Uniform Guidelines and Procedures in the Receiving, Retrieval, Processing and Storage of Tax Returns in the Revenue District and Regional Offices

July 10, 2000 REVENUE MEMORANDUM ORDER NO. 32-00 SUBJECT : Uniform Guidelines and Procedures in the Receiving, Retrieval, Processing and Storage of Tax Returns in the Revenue District and Regional Offices TO : All Revenue Officials, Employees and Others Concerned I. BACKGROUND In view of the direction of management to devolve processing functions of Revenue Data Centers (RDCs) to the Revenue District Offices (RDOs), policies have to be instilled, procedures institutionalized and the roles of the different concerned offices defined, to provide uniformity in RDO-based payment and returns processing activities. AcIaST In addition, statistics on the number of suspended records show that the suspense rate under the Limited Returns Processing System (LRPS) is relatively high and this high percentage is largely attributed to incompletely filled-up mandatory fields in the tax returns. Since the current policy is to capture whatever information appear in the returns filed, suspense returns errors "no value" and "required tax amount is empty" (error codes 1000 and 3085) could have been prevented had the returns been analyzed during the pre-processing stage inasmuch as the missing information can be obtained from documents attached to the returns and/or registration database. II. OBJECTIVES This Order is issued to: A. Amend the provisions of RMO No. 21-99 and RMO No. 58-99 relative to processing of tax returns; B. Prescribe standardized policies and procedures in RDO-based processing of tax returns; C. Delineate roles and responsibilities in relation to receiving, retrieval, processing and storage of tax returns at the RDOs and regional offices; and D. Reduce suspended tax returns under the Limited Returns Processing System (LRPS). III. POLICIES AND PROCEDURES The policies, guidelines and detailed procedures pertaining to the receiving, retrieval, processing and storage of tax returns outlined in the Revenue District Office Returns Processing Manual (Annex A) shall be observed by all offices concerned. IV. REPEALING CLAUSE RMO No. 21-99 and RMO No. 58-99 and other issuances or portions thereof not consistent with the provisions of this Order are hereby amended accordingly. V. EFFECTIVITY This Order shall take effect immediately. (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue Annex A REVENUE DISTRICT OFFICE RETURNS PROCESSING MANUAL I. DEFINITION OF TERMS A. Bank Branch Performance Check (BBPC) review and analysis of the reports submitted by banks and the returns filed by taxpayers. B. CBR Data Verification verifying uploaded amount against the amount on the return. C. Suspense Resolution correction/revision/updating of the registration information of the taxpayer or the pertinent data on the return document to resolve the suspense. D. Returns Pre-Processing sorting the returns by form type, assignment of Document Locator Number (DLN) and pre-checking of return information and amounts prior to encoding. E. Document Tracking Module (DTM) a system used to identify the status of the document whether it is on file, lent out, transferred to another BIR office or disposed. F. Document Locator Number (DLN) unique identifier of a document consisting of location code, stamping unit, date received and entered into the system, and the sequential six digit number. HDTCSI II. POLICIES AND GUIDELINES A. Under the devolution set-up, all payment processing functions (except payment data entry and uploading) and return processing functions will be done at the RDO level. Procedures for the processing of payment data of returns filed with Revenue Collection Officers/Deputized Municipal Treasurers are not covered by this issuance. B. All "no-payment" (refundable, breakeven, exempt and no operation/transaction) returns including returns to be paid on 2nd installment, withholding tax returns (WTRs) covered by Tax Remittance Advice (TRA) and returns paid through a Tax Debit Memo (TDM)/Credit Memo (CM) shall be filed with and accepted by the concerned RDO where the taxpayer is registered. However, no payment returns filed late shall not be accepted by the RDO but instead these shall be filed with an authorized agent bank (AAB) or Collection Officer/Deputized Municipal Treasurer, where there are no AABs, for payment of necessary penalties. The procedures on processing of WTRs with TRA are embodied in Revenue Memorandum Order No. 16-2000 C. A Special Processing (SP) code shall be indicated on the upper right hand corner of the following no payment returns: 1. refundable 2. 