Prescribing the Procedures on the Receipt, Transmittal and Processing of Tax Returns Filed Thru the Banks under the New Payment Control System (NPCS)

September 11, 1991 REVENUE MEMORANDUM ORDER NO. 29-91 SUBJECT : Prescribing the Procedures on the Receipt, Transmittal and Processing of Tax Returns Filed Thru the Banks under the New Payment Control System (NPCS) TO : All Internal Revenue Officers, RISSI/Bank Officials and Employees, and Others Concerned I. OBJECTIVES: This Revenue Memorandum Order is issued to: 1. Establish a new payment control system for Income (except Capital Gains), VAT, withholding and Other Percentage Taxes and eliminate the use of Payment Orders (POs) and/or Confirmation Receipts (CRs) in paying the above taxes; acd 2. State the revised delineation of functions of each office/division/unit/bank branch involved in the receipt and processing of tax returns; and 3. Further improve the BIR-Taxpayer-Bank relations through streamlined tax return filing and payment procedures. II. HIGHLIGHTS OF UPDATED PROCEDURES: 1. The taxpayers concerned shall accomplish in three (3) copies the following tax returns regardless of whether or not a tax is to be paid and shall file said tax returns/Authority to Accept Payments (ATAPs) (BIR Form No. 2319A) directly with the accredited banks in places covered by Payment Thru the Bank System: a. Income Tax: BIR Form No. 1701 - Individual Income Tax Return (For Use By Individuals With Income From Business/Profession And Compensation) BIR Form No. 1701A - Individual Income Tax Return (For Use By Individuals Earning Compensation Income Only) BIR Form No. 1701C - Non-Resident Citizen Income Tax Return BIR Form No. 1704 - General Professional Partnership Annual Income Tax Return BIR Form No. 1702 - Corporation/Partnership Annual Income Tax Return BIR Form No. 1702Q - Corporation/Partnership Quarterly Income Tax Return BIR Form No. 1702A-1 - Annual Information/Income Tax Return of Exempt Organization b. Value-Added Tax: BIR Form No. 2550 - Value-Added Tax (VAT) Return c. Withholding Tax: BIR Form No. 1743-W - Monthly Remittance Return of Income Taxes Withheld BIR Form No. 1745 - Quarterly Return of Final Income Taxes Withheld on Interest Paid on Deposit and Yield on Deposit Substitutes/Trusts/Etc. BIR Form No. 750A - Monthly Return of Internal Revenue Taxes Withheld on Government Money Payments (R.A. 1051) d. Other Percentage Taxes: BIR Form No. 2529A-Q - Quarterly Percentage Return The abovementioned forms (see Annexes A1 to A13) were revised to include features such as spaces for stick-on labels containing Taxpayers Identification Number (TIN), taxpayer's name and address, and carbonized portion to facilitate validation of payment by banks. 2. ATAP shall now be issued in three (3) copies by the ATAP Issuing Office to the taxpayer for presentation to the accredited bank when paying a deficiency/delinquent tax. The third copy which has been validated shall be attached to third copy which has been validated shall be attached to corresponding BCS copies by the said bank for pick-up by the RDO in contrast to RMO No. 21-91, where the third copy is retained by the ATAP Issuing Officer for file, prior to validation by the bank concerned. 3. The ATAP Issuing Officer shall maintain a logbook of ATAPs issued to the taxpayer reflecting therein pertinent information such as ATAP serial number, name of taxpayer and amount payable. 4. The use of PO and/or CR for tax payments shall be discontinued. The tax return or ATAP, in case of deficiency assessment/delinquent account, shall be the only documents to be accepted and validated by the bank teller as taxpayer's evidence of the filing of tax return and the payment of tax. 5. If Tax Credit Certificate (TCC) is to be used for payment, the taxpayer is required to secure a Tax Debit Memo (TDM), Annex B from the Accounts Receivable/Billing Division (AR/BD), National Office following the procedures as prescribed under RMO 20-91 and annotate the TDM on the appropriate space of tax return/ATAP. 6. Receipt of tax returns/ATAPs shall be evidenced as follows: a. For tax returns/ATAPs with cash and/or check payments - By two (2) types of validation: a.1. Machine Validation reflecting date of payment, amount paid and transaction code; and a.2. Stamp pad mark showing the word "RECEIVED", the bank's name and branch code, teller's code, initial and date of receipt. b. For tax returns/ATAPs fully paid thru TDM or returns without payments - By stamp pad mark showing the word "RECEIVED", bank name, branch code, teller's code, initial code, initial and date of receipt. 