Expenses for the Cost of Collecting Accounts thru Summary Remedies, as Provided for in Republic Act No. 5203

April 24, 1969 REVENUE MEMORANDUM ORDER NO. 21-69 SUBJECT : Expenses for the Cost of Collecting Accounts thru Summary Remedies, as Provided for in Republic Act No. 5203 In order to provide a uniform implementation of the last paragraph of Section 325, National Internal Revenue Code, as amended by Republic Act No. 5203, the following instructions are hereby issued: cdtech a. When charged to execute warrants of distraint or levy, a Collection Agent or any internal revenue officer, before incurring any expense in connection therewith, shall prepare a request for cash advance addressed to the revenue district officer concerned using BIR Form 12.38, herein attached, specifying in detail the kinds of expenses and the estimated amount to be incurred. Six (6) copies, including the original, shall be forwarded to the Revenue District Officer concerned for approval. At least four (4) copies of the approved request for cash advance shall be transmitted to the Collection Agent for distribution in the same manner as the BIR Form No. 12.31. One of the two remaining copies shall be retained by the Revenue District Officer for his file while the other copy shall form part of the report of the Distraining Officer which will eventually be incorporated in the corresponding tax docket. b. The Revenue District Officer shall determine the reasonableness of the amount requested in connection with the execution of warrant of distraint or levy. He shall indicate in the appropriate space of the request form the amount he approves to be taken out from the cash collections of the Collection Agent concerned. In doing this job, he should exercise great care in determining the appropriateness and correctness of the amount he approves based on existing regulations and practices for he shall be held jointly and solidarily liable with the distraining officer for any disallowances that may be made by the auditor after a post audit is made of the same. To prevent abuses and other irregular transactions, the Revenue District Officer shall exercise tight control over all requests for cash advances approved by him. He shall number and maintain file copies of the same arranged in chronological order by serial number and keep other pertinent records related thereto for future reference. c. The Collection Agent, when presented with an approved request for cash advance, shall draw from his collections the amount authorized in the request. The Distraining Officer shall be made to acknowledge the amount given him/her by signing in the appropriate space provided for in the form, in the presence of the former. The Collection Agent shall maintain a complete record of all advances taken out from his collections in the same manner prescribed for the Revenue District Officer. d. Only expenses for the following shall be covered by this order: Filing fee for registration of notice of lien and/or levy Advertisement of sale of personal or real property distrained or levied upon Hauling charges of personal property distrained Cost of necessary storage and/or security Other cost directly related to sale e. The Distraining Officer shall liquidate with the Collection Agent concerned, the cash advance given him as soon as possible but not later than the 30th day after said amount was received by him. He shall submit to the latter, a General Voucher (Gen. Form No. 5-A) duly approved by the Revenue District Officer, showing the expenses actually incurred and duly supported by receipts. The Collection Agent concerned, in turn, shall include such liquidations in his/her current Report of Collections. If not possible, it shall be reported not later than the next reporting period. In cases where the amount advanced has not been expended because the taxpayer decided to pay the tax liability before the warrant is served or for any other reason, or where a portion of the cash advance was not spent for some reason or another, the amount involved should be returned to the Collection Agent within the prescribed period for liquidating the same. The Collection Agent shall issue a certificate indicating the amount returned to him by the Distraining Officer furnishing a copy of the same to the Revenue District Officer concerned. A copy of the certificate issued to support the return of the unexpended portion of a cash advance shall form part of the supporting papers required in liquidating the cash advance made. If the whole amount of the cash advance has been returned, no entry shall be made by the Collection Agent in his report of collections. It is sufficient that a certificate of return has been issued to the corresponding Distraining Officer. In instances where the amount expended by the Distraining Officer is more than the amount given him as cash advance, the difference shall be reimbursed to him by the Collection Agent upon presentation of the duly approved General Voucher together with the supporting receipts and other documents indicating the said excess amount expended. In the meantime that the cash advance has not yet been liquidated, the approved request for cash advance shall form part of the cash on hand of the collection agent specially for auditing and inspection purposes. f. At the end of the month or collection period, the Collection Agent shall reflect in his Report of Collections for the period (BIR Form No. 12.31) all cash advances given by him which were already liquidated by the respective Distraining Officers. He shall write as the last entry in his report the words "CASH ADVANCES LIQUIDATED" under column 3 of the form and make a negative entry under the foot total of column 6. A corresponding negative entry shall also be made under the corresponding column (between columns 7 to 18) for the kind of tax or income account the collection of which is the subject of distraint and/or levy. The same amount shall also be taken up as a credit entry in his cashbook. The liquidation form (General Form No. 5-A) together with all the supporting receipts and documents, shall be attached to the Report of Collections to be forwarded to the Chief, Accounting Division, National Office. No credit for the cash advances made shall be honored unless all the required supporting documents stated herein are attached to the said collection report. In the case of advances given by the Collection Agents in Manila and suburbs whose official receipts issued are being abstracted by the Data Processing Center, all liquidations for cash advances made shall be reflected in the transmittal letter accompanying the receipts sent to the Center (BIR Form 12.40). The amount reported as liquidated shall in turn be reflected by the Data Processing Center as the last entry in the Report of Collections prepared by them. The required liquidation vouchers and the accompanying supporting receipts and documents shall be attached to the Report of Collections prepared by the Data Processing Center so that the amount shall be reflected as a credit to the accountability of the collection agent who made the cash advance which shall be reflected as such in the books of the Accounting Division. LLjur Strict compliance herewith is hereby enjoined. MISAEL P. VERA Commissioner of Internal Revenue