2nd installment 3. breakeven 4. exempt A payment record/credit amount of "0" (zero) will be automatically created in the taxpayer ledger for this type of return and as such, there is no need to encode CBR payment information "0". D. The original and duplicate copies of returns/documents "with payment" from the Authorized Agent Banks (AABs) shall be picked up by the respective RDOs. E. The RDC-devolved activities in document processing shall be in addition to the current/existing functions of the RDOs. F. The RDCs shall provide support to RDO operations related to payment and return processing. These include uploading payment data from AABs and running the payment and return validation modules. G. RDOs shall use the LRPS in capturing return information into the ITS. H. All tax returns received that will be entered in LRPS shall be screened and analyzed as to completeness of return information prior to encoding. This will be done at the pre-processing stage to ensure that mandatory fields are filled up and an "apron sheet" (Annex B), if necessary, is attached to the return. I. The Revenue District Officers shall be responsible for monitoring and facilitating resolution of their return suspense errors. J. The Revenue District Officers are likewise responsible in ensuring that all Batch Header Forms of tax returns encoded shall bear the word "ENCODED" and that the document status of these encoded returns is updated to F (on file) using the Document Tracking Module of the Case Monitoring System (CMS) prior to transmittal of the original copies of returns to the Administrative Division of the regional office. K. The Bank Document Analysts of the concerned RDO shall attend to inquiries of Accredited Agent Banks (AABs) regarding the procedural and encoding errors they have committed. L. The Document Processing Section of the concerned RDO shall be responsible for temporary safekeeping of original returns and updating of document status in the ITS. III. PROCEDURES A. Retrieval of Tax Returns with Payment from AABs 1. Revenue Officer/Retriever (Collection Section) : 1.1 Pick-up batches of Batch Control Sheet (BCS)-A and copies of tax returns (original and duplicate) from AABs. 1.2 Check completeness of physical returns against BCS-A. 1.3 Forward complete BCS-A and returns to Receipt and Control-Data Controller. EITcaD B. Receiving of No Payment Returns 1. Revenue Officer/Receipt and Control Data Controller (Collection Section) 1.1 Check completeness of tax returns. 1.2 Receive from taxpayers properly accomplished tax returns in triplicate. 1.3 Stamp "received", indicate date of receipt and affix initial on tax returns. 1.4 Release triplicate copy to the taxpayer. C. Processing of Tax Returns With and Without Payment at the Revenue District Office : 1. Revenue Officer/Receipt and Control Data Controller (Collection Section) : 1.1 For returns with payment: 1.1.1 Receive original and duplicate copies of BCS-A (received from AABs) from retrievers. 1.1.2 Log BCS-A and returns in the Documents Received From AABs worksheet (Annex C) for returns with payment. 1.1.3 Photocopy copy BCS-A and forward original and duplicate copies of BCS-A and returns with payment to Collection and Bank Reconciliation (CBR) Pre-processing Data Controller. 1.1.4 Forward accomplished Documents Received from AABs worksheet to the Bank Liaison Officer every Monday of the following week. 1.1.5 File triplicate copy of BCS-A. 1.2 For no payment returns and returns paid through TDM/CM: 1.2.1 Segregate returns paid through TDM/CM from no payment returns mentioned under Sec. II. C of this manual. 1.2.2 Write "SP" on the upper right hand corner of the return if the return is refundable/2nd installment/breakeven/exempt. The "SP" code shall not be indicated in the return other than those mentioned here. 1.2.3 Batch returns into 50 or less. 1.2.4 Prepare separate BCS-B in triplicate copies for no payment returns and returns paid through TDM/CM. The BCS number shall include the RDO code (3 digits), year filled (4 digits) and sequence number (6 digits). 1.2.5 Forward original and duplicate copies of BCS-B and tax returns to the CBR Pre-processing Data Controller. 1.2.6 File triplicate copies of BCS. 2. Revenue Officer/CBR Pre-processing Data Controller (Collection Section) : 2.1 Receive original and duplicate copies of BCS-A/BCS-B and tax returns from Receipt and Control Data Controller. Acknowledge receipt of tax returns on the triplicate copy of BCS. 2.2 Return the triplicate copy of BCS to the Receipt and Control Data Controller. 