7. Accredited banks shall be authorized to compute and collect surcharges/penalties from the taxpayers for out-of-district tax returns and late filing of the same or late payment of taxes covered by this RMO; 8. Except for income tax returns which shall be assigned a Document Locator Number (DLN) in accordance with the provision of RMO Nos. 9-91 and 10-91, all other tax returns shall be assigned the following as DLN; aisa dc Bank Branch Code - Batch Control Number - TIN III. DUTIES AND RESPONSIBILITIES : A. ACCREDITED BANK BRANCH 1. Receive three copies of tax return/ATAP from taxpayer, the original of which has a stick-on label, to be distributed as follows: Original - RISSI Duplicate - Taxpayer's copy Triplicate - RDO (for tax returns)/ATAP Issuing Office (for ATAP) 2. Do not accept the tax return/ATAP without stick-on label and instruct taxpayer to secure label from the RDO having jurisdiction over the taxpayer; 3. Check if the RDO code in the label of the tax return/ATAP is the same as the district code where the bank belongs; 4. Verify whether the taxpayer: a. has fully accomplished and signed all copies of the tax return b. is not a late filer 5. Inform taxpayer that penalties are imposed on out-of-district tax returns, late filing and late payment of tax; 6. Compute the corresponding penalties if the taxpayer is willing to pay the same; if not, stamp "Increments Not Paid" on every copy of the tax returns filed; cd i 7. Stamp "RECEIVED" on the appropriate portion of all copies of tax return filed indicating therein the date of receipt, bank name, teller's code and initial; 8. Determine the mode of payment and follow the applicable procedures below: 8.1. Payment in cash or check: a. Require taxpayer to write his TIN and telephone number at the back of the check, if payment is in check; Note: Accommodation checks (i.e. issued by a person other than the taxpayer) and out-of-town checks are not acceptable. b. Machine validate the date of payment, amount paid and the transaction code on every copy of the tax return/ATAP; 8.2. Payment by TDM: Request taxpayer to annotate TDM number and amount on the tax return/ATAP, if not indicated; 8.3. Payment partly in cash and partly in check: a. Require taxpayer to write his TIN and telephone number, at the back of the check if payment is in check; Note: Accommodation checks (i.e. issued by a person other than the taxpayer) and out-of-town checks are not acceptable. casia b. Make a separate machine validation on all copies of the tax return/ATAP, for the cash payment and check payment indicating the amount paid, date of payment and the transaction code; 8.4. Payment partly in TDM and partly in Cash or Check: a. Require taxpayer to write his TIN and telephone number at the back of the check; b. Request taxpayer to annotate TDM number and amount on the tax return/ATAP, if not indicated; c. Machine validate the payment in cash or check indicating the amount paid, date of payment and the transaction code on every copy of the tax return/ATAP; Note: There is no corresponding machine validation for TDM. 9. Release to taxpayer the duplicate copy of the tax return/ATAP and TDM, if any, 10. Segregate tax returns/ATAPs with payment in cash/check from those without any cash payment; 11. Segregate original from the triplicate copies of the tax returns/ATAPs and batch them separately in 25s or less; 12. Prepare daily, in six (6) copies Batch Control Sheet-A (BCS-A), Annex C1, for each batch of tax returns/ATAPs with cash/check payments of tax due and/or penalties, to be distributed as follows: Original with original copies of tax returns/ ATAPs) - RISSI Duplicate - Processing Section, RAD Triplicate - COA Resident Auditor Quadruplicate (with triplicate copies of tax returns/ATAPs) RDO Quintuplicate - Bank Head Office Sextuplicate - Bank Branch file copy 13. Prepare daily in four (4) copies Batch Control Sheet-B (BCS-B), Annex C2, for each batch of tax returns/ATAPs without cash/check payments such as those fully paid with TDM, zero-rated, even, refundable and no transaction returns, etc., for distribution as follows: Original - RISSI (with original copies of tax returns/ATAPs Duplicate - RDO (with triplicate copies of tax returns/ATAPs Triplicate - Bank Head Office (BHO) Quadruplicate - Bank Branch 14. Number consecutively BCS-A separately from BCS-B, each starting with 001 for the first batch of tax returns received during the year, 002 for the second batch and so on, regardless of whether there are less than 25 tax returns/ATAPs received per banking day. Each BCS number shall be preceded by the year of receipt of tax return; Note: If during the first day of filing tax returns, less than 25 tax returns were filed, the BCS-A or BCS-B of the batch of tax returns will be numbered 001. On the other hand, if during the first day of filing there were 35 tax returns filed, there will be two batches, the first BCS-A or BCS-B containing 25 tax returns will be numbered 001 and the second BCS-A or BCS-B containing 10 tax returns will be numbered 002. 