Nationwide Implementation of the Withholding Tax System and Computerization of Withholding Tax Returns Processing for Revenue Regions 4-A and 4-B

September 27, 1982 REVENUE MEMORANDUM ORDER NO. 30-82 SUBJECT : Nationwide Implementation of the Withholding Tax System and Computerization of Withholding Tax Returns Processing for Revenue Regions 4-A and 4-B TO : All Internal Revenue Officers and Others Concerned A. SCOPE Promulgated hereunder are the rules and procedures governing the nationwide implementation of the computerized Withholding Tax System designed and developed pursuant to the Five-Year Long Range Plan for Electronic Data Processing approved by the President on March 6, 1981 for the guidance of all concerned. cdt B. OBJECTIVE This Revenue Memorandum Order is being issued to ensure the effective implementation of the computerized Withholding Tax System and to define the duties and responsibilities of each organizational component/official concerned. C. PARTICIPANTS The units of the Bureau directly involved in the project are the following: a) Collection Office b) Withholding Tax Division c) All Revenue Regions d) All Revenue Districts e) National Assessment Office f) Financial and Management Service g) Tax Information and Education Division h) Personnel and Administrative Service i) Career Development Division j) General Services Division k) Property Division l) Data Processing Center m) Information Systems Development Staff, Office of the Commissioner Corollary to this, a Steering Committee to oversee and evaluate implementation activities is hereby created, thus: Chief, Collection Office - Chairman Regional Director, Revenue Region 4-A - Co-Chairman Regional Director, Revenue Region 4-B - Co-Chairman Chief, National Assessment Office - Member Chief, Financial and Management Service - Member Chief, Personnel & Administrative Service - Member Chief, Data Processing Center - Member Chief, Withholding Tax Division - Member Chief, Tax Information & Education Division - Member Chief, Career Development Division - Member Chief, General Services Division - Member Chief, Property Division - Member Information Systems Development Staff, Office of the Commissioner - Member The Steering Committee shall monitor the progress of Withholding Tax System implementation, and shall approve whatever changes that may be deemed necessary in the mechanics of the implementation as well as in the procedures. D. RESPONSIBILITY OF COLLECTION AGENTS The procedures to be followed by each Collection Agent in processing Withholding Tax Returns are as follows: a) Monthly Statement of Income Tax Withheld on Compensation - BIR Form W-1A b) Quarterly Return of Income Tax Withheld on Compensation - BIR Form W-1 c) Annual Return of Income Tax Withheld on Compensation - BIR Form W-3 d) Monthly Statement of Creditable Income Tax Withheld - BIR Form 1743-A1 e) Quarterly Return of Creditable Income Tax Withheld - BIR Form 1743-A f) Annual Return of Creditable Income Tax Withheld - BIR Form 1743-B g) Quarterly Return of Final Income Tax Withheld - BIR Form 1743-C h) Annual Return of Final Income Tax Withheld - BIR Form 1743-D i) Return of Internal Revenue Taxes Withheld on Money Payments by Government Offices - BIR Form 7.50A (under R. A. 1051) j) Annual Return of Internal Revenue Taxes Withheld on Money Payments by Government Offices - BIR Form 7.50B (under R. A. 1051) 2) Check each WTR to make sure that all essential data, whether to be encoded or not, are indicated: ID No. Name of Withholding Agent Address Taxpayer Account Number (TAN) Amount(s) For BIR Form 1743-A and 1743-C, tax payment breakdowns on the back of the said forms should be specified correctly by the WA. RTR/ROR No. CR No. Signature of Filer Position/Title of Signor TAN of Signor 3) For WTRs with erroneous or missing essential data, payment should be accepted and the Withholding Agent (WA) concerned notified of the errors or omissions. Correction of the WTR by the Withholding Agent should be made before the WTR is forwarded to the Revenue District Office. cd i 4) Stamp RECEIVED on copies 1 to 3 of WTR, and initial each copy on the space provided. 