2.3 Affix BCS number on each copy of the returns in the batch. 2.4 Check for bank procedural errors on the BCS-A and accomplish Bank Branch Performance Statistics Form (BIR Form 2841) (Annex D). 2.5 Forward original and duplicate copies of the following to the CBR Data Verifier: 2.5.1 BCS-A and returns with payment (with or without errors) together with Form 2841; and 2.5.2 BCS-B and returns with TDM/CM. 2.6 Forward original and duplicate copies of BCS-B and returns without payment (refundable/2nd installment/breakeven/exempt) to RPS Pre-processing Data Controller. DaAIHC 3. Revenue Officer/CBR Data Verifier (Collection Section) : 3.1 For returns with payment: 3.1.1 Receive original and duplicate copies of BCS-A, returns and Form 2841 from CBR Pre-processing Data Controller. 3.1.2 Verify on screen whether the uploaded data matches with the information appearing in the actual returns/payment forms. If with discrepancy on the amount paid, accomplish BIR Form 2841. 3.1.3 Segregate BCS-A and returns without procedural and encoding errors and forward to RPS Pre-processing Data Controller. 3.1.4 Encode BIR Form 2841 with BCS-A procedural and encoding errors. 3.1.5 Forward original and duplicate copies of BCS-A and returns with procedural and/or encoding errors together with the encoded Form 2841 to Bank Document Analyst. 3.2 For returns paid through TDM/CM 3.2.1 Receive original and duplicate copies of BCS-B and tax returns from the CBR Pre-processing Data controller. 3.2.2 Encode payment information (TDM/CM) using the ADD function of the Collection and Bank Reconciliation System (CBR). 3.2.3 Forward the original and duplicate copies of BCS-B and tax returns to RPS Pre-processing Data Controller. 4. Revenue Officer/Bank Documents Analyst (Collection Section) : 4.1 Receive original and duplicate copies of BCS-A and returns with procedural and/or encoding errors, together with the encoded Form 2841 from CBR Data Verifier. 4.2 Receive generated Batch Exception Report, BCS Summary and List of Late Batches Reports from CONE-RDC and sort by bank branch. 4.3 Verify validity of these reports against BCS-A and returns. 4.4 Photocopy BCS-A and returns with procedural and/or encoding errors and attach these to the Batch Exception Report. 4.5 Prepare preliminary notices of violations related to timeliness and accuracy of collection information and documents submitted by AABs. 4.6 Forward verified BCS, returns, Batch Exception Report, BCS Summary Report and List of Late Batches Report and the preliminary notices of violations to the Bank Liaison Officer. 5. Revenue Officer/Bank Liaison Officer (Collection Section) : 5.1 Receive accomplished Document Received from AABs worksheet on a weekly basis from Receipt and Control Data Controller and weekly report on Transmitted Collection Data from Computer Operations Network Engineering (CONE)-RDC. 5.2 Compare data on Documents Received from AABs worksheet with data on Transmitted Collection Data. If with discrepancy, coordinate with AAB regarding failure to transmit collection data and/or documents. 5.3 Receive the verified BCS-A, returns, Batch Exception Report, BCS Summary Report and List of Late Batches Report and the preliminary notices of violations from the Bank Document Analyst. 5.4 Send Batch Exception Report with photocopy of BCS and returns, BCS Summary Report and List of Late Batches Report with the preliminary notices of violations to concerned AABs. IDTHcA 5.5 Evaluate AAB responses to issued preliminary notices of violations. Refer to Collection Programs Division, Collection Service AABs who fail to comply with preliminary notice of violation. 5.6 Forward original and duplicate copies of the BCS-A and returns with procedural and/or encoding errors to RPS Pre-processing Data Controller 6. Document Processor/RPS Pre-processing Data Controller (Document Processing Section) 6.1 Receive original and duplicate copies of the following 6.1.1 BCS-B and returns without payment (refundable/2nd installment/breakeven/exempt) from CBR Pre-processing Data Controller 6.1.2 BCS-A/BCS-B, payment returns without procedural/encoding errors and returns paid through TDM/CM from CBR Data Verifier 6.1.3 BCS-A and returns with procedural/encoding errors from Bank Liaison Officer. 6.2 Detach the original and duplicate copies of BCS from the returns. 6.3 Forward the original copies of BCS to the Administrative Division and file temporarily the duplicate copies of BCS. 6.4 Sort, classify and batch tax returns according to form type on a daily basis; thus, a batch shall not contain returns received on different dates. A batch shall contain not more than 50 documents. 