15. Report daily to the Bank Head Office (BHO) by fax, telephone, telex, radiogram, or any means of fast communication the total amount of taxes collected at the end of each banking day; 16. Attach to the original copies of BCS-As and BCS-Bs the corresponding batch of original copies of the tax returns/ATAPs; 17. Attach to each quadruplicate copy of BCS-A or duplicate copy of BCS-B the corresponding batch of triplicate copies of the tax return/ATAP for daily pick-up by the RDO representatives; Note: Batches of tax returns/ATAPs listed under BCS-A or BCS-B are gathered daily although said tax returns/ATAPs were received by the bank branch three days before the pick-up day. 18. Forward in separate bundles the following copies of BCS to BHO within three (3) days from date of receipt of tax return: For BCS-A: Copy Distribution Original - RISSI, with original copies of tax return/ATAP Duplicate - Processing Section, RAD Triplicate - COA Resident Auditor Quintuplicate - BHO For BCS-B: Copy Distribution Original - RISSI with original copies of the tax return/ATAP Triplicate - BHO 19. Retain sextuplicate copies of BCS-As and quadruplicate copies of BCS-Bs for file; B. BANK HEAD OFFICE (BHO) 1. Summarize in the Advance Report of Daily Collections (ARDC), Annex D, the collections reported daily by the different bank branches; Note: Indicate in the ARDC the particular date/s when no collections were received. 2. Send thru fax/telex the ARDC to the following offices within three (3) days from date of collection: a. Processing Section, RAD, BIR b. Bureau of Treasury 3. Prepare and submit report on the returned/ dishonored checks using BIR Form No. 1258, (Annex E), in accordance with Revenue Regulations No. 5-84; 4. Receive batches of original copies of tax returns/ATAPs with their corresponding BCS-As and BCS-Bs; 5. Prepare in four (4) copies Consolidated Report of Daily Collections (CRDC), Annex F, based on the sequentially arranged BCS-As per batch for distribution to the following: cd i Original - Accounting Dept., Central Bank Duplicate - Revenue Accounting Division Triplicate - Bureau of Treasury Quadruplicate - Bank Head Office 6. Indicate in the CRDC whether there were no tax payments received during the day; 7. Bundle separately each type of documents according to their office destination and forward to BIR Receiving Unit, CB Complex the segregated documents intended for the BIR on a daily basis; Office Destination: Contents RISSI - batches of original copies of tax returns/ATAPs attached to corresponding BCS-A or BCS-B Processing Section, RAD - duplicate copies of BCS-A - duplicate copy of CRDC with attached acknowledged original copy of BIR Form No. 1258, if any COA resident Auditor - triplicate copies of BCS-A Note: 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. 8. Prepare and submit to offices concerned an adjusted CRDC to notify them of the errors discovered in the report; indicate the word "ADJUSTMENT" opposite the affected collection date; C. BIR RECEIVING UNIT, CB COMPLEX 1. Stamp "RECEIVED"on each bundle (per office destination) of the BCS-As, BCS-Bs, BIR Form 1258 and CRDC to acknowledge receipt of the documents from BHO, for daily pick-up by the PO/CR Monitoring Division; 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. RISSI - batches of original copies of tax returns/ATAPs attached to corresponding BCS-A or BCS-B b. Processing Section, RAD - duplicate copies of BCS-A - duplicate copy of CRDC - BIR Form 1258, if any c. COA Resident Auditor - triplicate copies of BCS-BCS-A 2. Receive exception reports from RISSI, Revenue Accounting Division and RDOs; 3. Communicate to the bank any exception report received and bill the bank with corresponding penalties, if necessary; E. RISSI 1. Receive bundles/batches of original copies of tax returns/ATAPs with their corresponding copies of BCS-As and BCS-Bs from the PO/CR Monitoring Division; 2. Check the number of tax returns/ATAPs against the attached BCS-A and BCS-B, note down any discrepancy or inconsistency; 3. Encode data from the tax returns/ATAPs; 4. Generate computer totals of the different batches and match them with their respective BCS-A totals; note any discrepancy discovered; 5. Generate in four (4) copies exception reports based on the discrepancies or inconsistencies noted in the documents; 6. Forward exception reports within ten (10) days from the receipt of the returns to the following offices: Original - Processing Section, RAD Duplicate - PO/CR Monitoring Div. Triplicate - RISSI, file copy Quadruplicate - BHO (thru (PO/CR Monitoring Div.) 7. Generate Bank Collection Control Ledger in the prescribed format as Annex G of this memorandum; forward the same to the PO/CR Monitoring Division for monitoring purposes; cdt 8. Segregate the ATAPs from the batches of original copies of the tax returns and transmit the same together with a transmittal list to the ATAP Issuing Officer concerned, for attachment of ATAP to the docket; 9. Generate the following and forward to the offices concerned; copy furnish the Collection Service and/or Collection Branch: a) Monthly Alpha List of Tax Filers by Type of Tax (containing the name of drawee bank, check number, and the amount