Prescribing the use of Form 1717 Series (Revenue Officer's Audit Report) and Providing the Necessary Guidelines and Instructions for Their Use

March 7, 1994 REVENUE MEMORANDUM ORDER NO. 25-94 (amended by RMO 17-95) SUBJECT : Prescribing the use of Form 1717 Series (Revenue Officer's Audit Report) and Providing the Necessary Guidelines and Instructions for Their Use TO : All Assistant Commissioners, Revenue Regional Directors, Revenue District Officers, Revenue Officers and Others Concerned I. OBJECTIVES 1. Provides for the guidelines, instructions, and the use of the following forms: a. BIR Form No. 1717-A Revenue Officer's Audit Report on Income Tax; b. BIR Form No. 1717-C Revenue Officer's Audit Report on Capital Gains Tax (On Real Property Transactions); c. BIR Form No. 1717-C1 Revenue Officer's Audit Report on Capital Gains Tax (On Stock Transactions Not Traded thru a Local Stock Exchange); d. BIR Form No. 1717-D Revenue Officer's Audit Report on Donor's Tax; e. BIR Form No. 1717-E Revenue Officer's Audit Report on Estate Tax; f. BIR Form No. 1717-P Revenue Officer's Audit Report on Percentage Tax; g. BIR Form No. 1717-S Revenue Officer's Audit Report on Documentary Stamp Tax; h. BIR Form No. 1717-V Revenue Officer's Audit Report on Value-Added Tax (VAT); i. BIR Form No. 1717-W Revenue Officer's Audit Report on Withholding Taxes; and j. BIR Form No. 1717-X Revenue Officer's Audit Report on Excise Tax. 2. Serve as the basis for the preparation of the post reporting notice, the Authority to Accept Payment (ATAP), pre-assessment notice, letter of demand and assessment notice. 3. Supply information and statistics to higher management officials to assist in revenue projections, selection of returns for audit, and the performance evaluation of revenue officers. II. GUIDELINES AND INSTRUCTIONS 1. Revenue Officers shall complete the required form in duplicate. The original form shall be attached to the docket while the duplicate shall be detached from the docket when the case is submitted by the Revenue District Office (RDO) to the Revenue Region Assessment Division. The duplicate Forms 1717 will be batched by the RDO and submitted every Monday directly to the Audit Data Bank Division, Assessment Service at the National Office. 2. If changes are made to the Audit Report upon review or reinvestigation, a new Form 1717 shall be completed by the Revenue District Office or the Assessment Division as the case may be, and shall send the same within (5) five days from the change of the report to the Audit Data Bank Division, Assessment Service at the National Office as indicated in Item 1 above. 3. Revenue Officers shall enter the appropriate three character 1994 Audit Work Plan Selection Code in the lower left hand corner of the applicable Form 1717, which shall be stamped with the words "SELECTION CODE", for all dockets closed during calendar year 1994. Selection codes are outlined in the Revenue Memorandum Order prescribing the audit program for 1994. acd 4. To complete the item " No. of Hours to Complete Audit " located at the left hand corner of the form, enter the number of hours directly spent on the audit of the taxpayer. Direct time includes time spent actually auditing a taxpayer's books and records, time on research or reading issuances (RAMOs, court decisions, rulings, etc.) dealing with issues involved in the tax return being audited, travel time incident to the audit, time devoted to writing the audit report, and time for administrative processing of the audit. Revenue Officers will complete a log sheet to record time spent from the start of the audit. The log sheet will contain the date, audit activity, and the number of hours spent on the activity. The log sheet will become part of the docket. Form 1951 (Revenue Officer's Activity Report) shall be used for this purpose. See example below. Date Activity No. of Hours 10/4/93 Research 3 hours 10/6/93 Travel to/from and audit 4 hours of taxpayer 10/7/93 Report writing 2 hours 10/9/93 Final report, closing of 2 hours case and submission Total 11 hours 5. Audit results are shown in three (3) columns. These columns refer to the information furnished by the taxpayer on his return, the total adjustments made during the audit, and the amount as corrected by the audit adjustments. If there are changes made during review or reinvestigation, the columns refer to the amounts reflected on the original investigation, the adjustment made during the review or reinvestigation, and the third column refer to the amount as corrected by the review/reinvestigation. 