5) Issue RTR to the WA, temporarily retaining all 3 copies of the WTR until the corresponding Confirmation Receipt (CR) of the RTR indicating payment of tax is shown by the WA. 6) Upon presentation of the CR by the WA, the following procedures should be undertaken: a) Fill-up required CR information (Number, Date, Bank and Amount) in the spaces provided on the WTRs. b) Return copy 3 of WTR to the WA. 7) File temporarily copies 1 and 2 of WTR by type of taxes withheld, and by month covered by the return. FOR EACH TYPE OF TAXES WITHHELD AND FOR EACH MONTH COVERED 8) Batch WTRs by 50's. A batch may contain less than 50 WTRs if: a. The total number of WTRs received is less than 50; b. If it is the last batch in a group of WTRs received, the total number of which is greater than 50 and not exactly divisible by 50; c. Delayed returns. 9) As the basis of each Batch of WTRs, prepare Batch Control/Transmittal Slip (BC/TS), BIR Form W-6 in 4 copies. 10) Attach copies 1 to 4 of BC/TS (BIR Form W-6) to each batch of WTR. 11) Forward batched WTRs together with copies 1 to 4 of BC/TS (BIR Form W-6) to respective Revenue District Office (RDO). 12) Receive duly acknowledged copy 4 of BC/TS (BIR Form W-6) from the RDO. E. RESPONSIBILITY OF REVENUE DISTRICT OFFICE - WITHHOLDING TAX UNIT A Withholding Tax Unit (WTU), consisting of an appropriate number of qualified personnel as determined by the Revenue District Officer concerned, shall be organized to perform the following functions: 1. Withholding Tax Returns Processing For each type of taxes withheld and for each month covered: A. Received copies 1 to 4 of BC/TS (BIR Form W-6) and all batches of WTRs from each Collection Agent. B. Check actual contents of each batch as to type of tax withheld (Wages, Creditable, Final, Government Payments). Each batch of WTRs should contain only one type of tax withheld per batch. C. Acknowledge receipt of the batches of WTRs by signing copies 1 to 4 of BC/TS (BIR Form W-6) on the space provided for. D. Return duly acknowledged Copy 4 of BC/TS (BIR Form W-6) to the Collection Agent. E. Check each WTR to make sure that all essential data, whether to be encoded or not, are indicated: ID No. Amount(s) For BIR Forms 1743-A and 1743-C, tax payment breakdowns on the back of the said forms should be specified correctly by the WA. RTR/ROR No. CR No. F. Segregate all returns where any of the essential data which are to be encoded, or the amount(s) is missing and send back to the Collection Agent. Adjust No. of WTR and control totals of BC/TS (BIR Form W-6) in view of the returns to be sent back to the Collection Agent. cd i G. Recheck batch control totals and determine the sum of each of the following: Total Taxes Withheld Adjustment Surcharges Interest Compromise H. Separate the original from the duplicate copy of the WTRs. I. Forward to the Revenue Region within five (5) days after receipt from the Collection Agent the following: Batches of original copies of WTRs Copies 1 to 3 of BC/TS (BIR Form W-6) J. Receive duly acknowledged copy 3 of BC/TS (BIR Form W-6). K. File the following: Batches of duplicate copies of WTRs. Duly acknowledged copy 3 of BC/TS (BIR Form-6). The filed batches of duplicate copies of WTRs and copy 2 of BC/TS (BIR Form W-6) shall serve as reference documents for audit purposes and possible error verification of unresolvable WTR entries encountered during WTR processing. 2. Application of Withholding Agent's Identification Number - To be able to accurately reflect every Withholding Agent into the Withholding Agent Masterfile set up, the RDO shall - 1) Require all Withholding Agents in the private and public sectors to register or renew registration as employers. (As per RMO 11-82) 2) Emphasize checking of the appropriate boxes as to industry classification, type of organization, and type of taxes withheld or expected to be withheld. 