Processing and Issuance of ITS-Generated Assessment Notice Arising From Return Information Discrepancy, Late Filing of Tax Return or Non-Payment/Underpayment of Tax

July 13, 2000 REVENUE MEMORANDUM ORDER NO. 33-00 SUBJECT : Processing and Issuance of ITS-Generated Assessment Notice Arising From Return Information Discrepancy, Late Filing of Tax Return or Non-Payment/Underpayment of Tax TO : All Internal Revenue Officers and Others Concerned I. OBJECTIVES : This Order is issued to: A. Establish policies and procedures in the issuance of ITS-generated assessment notices arising from return information discrepancy, late filing of tax return or non-payment of tax based on tax returns filed by taxpayers. B. Identify the offices and the revenue officials responsible in the implementation of this Order. II. DEFINITION OF TERMS For purposes of this Order, the following terms shall be defined as: 1. Return Information Discrepancy refers to computation errors based on the return filed by the taxpayers which are automatically detected under the ITS. The amount of tax due/paid as encoded in the Return Processing System (RPS) differs from the amount of payment made by the taxpayer as reflected in the Collection and Bank Reconciliation (CBR) data. 2. Assessment Notice a notice automatically generated by the ITS informing the taxpayer of his tax liability based on return information discrepancy, late filing of return or non-payment/underpayment of tax. 3. RDO-based encoding capture of return information is performed at the respective district office. 4. RDC-based encoding capture of return information is done at the Revenue Data Center (RDC). III. POLICIES A. Prior to encoding of tax returns, the concerned RDC/RDO shall perform pre-processing procedures to ensure that the return data are captured correctly and all mandatory items for assessment based on the tax return and its attachments are considered. (The details of pre-processing procedures are embodied in a separate RMO). B. The RDC shall be responsible for the generation and printing of Assessment Notices arising from return information discrepancies, late filing of return and non-payment/underpayment of tax based on tax returns filed under the jurisdiction of ITS RDOs. AHCcET C. The RDC Heads/Revenue District Officers (RDOs) where the return information are captured/encoded shall initial the verified assessment notices before sending it to the concerned Assessment Division. D. The Assessment Division (AD) of regional offices shall be given appropriate access to ITS to view the encoded information of the taxpayer so they can easily review and evaluate the correctness of assessment notices before these are sent to the taxpayers. E. In case there are backlogs, the Regional Director may request additional personnel from the Revenue District Offices, particularly from the Assessment Section, to assist the Assessment Division in the review and evaluation of assessment notices. In the meantime that selected RDO personnel are temporarily assigned at the Assessment Division, such personnel shall be given appropriate access to ITS to view the encoded information. F. The Regional Director concerned shall be the approving authority in the issuance of assessment notice. G. The Assessment Notices generated based on return information discrepancy, late filing of return or non-payment/underpayment of tax are different from assessments arising from audit/verification of tax returns. H. The system-generated Assessment Notices shall be duly supported by manually-prepared attachments showing the reason(s) for the assessment (Annex "A"). acCDSH IV. PROCEDURES A. The Computer Operations Network and Engineering (CONE), RDC shall : 1. Generate and print the assessment notices per RDO. 2. For RDOs under RDC-based encoding, forward assessment notices together with corresponding summary report to Quality Assurance Division (QAD), RDC on the same day for quality check. For RDO-based encoding, forward assessment notices together with corresponding summary report to respective RDOs on the same day for verification. B. For RDC-based encoding : The (QAD), RDC shall : 1. Receive from CONE the printed assessment notices with the summary report. 2. Locate the return for verification. If the return is already transmitted to the AD for safekeeping, prepare transmittal letter and forward the assessment notices with the transmittal letter to AD. If the return is still with the Division, check the accuracy of the encoded information in the assessment notice within five (5) days from receipt thereof. 3. If the discrepancy is due to encoding error, the same should be resolved with RDC. 4. If no error is detected, prepare attachments to the assessment notices and affix initial on the verified assessment notices within three (3) days after verification. 5. Transmit verified assessment notices to the concerned Assessment Division of the revenue region (RR) for review and evaluation together with the attachments, duplicate copy of tax return, and withholding certificates or other documents of taxpayers to be used in the review of the basis of the assessment. 6. Maintain a record/logbook of all transmitted assessment notices and tax returns/documents. 7. Receive from AD the returned invalid notices together with the corresponding summary report. 8. Verify/correct the invalid notices submitted by AD within three (3) days from receipt of summary report and invalid notices. C. For RDO-based encoding : The Assessment Section, RDO shall : 1. Receive from CONE the printed assessment notices with the summary report. 2. Locate the return for verification. If the return is already transmitted to the AD for safekeeping, prepare transmittal letter and forward the assessment notices with the transmittal letter to AD. If the return is still with the Section, check the accuracy of the encoded information in the assessment notice within five (5) days from receipt thereof. 3. If the discrepancy is due to encoding error, the same should be forwarded and resolved by the Document Processing Section of the RDO. AacDHE 4. If no encoding error is detected, prepare attachments to the assessment notice and affix initial on the verified assessment notices within three (3) days after verification. 5. Transmit verified assessment notices to the concerned Assessment Divisions for review and evaluation together with attachments, duplicate copy of tax return, and withholding certificates or other documents of taxpayers to be used in the review of the basis of the assessment. 6. Maintain a record/logbook of all transmitted assessment notices and tax returns/documents. 7. Receive from AD the returned invalid notices together with the corresponding summary report. 8. Verify/correct the invalid notices submitted by AD within three (3) days from receipt of summary report and invalid notices. D. The Assessment Division (AD), RR shall : 1. Receive from RDC/RDO the assessment notices, attachments, duplicate copy of the tax return, and withholding certificates or other documents of taxpayers to be used in the review of the basis of the assessment. TECIaH 2. For assessment notices where the returns were already transmitted to the Division for safekeeping a. Check the accuracy of the encoded information. b. If the discrepancy is due to encoding error, accomplish report necessary for return adjustment. 3. Validate the accuracy of assessment notices together with attachments within five (5) days from receipt thereof. Check and compare the data with RPS screen and the physical return to verify the nature and details of discrepancy. 4. Submit to the Regional Director the verified and valid assessment notices for approval and signature. A report on invalid notices should likewise be submitted to the Regional Director. 5. Return to the concerned RDC/RDO the invalid assessment notices together with corresponding summary report. 6. Transmit signed notices to the Administrative Division for mailing. 7. Attend to taxpayers' response to issued notices. 8. In case the taxpayer fails to pay or respond within the period indicated in the assessment notices, include the assessments in the Form 40 and forward the dockets to the Collection Division for appropriate action. 9. File duplicate copies of tax returns per DLN. E. The Regional Director shall : 1. Approve/sign the assessment notices within three (3) days from receipt thereof. 2. Forward signed notices to Assessment Division for mailing by the Administrative Division. 3. Monitor status of taxpayer compliance/response to the issued notices. 4. Call the attention of the head of office regarding report on invalid assessment notices. F. The Administrative Division shall : 1. Mail signed notices transmitted by the Assessment Division within one (1) day from receipt thereof. V. REPEALING PROVISION This Order supersedes all revenue issuances or portions thereof inconsistent therewith. DSATCI VI. EFFECTIVITY This Order shall take effect immediately. (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue ANNEX A