6. The area labeled " Adjustments ", shall contain a brief narrative of the nature of item(s) adjusted. The amount should be specified and an explanation of the particular item adjusted is required. If necessary, additional sheets may be used and the same shall be attached to the Forms 1717 sent to the Audit Data Bank Division, Assessment Service at the National Office as required in Item 1 and 2 above. aisa dc 7. " Total Assets of Business as of End of Period " shown on Form 1717A (Income) refers to the individual and corporation tax returns (BIR Forms 1701 and 1702). Enter the total amount of assets of the taxpayer as shown on the face of Forms 1701 and 1702. 8. If the taxpayer used an accounting firm or an accountant to prepare the tax return or represent the taxpayer during the audit, the revenue officer shall place the name of the accountant/accounting firm or duly authorized representative in the lower right hand corner of Form 1717, which shall be stamped with the words "ACCOUNTANT/AUTHORIZED REPRESENTATIVE". 9. " Date Report Submitted " pertains to the date when the docket was completed by the revenue officer and submitted to the first level of review, i.e. Supervisor. If the audit was referred to another unit, indicate the referral date. 10. " Signatory " - Revenue Officers conducting the audit will sign the report as the submitting official. The report will be reviewed, recommended for approval, and approved by the revenue officers designated in the applicable revenue issuances. If changes are made during review by the Assessment Division, the reviewer shall be the submitting official of the amended Form 1717. 11. All audit reports covered by a Letter of Authority shall, in addition to the Form 1717 prescribed under this Memorandum Order, contain a narrative and detailed Audit Memorandum Report as prescribed in the Handbook on Audit Procedures and Report Making. cd III. CLOSED DOCKETS SINCE JANUARY 1, 1992 Revenue District Offices, Revenue Region Administrative Divisions, and the Records Division, Administrative Service at the National Office shall furnish the Audit Data Bank Division, Assessment Service at the National Office by July 31, 1994, a photocopy of the duly accomplished Forms 1717 for all dockets covered by a Letter of Authority submitted since January 1, 1992. For this purpose, all office audit cases covered by a Letter of Authority shall be excluded. In case the required Form 1717 was not accomplished, the same offices shall, instead of a photocopy, fill up the Form 1717 prescribed under this Revenue Memorandum Order. IV. QUALITY REVIEW OF FORMS 1717 Forms 1717 submitted to the Assessment Service at the National Office will be reviewed for completeness and accuracy. Forms 1717 that do not comply with the requirements of this Revenue Memorandum Order will be returned to the originating Revenue District Office or Assessment Division, for correction. Notice of the returned Forms 1717 will be provided to the Regional Director concerned and the Performance Monitoring Service at the National Office. V. REPEALING CLAUSE Portions of RMO 27-85, Revision of Procedures on the Preparation and Release of Assessment Notices and Demand Letters, dated September 25, 1985, and other orders and issuances, inconsistent with these instructions are hereby modified or repealed accordingly. VI. EFFECTIVITY DATE This order will take effect upon approval. cdt LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue BIR Form No. 1717-A Revenue Officer's Audit Report on Income Tax BIR Form No. 1717-C Revenue Officer's Audit Report on Gains Tax (On Real Property Transactions) BIR Form No. 1717-C1 Revenue Officer's Audit Report on Capital Gains Tax (On Stock Transactions Not Traded Thru Local Stock Exchange) BIR Form No. 1717-D Revenue Officer's Audit Report on Donor's Tax BIR Form No. 1717-E Revenue Officer's Audit Report on Estate Tax BIR Form No. 1717-P Revenue Officer's Audit Report on Percentage Tax BIR Form No. 1717-S Revenue Officer's Audit Report on Documentary Stamp Tax BIR Form No. 1717-V Revenue Officer's Audit Report on Value-Added Tax BIR Form No. 1717-W Revenue Officer's Audit Report on Withholding Taxes BIR Form No. 1717-X Revenue Officer's Audit Report on Excise Tax