3) Issue Withholding Agent Identification Number to applicants. To avoid duplication of ID Numbers, the Withholding Agent whose registration will be renewed shall be required to indicate his old number on the application (BIR FORM W-5) in parenthesis to distinguish it from the new ID Number. In case of transfer of a duly registered Withholding Agent from one district to another, the Revenue District Office in which it is registered shall cancel the ID Number upon receipt of the notice of transfer. The ID Number cancelled shall not be reused or issued to other Withholding Agents. The Withholding Agent must apply for a new ID Number in the Revenue District Office of the City or Municipality to which it has transferred. For a Withholding Agent applying for an Identification Number for the first time, the ID Number should be left blank, the proper Identification Number to be assigned by the RDO. 4. Check each BIR Form W-5 filed to make sure that all data to be encoded are indicated. These data are the following: a. Registered Name b. TAN c. Address d. ID No. e. Industry Classification f. Type of Organization g. Types of Taxes Withheld or Expected to be Withheld 5) Transmit the original copy to Withholding Tax Division (WTD) within thirty (30) days from receipt of the application. 6) Retain duplicate copy for the RDO file. F. RESPONSIBILITY OF REVENUE REGIONAL OFFICE 1. FOR REVENUE REGIONAL OFFICES OTHER THAN REGIONS 4A AND 4B The Revenue Regional Office Returns Processing Unit, Assessment Branch, shall be charged with the following functions: a. Receive from the RDO the following: Batches of original copies of WTRs Copies 1 to 3 of BC/TC (BIR Form W-6) b. Acknowledge receipt of batches of WTRs by signing copies 1 to 3 of BC/TS (BIR Form W-6). c. Return duly acknowledged copy 3 of BC/TS (BIR Form W-6) to the RDO. d. Check each BC/TS (BIR Form W-6) to make sure that all data to be encoded are indicated. These data are the following: RDO No. City/Municipality Code Batch No. No. of WTRs Type of Taxes Withheld Period Covered Control Totals e. Segregate all returns if any of the essential data for encoding or the amount(s) due is missing and send them back to the Regional District Office (RDO) concerned for correction. Adjust No. of WTRs and control totals of BC/TS (BIR Form W-6) considering the returns to be sent back to the RDO. cd f. Prepare Documents Transmittal (BIR Form W-7) in 4 copies for transmitting batches of original WTRs. g. Retain copy 2 of BC/TS (BIR Form W-6) and copy 4 of Documents Transmittal (DT), BIR Form W-7. h. Forward to the WTD within ten (10) days after receipt from the Revenue District Offices the following: Copies 1 to 3 of DT (BIR Form W-7) Copy 1 of batch BC/TS (BIR Form W-6) Batches of original WTRs i. Received duly acknowledged copy 3 of DT (BIR Form W-7). 2. FOR REVENUE REGIONAL OFFICES 4A AND 4B The respective Regional Data Centers of these two Revenue Regions shall be charged with the following functions: a. Received from the RDO the following: Batches of original copy of Withholding Tax Returns Copies 1 to 3 of BC/TS (BIR Form W-6) b. Acknowledge receipt of batches of WTRs by initiating copies 1 to 3 of WTR. c. Return duly acknowledged copy 3 of BC/TS (BIR FORM W-6) to the RDO. d. Check each BC/TS (BIR Form W-6) to make sure that all data to be encoded are indicated. These data are the following: RDO No. City/Municipality Code Batch No. No. of WTRs Types of Taxes Withheld Period Covered Control Totals e. Segregate all returns if any of the essential data for encoding or the amount(s) due is missing and send them back to the RDO. Adjust No. of WTRs and control totals of BC/TS (BIR Form W-6) considering the returns to be sent back to the RDO for correction. f. Perform logging and recording functions as required by Data Center standard operating procedures. g. Encode data from WTRs. h. Send encoded WITAX transaction tape/s to the Data Processing Center (DPC), Computer Operations Section for processing. i. Prepare DT (BIR Form W-7) in 2 copies for transmitting batches of encoded original WTRs. j. Retain copy 2 of BC/TS (BIR Form W-6). k. Forward to the WTD the following: Copies 1 and 2 of DT (BIR Form W-7) Copy 1 of BC/TS (BIR Form W-6) Batches of original WTRs. l. Receive and file duly acknowledged copy 2 of DT (BIR Form W-7). G. RESPONSIBILITY OF COLLECTION OFFICE The Collection Office shall provide the necessary control, coordination and monitoring of all implementation activities as determined by the Steering Committee. H. RESPONSIBILITY OF WITHHOLDING TAX DIVISION 1. Withholding Tax Returns Processing A. FOR WTRs FROM REVENUE REGIONS OTHER THAN REVENUE REGIONS 4A AND 4B 1. Receive from Revenue Region the following: Copies 1 to 3 of DT (BIR Form W-7) Copy 1 of BC/TS (BIR Form W-6) Batches of original WTRs 2. Check the actual number of batches of WTRs against the number of batches as indicated in the documents transmittal. 