during the period when the Program is in effect. The VAP Application/VAP payment forms and the attachments shall be bundled and together with the copy of the report form, shall be forwarded to their respective Offices for safekeeping except for VAP availments mentioned in Subsection 6.10 hereof which must be forwarded to the concerned RDO or LTS Office first for the issuance of the corresponding TCL/CAR before forwarding the same to the appropriate office for safekeeping. The ACIR-Collection Service shall summarize all reports received and shall submit an updated report of the Program to the CIR, thru the DCIR-Operations, as often as may be required by the CIR (Annex "H"). 7.3 Reports on non-availment . The Regional Director, ACIR-LTS and ACIR-Enforcement Service (ES) shall submit to the Assessment Service, copy furnished the DCIR-Operations a monthly report of taxpayers with issued LA/AN, TVN or MO but who opted not to avail of the VAP with mention of the following information: taxpayer, TIN, LA/AN/TVN/MO, year covered, tax type covered, sales/gross revenue, tax due, output tax per return, tax paid per return, deficiency assessment for every tax type, date of payment of the deficiency tax or date of assessment notice (Annex "L").Reports of audit/investigation of these taxpayer shall be forwarded to the Office of the Commissioner for post review upon request. The ACIR-Assessment, ACIR-LTS and ACIR-Enforcement Service, on the other hand, shall furnish the Office of the Deputy Commissioner for Operations a copy of the report of 'Inventory of Pending Cases' as of July 31, 2001 and every month thereafter until December 31, 2001. SECTION 8 . Benefits from VAP availment . A taxpayer who has availed of the VAP shall not be audited except upon authorization and approval of the CIR when there is strong evidence or finding of understatement in the payment of taxpayer's correct tax liability by more than thirty percent (30%) as supported by a written report of the appropriate office detailing the facts and the law on which such finding is based: Provided, however, that any VAP payment should be allowed as tax credit against the deficiency tax due, if any, in case the concerned taxpayer has been subjected to audit. Audit of taxpayers shall automatically be suspended upon availment of the VAP. LAs/ANs/TVNs or MOs shall thereafter be cancelled and withdrawn upon issuance of the Certificate of Qualification, or if no such Certificate has been issued, then within thirty (30) days after the taxpayer has complied with all the conditions and requirements for the availment of the VAP. The suspension .of audit/investigation and the cancellation of the authority to audit/investigate, however, shall be on a per tax type or only on the kind of tax subject of VAP availment. Before any LA, AN, TVN, or MO is issued against a taxpayer covering the taxable year/s covered by this Program, it is incumbent upon the investigating office to first secure a Certification from the DCIR-Operations Group on whether such taxpayer has availed of the VAP and whether such availment has been correspondingly approved. On the other hand, reports of tax audit/investigation of taxpayers who did not avail of the VAP shall be subjected to post audit by the National Office upon request thereof by the CIR or his duly authorized representative. SECTION 9 . Transitory Provision . All VAP/ERAP availments made pursuant to prior Programs of the Bureau which are still pending approval as of the effectivity of Revenue Regulations No. 8-2001 shall be forwarded to the concerned TWG constituted under this Order within 30 (thirty) days after the expiration of the current VAP program, for appropriate action. SECTION 10 . Deadline for Availment . This Program is valid only until October 31, 2001. SECTION 11 . Effectivity Clause . This Order shall take effect immediately. (SGD.) RENE G. BAEZ Commissioner of Internal Revenue ANNEX A NDQ No. __________________ Date: ______________________ Name of Taxpayer Address TIN Number NOTICE OF DISQUALIFICATION This is to inform you that your VAP application for (Tax Type) covering Taxable Year _______ has been disqualified due to the following: _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ However, you are hereby advised to file a written request for reconsideration/appeal and/or submit the other documents enumerated above within ___________ from receipt hereof at (BIR Office) on the basis of which your VAP application shall be re-evaluated, otherwise, this Notice of Disqualification shall be considered final as of the date herein stated. As such, your VAP payment amounting to _________ as evidenced by O.R. No.__________ dated ____________ shall be credited against any deficiency tax that may be assessed in the course of audit/investigation. cCHETI (Regional Director, ACIR-LTS or CIR) ANNEX B VAP Collection Thru Authorized Agent Banks (AABs) ANNEX C VAP Collection Thru Authorized Agent Banks (AABs) ANNEX D VAP Collection Thru Authorized Agent Banks (AABs) ANNEX E VAP Collection Thru Revenue Collection Officers (RCO)/Deputized Municipal Treasurer (DMT) ANNEX F VAP Collection Thru Revenue Collection Officers (RCO)/Deputized Municipal Treasurer (DMT) ANNEX G VAP Collection Thru Revenue Collection Officers (RCO)/Deputized Municipal Treasurer (DMT) ANNEX H Summary of VAP Collection ANNEX I Report on VAP Availment ANNEX J Report on VAP Availment ANNEX K-1 ANNEX K-2 ANNEX L Taxpayers with Pending LAs/TVNs/MOs