6.5 Segregate the following returns that will be encoded in LRPS: a) Withholding Tax Returns (BIR Forms 1600, 1601, 1602 and 1606) b) Income Tax Returns (BIR Forms 1700, 1701, 1701Q, 1702, 1702Q and 1706) c) Documentary Stamp Return (BIR Form 2000) d) VAT and Percentage Tax Returns (BIR Forms 2550M, 2550Q and 2551) 6.6 Assign and indicate the Document Locator Number (DLN) on the original and duplicate copies of every return by means of rubber stamp or sequential numbering machine, reflecting the following ITS features: RDO Code 3 digits Location Code 1 character (R for returns) Year of Return 2 digits Month Filed 2 digits Sequence Number 6 digits which shall start with 000001, 000002 and so on regardless of month 6.7 Segregate the original from the duplicate copies of returns. 6.8 Attach Batch Header Form to the batched original and duplicate returns using the updated version of Form 2604 (Annex E). The "Date Prepared" and "Batch Header Number" portions shall be filled up in the following manner: 6.8.1 Date Prepared MM DD YYYY where: MM is the month of the year DD is the day of the month YYYY is the current year 6.8.2 Batch Header Number YY RDO 99999 where: YY refers to the last two (2) digits of the current year RDO is the RDO code 99999 is the sequence number which shall start with 00001,00002 and so on regardless of month 6.9 Retrieve duplicate copies of BCS. 6.10 Forward the duplicate copies of BCS-A/BCS-B and returns with attached Batch Header Form to the Assessment Section (Since this procedure is prior to encoding, limited information is available on the duplicate Batch Header Form). 6.11 Screen each return as to completeness of information. Ensure that all mandatory fields have data/values. 6.12 Access the Registration System database to inquire missing taxpayer information like Taxpayer Identification Number (TIN), accounting period and tax types. Use a pencil in filling up the returns. AEaSTC 6.13 Check correctness of income, deductions, exemptions, tax due, tax credit, advance payment and other return data reflected in the return. Detailed pre-processing procedures shall be specified in Job Aids to be provided in a separate revenue issuance. 6.14 Accomplish the "apron sheets" only for returns with mandatory fields not properly filled-up and attach to the returns. The "apron sheet" contains mandatory fields, which if left empty will cause the suspension of the returns (error code 3085 required tax amount is empty). Make sure that tax amounts per returns are copied correctly into the "apron sheet". If the data required for encoding do not show any amount on the tax return, indicate "0" (zero) on the applicable spaces in the "apron sheet". 6.15 Refer unresolved cases to the RDO's Officer-of-the-Day or contact the taxpayer to inquire or verify return information. 6.16 Forward pre-processed original returns and "apron sheets" to RPS Data Encoder for data capture. 7. Computer Operator/RPS Data Encoder (Document Processing Section) : 7.1 For returns other than no payment returns: 7.1.1 Receive original tax returns forwarded by the RPS Pre-processing Data Controller. 7.1.2 Encode specific return information as appearing in the returns. Copy data/amounts from the "apron sheet" for missing data in the return/corrected values. 7.1.3 Return to the RPS Pre-processing Data Controller tax returns not properly accomplished without an "apron sheet" attached. 7.1.4 Stamp/write the word "ENCODED" on the upper right hand side of the batch header form. 7.1.5 Forward encoded original tax returns to Document Custodian for temporary storage. 7.2 For no payment returns: 7.2.1 Receive original tax returns forwarded by the RPS Pre-processing Data Controller. 7.2.2 Encode return information and "SP" code in the appropriate field. Encoding of no payment return shall not start until the SP flag-field has been added in the RPS Data Entry Screen. Make sure that no SP code is encoded for return paid through TDM/CM. 7.2.3 Stamp/write the word "ENCODED" on the upper right hand side of the batch header form. 7.2.4 Receive Batch Data Entry Verification Report (BDEVR) from RDC. 7.2.5 Check/verify whether all returns encoded are listed in the report. If with discrepancy, inform the RDC. 7.2.6. File BDEVR for future reference. 7.2.7 Forward encoded returns to Document Custodian. 8. Revenue Officer/Document Processor/CBR/RPS Error Handler (Collection Section/Data Processing Section) : 8.1 Receive Returns/Payment Suspense Report from CONE-RDC. 8.2 Resolve suspended returns/payment transactions. 8.3 Request for copy of returns from Document Custodian, if applicable. 