3. Acknowledge receipt of batches of WTRs by signing copies 1 to 3 of DT (BIR Form W-7). 4. Return to Revenue Region of origin duly acknowledged copy 3 of DT (BIR Form W-7). 5. Check each WTR to make sure that all essential data, whether to be encoded or not, are indicated: ID Number Amount(s) For BIR Forms 1743-A and 1743-C, tax payment breakdowns on the back of the said forms should be specified correctly by the WA RTR/ROR Number Confirmation Receipt Number 6. Segregate all returns where any of the essential data for encoding or the amount(s) due is missing and send them back to the Regional Office/District Office for correction. Adjust No. of WTRs and control totals of BC/TS (BIR Form W-6), considering the returns to be sent back to the RRO/RDO. 7. Send edited batches to the DPC Support Services Division for data capture. B. FOR WTRs FROM REVENUE REGIONS 4A AND 4B 1. Receive from Revenue Regions 4A and 4B the following: Copies 1 and 2 of DT (BIR Form W-7) Copy 1 of BC/TS (BIR Form W-6) Batches of original WTRs 2. Acknowledge receipt of batches of WTRs by signing copies 1 and 2 of DT (BIR Form W-7). 3. Return to Revenue Regions 4-A and 4-B duly acknowledged copy 2 of DT (BIR Form W-7). 4. File DT (BIR Form W-7), BC/TS (BIR Form W-6) and batches of original WTRs. The filed batches of original copies of WTRs, DT (BIR Form W-7), and BC/TS (BIR Form W-6) shall serve as basic documents for audit purposes and possible error verification of unresolvable WTR entries encountered during processing of WTRs. 2. Application for Withholding Agent's Identification Number A. Receive from RDOs original copies of BIR Form W-5 filed. B. Check each BIR Form W-5 filed to make sure that the following data are indicated: 1. Registered Name 2. Taxpayer's Account Number 3. Address 4. ID No. 5. Industry Classification 6. Type of Organization 7. Type of Taxes Withheld or Expected to be Withheld C. Indicate in block letters the region and district codes on the right hand side of BIR Form W-5. D. Classify the BIR Form W-5 by Region and District. E. Batch the BIR Form W-5 by Region and District. F. Send edited batches to DPC. 3. Other Related Functions A. Receive "Error Lists" and system output reports from the DPC Support Services Division. B. Receive encoded WTR source documents from DPC Support Services Division. C. Make necessary corrections and submit "Error Lists" with corrections to the Data Processing Center, Support Services Division for data encoding. D. Analyze the Withholding Tax Reports, and come up with recommendations regarding the implementation of Withholding Tax Laws and Regulations. E. Initiate/Participate in organizing seminars on the Withholding Tax System in cooperation with the Career Development Division and the Tax Information and Education Division, and in the distribution of Withholding Tax Forms and the Guide for Withholding Agents nationwide. I. RESPONSIBILITY OF DATA PROCESSING CENTER 1. DPC Support Services Division ( SSD ) A. Receive edited batches of WTRs or corrected error lists from the WTD. B. If edited batches of WTRs are being received: 1. Receive from the WTD the following: Copies 1 and 2 of DT (BIR Form W-7) Copy 1 of BC/TS (BIR Form W-6) Batches of original WTRs 2. Check the actual number of batches of WTRs against the number of batches as indicated in the documents transmittal. 3. Acknowledge receipt of batches of WTRs by signing copies 1 and 2 of DT (BIR Form W-7). 4. Return duly acknowledged copy 2 of DT (BIR Form W-7) to WTD. C. If corrected "Error Lists" are being received: 1. Receive from WTD the following: Corrected error list Copies 1 and 2 of WTD Transmittal Letter 2. Check contents and actual number of pages as indicated in the transmittal letter. 3. Acknowledge receipt of corrected error lists by signing copies 1 and 2 of transmittal letter. 4. Return duly acknowledged copy 2 of transmittal letter. D. Perform logging and recording functions as required by SSD standard operating procedures. E. Transmit WTRs or corrected error lists to the Machine Operations Division (MOD), Transcription Section. F. Transmit error lists to WTD. G. Transmit processed WTRs to WTD. H. Send appropriate Withholding Tax System output reports to BIR Offices concerned. 