paid by the taxpayer) (1) by revenue regions - Regional Offices (2) by city/municipality - Revenue District Office concerned (3) listing of non-resident citizens from revenue posts - ITAD (4) listing of non-resident foreign countries - RDO concerned b) Statistical data required by the Statistical Analysis Division 10. Generate a copy of Monthly Alphabetical List of Stop/Non-Filers and Late-Filers by RDO using the previous filers' records; 11. Generate in three (3) copies reminder letters to stop/non-filers within ten (10) days from receipt of tax return for distribution to the following: Original - taxpayer Duplicate - RDO Triplicate - taxpayer (as follow-up letter) 12. Forward the Monthly Alphabetical List of Stop/Non-Filers and Late Filers to RDO concerned together with the three (3) copies of reminder letters; 13. Transmit original copies of processed tax returns to Administrative Branch not later than twenty (20) days from receipt of said documents, for safekeeping; F. REVENUE DISTRICT OFFICE 1. Pick-up daily, triplicate copies of tax returns/ATAPs attached with duplicate copies of BCS from bank branch; 2. Check the tax returns/ATAPs against BCS to determine the correctness of entries therein, particularly the amounts indicated, if any; cd i 3. Check with the bank concerned on discrepancies noted; 4. Segregate out-of-district tax returns; 5. Prepare transmittal list for out-of-district tax returns/ATAPs received during the week indicating therein the bank branch and the BCS number of the batch where the tax returns were taken; attach therein the copies of out-of-district tax returns/ATAPs and forward the same to the respective RDO/ATAP Issuing Office not later than three (3) days upon receipt of the tax returns/ATAPs; 6. Segregate ATAPs from the tax returns and attach ATAP to the corresponding tax docket; 7. Classify tax returns and number in accordance with RMO Nos. 9-91 and 10-91 in case of Income Tax Returns; number other tax returns in the following manner: Bank Branch - BCS Number - TIN 8. Segregate according to type of tax return (BIR Form Nos. 1701, 1701A, 1701C, 1704, 1702, 1702C, 1702A-1, 2550, 1743-W, 1745, 750A and 2529A-Q) and prepare in three (3) copies "Monthly Summary of Tax Returns Filed" in the prescribed format as Annex H of this memorandum and distribute to the following offices not later than 20 days from the receipt of the tax returns: Original - Statistical Analysis Division Duplicate - RISSI Triplicate - Assessment Branch 9. Forward tax return/s stamped with "Increments Not Paid" to Collection Unit for the issuance of the necessary collection letter/s to the taxpayer/s; 10. Receive from RISSI the Monthly Alphabetical List of Stop/Non-Filers and Late Filers together with the reminder letter/s and the Monthly Alpha List of Tax Filers by Type of Tax, 11. Deliver personally to stop/non-filer(s) the original copy of the reminder letter(s); Mail the triplicate copy fifteen (15) days after the taxpayer fails to respond to the original copy of the letter; 12. 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 tax return filed in case the tax return presented by the taxpayer is authentic, otherwise, conduct investigation of the taxpayer; 13. Conduct verification of stop/non-filers who did not respond to the reminder letters sent; 14. Prepare report addressed to RISSI on taxpayers who stopped filing due to closure of business as discovered during verification stage; 15. Prepare report to Tax Fraud Evaluation Committee on tax evaders discovered during the verification of stop/non-filers; 16. Submit to the Revenue Regional Director a list of stop/non-filers who failed to respond to the two (2) reminder letters fifteen (15) days after mailing the second reminder letter. cd G. REVENUE ACCOUNTING DIVISION (RAD) 1. Summarize advance collection reports received thru fax/telex from the different Bank Head Offices and generate the Daily Report of Collection per ARDC (Annex I), to be distributed as follows: Original - RAD Accountabilities Section Duplicate - Statistical Analysis Division 2. Process daily the BCS and CRDC reports received thru PO/CR Monitoring Division or RISSI 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 (Annex J); 5. Reconcile exception reports on inaccurate BCS-A received from RISSI 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; cdt 8. Generate the Monthly Report of Collections per CRDC (Annex K1) and BCS (Annex K2) with adjustment, if any and the Monthly Report of Remittances per CBCA (Annex L) and forward to RAD-Bookkeeping and Reconciliation 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 (Annex M) of Internal Revenue Tax Collections thru Banks and submit to PO/CR Monitoring Division. IV. REPEALING CLAUSE: This Order supersedes all issuances and/or portions thereof inconsistent herewith. V. EFFECTIVITY: This Order shall take effect beginning October 1, 1991. (SGD.) EUFRACIO D. SANTOS Deputy Commissioner Officer-In-Charge