9. Document Processor/Document Custodian (Document Processing Section) : 9.1 Receive encoded original tax returns from RPS Data Encoder. 9.2 Arrange and store temporarily for thirty (30) days encoded original returns per DLN. The returns shall remain in the custody of the Document Custodian until all suspended returns in the batch are resolved. SHAcID 9.3 Update documents status, using the Document Tracking Module (DTM) of the Case Monitoring System (CMS), to F (on-file). Documents may be simultaneously updated on line by identifying a wide range of DLNs instead of updating the status of each document individually. 9.4 Retrieve returns needed by other sections upon presentation of duly approved request form. Update the document status by entering the borrower's name and date the document was borrowed into the DTM. Update this again once the original document has been returned by entering the return date. 9.5 Return to the RPS Data Encoder original batched returns without the word "ENCODED" on the Batch Header Form for encoding. 9.6 Prepare transmittal letter and forward original copies of returns together with transmittal letter to the Administrative Division of the regional office after thirty (30) days from receipt of encoded returns from the RPS Data Encoder for permanent storage. If there are still returns in the batch still with the CBR/RPS Error handler for suspense resolution, the other returns on the same Batch Header Form will not be transmitted to the Administrative Division unless all the returns in the batch are complete. 10. Assessment Section : 10.1 Receive duplicate copies of BCS and tax returns with duplicate Batch Header Form from RPS Pre-processing Data Controller. 10.2 Segregate copies of tax returns to be audited in the district office pursuant to the existing Audit Program. 10.3 Prepare list of returns selected for audit/verification. 10.4 Forward list of returns selected for audit/verification, duplicate copies of BCS and tax returns not selected for audit to the Assessment Division, Regional Office for permanent storage. 11. Office of the RDO : 11.1 Supervise daily processing of documents. 11.2 Elevate issues/concerns to the RDC. D. Storage of Tax Returns at the Regional Office 1. Assessment Division 1.1 Receive from the district office list of returns selected for audit/verification, duplicate copies of BCS and tax returns with duplicate Batch Header Form not selected for audit. 1.2 Select/segregate tax returns for office audit in accordance with the existing Office Audit Program. 1.3 File duplicate copies of BCS per BCS number. 1.4 File all duplicate copies of tax returns not selected for office audit per DLN. 2. Administrative Division 2.1 Receive original copies of BCS from RPS Pre-processing Data Controller. 2.2 Receive all encoded original returns with original Batch Header Form from Document Custodian. 2.3 Match returns against the original copy of the BCS. All returns indicated in the BCS must be received by the Administrative Division within sixty (60) days from receipt of the BCS. In case there are returns not received within the said period, such must be communicated to the concerned RDO. SDTIaE 2.4 File original copies of BCS per BCS number. 2.5 Ensure that Batch Header Forms of tax returns shall bear the word "ENCODED". In case the word "ENCODED" is not indicated on the Batch Header Form, access the inquiry module of LRPS to verify if the batched returns were encoded and the DTM of CMS to check if the document status of such returns is updated to F (on file). 2.6 Return to the concerned RDO batched returns that were determined as not having been encoded or their status has not been updated to F (on file) in CMS. Returns actually encoded but without the word "ENCODED" on the Batch Header Form shall not be returned but instead stamp/write the word "ENCODED" on the upper right hand side of the Batch Header Form. 2.7 File all original tax returns per DLN. E. Related Procedures at the Revenue Data Center : 1. Office of the Head, RDC : 1.1 Act on issues/concerns of RDOs to maintain up-to-date processing of documents. 1.2 Ensure the availability of reports as required by the National Office (NO), Regional Office (RO) and/or RDOs. 2. CONE, RDC/MC : 2.1 Receive payment data from AAB through Electronic Data Transmission (EDT). 2.2 Upload payment data to the Integrated Tax System (ITS) database. 2.3 Generate reports needed by the NO, RO and/or RDOs. 2.4 Forward generated reports to concerned offices. 2.5 Attend to technical issues/concerns of RDOs. THADEI ANNEX B ANNEX C ANNEX D ANNEX E