2. Machine Operations Division ( MOD ) A. Transcription Section 1. Receive WTRs or corrected error lists from the Support Services Division. 2. Perform logging and recording functions as required by MOD standard operating procedures. 3. Encode data from WTRs or from corrected error lists, retaining transaction tape/s for processing. 4. Send encoded WITAX transaction tape/s to the Computer Operations Section for processing. 5. Send processed WTRs to SSD for transmittal to WTD. B. Computer Operations Section 1. Receive WITAX transaction tape/s from the Transcription Section. 2. Schedule computer processing run requirements per design specifications. 3. Process WITAX computer run. 4. Transmit transaction tape/s to Transcription Section for retention and temporary storage. 5. Forward error lists or system output to DPC Support Services Division. J. RESPONSIBILITY OF ASSESSMENT OFFICE The Assessment Office shall provide the necessary control, coordination and monitoring of the activities of the Returns Processing Units, under the Assessment Branch in the Revenue Regional Offices, concerning the processing WTRs. K. RESPONSIBILITY OF THE FINANCIAL AND MANAGEMENT SERVICE The Financial and Management Service shall allocate and facilitate the release of adequate funds needed out of the current budget in the implementation of the Withholding Tax System to ensure its success, subject to the usual accounting procedures and auditing requirements. cdt L. RESPONSIBILITY OF TAX INFORMATION AND EDUCATION DIVISION The Tax Information and Education Division (TIED) shall provide all necessary resources and facilities to disseminate information on the Withholding Tax System to the public through the use of mass media, cooperation in the holding of public forums, seminars and similar group conferences, and the distribution of the Guide for Withholding Agents, in coordination with the Career Development Division (CDD), Property Division (PD), and the Withholding Tax Division (WTD). M. RESPONSIBILITY OF THE PERSONNEL AND ADMINISTRATIVE SERVICE The Personnel and Administrative Service shall provide the required manpower assistance, coordination and monitoring of the activities of the Career Development Division, General Services Division and the Property Division. N. RESPONSIBILITY OF THE CAREER DEVELOPMENT DIVISION The Career Development Division (CDD) shall provide assistance and facilities to conduct seminars at all functional levels involved in the implementation of the Withholding Tax System: (1) BIR Personnel (Collection Agents, Revenue District Officer and Revenue Regional Officers) in coordination with the Revenue Regional Offices; and (2) Withholding Agents, in coordination with the TIED. O. RESPONSIBILITY OF THE GENERAL SERVICES DIVISION The General Services Division shall provide all necessary resources and facilities, subject to normal government procedures and requirements, to reproduce required quantities of Withholding Tax Forms, Guide for Withholding Agents, and Procedural Responsibilities as well as monitor and control their distribution on a nationwide basis. P. RESPONSIBILITY OF PROCUREMENT COMMITTEE AND PROPERTY DIVISION The Procurement Committee and the Property Division shall provide all necessary resources and facilities, subject to normal government procedures and requirements, to print the required quantities of Withholding Tax Forms and the Guide for Withholding Agents for use in the nationwide implementation of the Withholding Tax System. Q. RESPONSIBILITY OF THE INFORMATION SYSTEMS DEVELOPMENT STAFF, OFFICE OF THE COMMISSIONER The Information Systems Development Staff (ISDS) shall provide coordination, monitoring, reporting, planning and technical assistance in all aspects of the implementation effort whenever and wherever necessary. R. REPEALING CLAUSE Revenue Memorandum Orders and all rules and regulations or parts thereof inconsistent with the provisions of this Revenue Memorandum Order are repealed or modified accordingly. aisa dc S. EFFECTIVITY This Memorandum Order shall take effect immediately. RUBEN B. ANCHETA Acting Commissioner