Redirection of the Bureau's Activities

July 6, 1981 REVENUE MEMORANDUM ORDER NO. 21-81 SUBJECT : Redirection of the Bureau's Activities TO : Revenue Service Chiefs, Regional Directors, Division Chiefs, Revenue District Officers, and all Others Concerned I. THE PROBLEM It has been observed that the Bureau's activities have been heavily concentrated on the review, investigation or audit of tax returns, after these have been filed. Very few activities are being done toward checking compliance with tax laws and seeing to it that the taxpayers are notified about their liabilities before the deadlines. The passive position of the Bureau has resulted in not too many turn outs of tax returns and frequent requests for extension of deadlines. Further, collection of taxes is delayed. cd i II. THE OBJECTIVES The Bureau must focus its attention toward voluntary compliance. It is the duty and obligation of every tax administrator to see to it that taxpayers within their jurisdiction are properly identified; their tax liabilities estimated; are informed of deadlines; and their tax compliance periodically monitored. It is the intention of this order to redirect the Bureau's total operations activities toward these objectives. cd i III. THE ORDER All are hereby ordered to reorient the plans, programs, projects and activities of their respective Office/Unit in line with the following: 1. Defining, accounting for and updating the various types of taxpayers within their respective jurisdiction; 2. Estimating the tax liabilities of these taxpayers and notifying them of these even before the deadlines; 3. Informing and assisting these taxpayers in complying with the tax laws; and 4. Intensifying the detection of non-filers and non-payers of taxes due. cd IV. THE POLICIES AND PROCEDURES In the attainment of the objectives of and in carrying out the above order, the following policies and procedures are hereby promulgated for adoption and compliance by all concerned: A. Taxpayers Records Every revenue district officer shall establish a system whereby he can identify taxpayers within his area of jurisdiction who failed to file returns and pay their tax liabilities within a month after due date. With such a system, his office shall be able to inform his taxpayers of their liabilities even before deadlines for their payment. 1. Taxpayers records shall be periodically updated. 2. The Revenue District officer shall strictly comply with the procedures prescribed in RMO No. 28-80 so that remittance of taxes withheld by withholding agents are properly monitored, particularly paragraph B 2 A 4 (page 3 of RMO 28-80). For those who have not yet installed a taxpayers' master file, they may begin by using the alphabetical file of the hard copies of the RTRs issued. B. Selective Audit The goal shall be the audit or investigation of tax returns with greater revenue potential rather than the verification of all returns. Audit or investigation shall be used as a means of correcting malpractices, misinformation or misinterpretation of provisions of the NIRC. It shall be directed toward encouraging compliance with existing statutes, rules and regulations. Any taxpayer selected for audit shall be investigated on his most recent five year returns, excluding taxable years for which he has availed of an official tax amnesty. The bases for selective audit shall be as follows: 1. Sector/Industry Approach This may be done by predetermining the sector/industry which shall be the subject of intensive audit for any given year. The determination shall be based on statistics gathered on compliance by taxpayers of a sector. cd 2. Income Level Approach Taxpayers of certain levels of income may be selected for audit. Total gross receipts or gross income may be used as bases for selection. 3. Others Bases of selection may be adopted. But deciding on the basis, fairness shall be an important factor in determining the direction of compliance activities. As much as possible, taxpayers showing poor compliance with revenue laws and regulations shall be selected for investigation or audit. C. Proper Monitoring of Compliance with Withholding Requirements 1. Taxpayers subject to the withholding tax provisions of the NIRC shall be determined and identified. With respect to withholding on salaries and wages, the Withholding Tax Division has provided every Revenue District Office with a Register of Employers of his District. 2. Remittance of taxes withheld at source by withholding agents shall be properly monitored. Existing issuances like Revenue Regulations V-8, as amended; 16-77 dated October 11, 1977; 13-78 dated September 7, 1978; 6-79 dated June 4, 1979; RMO 28-80, etc. shall be fully complied with. aisa dc D. Utilization and Updating of Data Bank One of the measures that would encourage voluntary compliance and at the same time serve as a means of detecting non-filers and non-payers of taxes due and as a source of information vital to the determination of taxpayers' liabilities is the data bank established and maintained in the regions or in the Revenue District Offices. Reference to the data bank shall be standard operating procedure before undertaking any tax audit or investigation of a taxpayer. E. Effective Supervision It has been noted that field offices have not been properly guided and supervised. Some subordinate officials and employees seem not to be aware of their functions, duties and responsibilities. While some, even if aware of their functions and responsibilities, seem not to care whether or not the same are properly discharged. It is time that supervisory officials assert their authority and fully exercise their supervisory functions over their personnel and offices to insure the attainment of these objectives. There shall be no place in the Revenue Service for incompetent supervisors. acd F. DPC Support The Data Processing Center shall, subject to the limitations of its present resources, provide the necessary support for regional projects. Requests for support shall be specific and complete in information and details. Revenue Regions shall, however, provide for alternative procedures, if DPC cannot comply with Regional requests. This includes only the enhancement of existing systems, applications and programs. Requests for new systems and applications will be addressed to the office of the Commissioner for inclusion in the design of an integrated Management Information System. G. Reference to Prior Issuances To conform with existing procedures, reference shall be made to relevant previous issuances on the subject matter of this RMO particularly on the setting up and maintenance of Data Banks and Taxpayers Records. cd V. PLANS AND PROGRAMS In order to attain the objectives set forth in this RMO and pursuant to the policy pronouncements of this Office, all Revenue Regional Directors shall: A. Submit within thirty days from the receipt of this RMO the plans (short and long range) and programs of his region and of each Revenue District Office under his jurisdiction to accomplish these objectives pursuant to the guidelines and procedures set forth herein. The objectives, projects, goals, activities and time frame shall be embodied in the plans and programs (Format attached). B. Submit a progress report on the projects initiated within thirty days after the end of each quarter (Format attached). C. Conduct periodic visitations in the Revenue Districts to assess the progress of each project. acd D. Require Revenue District Officers to spot check activities in all municipalities in his district. E. Utilize fully all available resources of the region, human and physical, in the projects launched to insure their successful completion. VI. CONSTRAINTS There will understandably be problems in the implementation of this Order. But problems can be solved if each member of the organization shall do his part. The Regional Directors and heads of Offices in all units shall provide the leadership and the guidance needed. This Office is ready to assist the regional offices in the implementation of this order, subject to budgetary and personnel constraints. cd i VII. EFFECTIVITY This Order takes effect immediately. (SGD.) RUBEN B. ANCHETA Acting Commissioner FORM A LONG RANGE/SHORT RANGE PLAN REDIRECTION OF BUREAU'S ACTIVITIES _____________________________ ____________________________ (1) NAME OF OFFICE (2) DATE : : (5) TIME FRAME : (3) OBJECTIVES : (4) DETAILED PLANS/ : : : : ACTIVITIES : : Start : Finish : (6) RESPONSIBILITY : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : ______________________________ Signature & Designation I N S T R U C T I O N S 1. Name of Office - refers to the name of the organizational unit which is to execute the work plan. 2. Date - refers to the date prepared. 3. Objectives - refers to the objective defined in III of Revenue Memorandum Order No. 21-81. 4. Detailed Plan/Activities - the detailed steps or action to be taken for the achievement of the objectives. cdtai 5. Time Frame - refers to the date and period within which a plan or portion thereof is expected to be accomplished. 6. Responsibility - refers to the office or person responsible in completing the plan or activities. FORM B PROGRESS REPORT ( RMO No. 21-81 ) ___________________________ ___________________________ NAME OF UNIT DATE : S T A T U S PLANS/ : ___________________________________________________ : ACTIVITIES : NARRATIVE REPORT : PERCENT COMPLETED : REMARKS : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : ___________________________ NAME & DESIGNATION