Prescribing the Policies and Procedures on the Processing of Tax Credit Certificates (TCCs) for Cash Conversion Implementing the Provisions of Revenue Regulations No. 5-2000 Dated July 19, 2000

December 6, 2001 REVENUE MEMORANDUM ORDER NO. 34-01 SUBJECT : Prescribing the Policies and Procedures on the Processing of Tax Credit Certificates (TCCs) for Cash Conversion Implementing the Provisions of Revenue Regulations No. 5-2000 Dated July 19, 2000 TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Objectives . This Order is issued in order to: A. Prescribe the guidelines, policies and procedures in the processing of request for conversion of Tax Credit Certificate (TCC) into cash refund; B. To delineate the functions and responsibilities of each office involved in the processing requests for conversion of TCCs into cash refund; and C. Provide for a more effective system to process, evaluate, approve/disapprove requests for TCC conversion as well as control and monitor the cancellation of TCCs and the release of funds of those requests which have been approved. SECTION 2 . Guidelines and Policies . The following guidelines and policies shall be observed by all concerned: A. All requests for cash conversion shall be filed with the office which originally issued the TCC. The said Office shall process the requests for conversion, issue a Memorandum recommending Approval/Disapproval thereof, and certify as to the authenticity, accuracy and validity of the TCC issued; B. In the case of TCCs issued by the One-Stop Shop (OSS) Inter Agency Tax Credit and Duty Drawback Center under the Department of Finance, requests for cash conversion of such TCCs shall be filed with the said Office which shall process and evaluate the requests as well as certify the authenticity, accuracy and validity of the TCC issued in accordance with its established procedures. The recommendation on the request, which shall likewise be in memorandum form, shall be signed by the Assistant Commissioner of Internal Revenue (ACIR)-Assessment Service who has functional jurisdiction over the Tax Revenue Group of the OSS; C. No request for conversion into cash refund of TCCs issued by the OSS shall be processed and approved by the BIR unless such request has been duly processed, evaluated and recommended for approval by the OSS; D. Any request for cash conversion of the amount reflected in the TCC or any unutilized portion thereof may be allowed, subject to the provisions of Section 230 of the Tax Code of 1997; E. The original copy of the TCC must be surrendered to the issuing office as part of the supporting documents for cash conversion. The cancellation of the original TCC shall be done by the Accounting Division; F. No cash conversion shall be allowed where the TCC is the result of availment of incentives granted pursuant to special laws for which no actual payment was made; G. All requests for cash conversion shall be approved by the ACIR-Collection Service. After approval, the same shall be referred to ACIR-Financial & Administrative Service for funding purposes. However, the validity and correctness of the TCC and the completeness of the supporting documents surrounding the issuance thereof shall still be the responsibility of the office which approved and issued the same; H. Previously transferred or assigned TCCs shall not be convertible into cash refund; and I. TCCs issued which remain unutilized after five (5) years from date of issue, unless revalidated before the end of the fifth year, shall not be allowed to be converted into cash. SECTION 3 . Supporting Documents for Cash Conversion . The following documents are required for the processing and approval of requests for conversion of TCC into cash refund: A. Letter request of taxpayer-claimant for conversion of TCC to cash refund; B. Original Copy of the TCC for conversion; C. Updated clearance from Collection Division of Regional Offices and from the Collection Enforcement Division-Collection Service (CED) or Large Taxpayers-Collection Enforcement Division (LT-CED) stating that the taxpayer-claimant has no outstanding tax liabilities; D. Disbursement Voucher (DV) with Box A duly signed by the Chief, Issuing Office of the original TCC. DVs of TCCs issued by the One-Stop Shop Center (OSS-Center) shall be co-signed by the Executive Director, OSS-Center and the ACIR-Assessment Service; E. Original case docket supporting the issuance of the TCC; and F. Duly approved memorandum report. SECTION 4 . Procedures . A. The Taxpayer-Claimant shall 1. File a written request for the conversion of TCC to cash refund at the office which originally issued the TCC together with the documents enumerated in Section 3 of this Order. B. TCC Issuing Office shall 1. Receive the written request for the conversion of TCC to Cash Refund, together with the original copy of the TCC for conversion; 2. Locate and request for the entire original case docket which was the basis for issuing the original TCC and attach thereto the pertinent documents submitted by the taxpayer-claimant thereto; 3. Review and evaluate the record of the case by ensuring that the TCC being applied for conversion into cash refund is that which had been duly processed and validly issued by the Office; 4. Prepare memorandum report recommending approval/disapproval of the conversion of TCC to Cash Refund; 5. Prepare DISBURSEMENT VOUCHER (DV) (General Form No. 1) and sign "Box A" thereof; and 6. Forward the entire docket of the case, together with the signed DV to the Chief, Collection Programs Division. C. The Collection Programs Division (CPD) shall 1. Issue a certification on the correct amount or unutilized balance of the TCC; 2. Request CED, LT-CED, and/or the Collection Division of the concerned Regional Office, as the case may be, to verify the existence of any delinquent account by the taxpayer-claimant; 3. Notify taxpayer-claimant of the existence of any delinquent account with the above offices, 4. Issue Tax Debit Memo (TDM) for the settlement of outstanding tax liability/ies established by the CED, LT-CED, and/or Collection Division of the Regional Office, if any, to be deducted against the TCC balance; 5. Initial the recommendation of the issuing office if it agrees with the proposed conversion. If not, prepare a memorandum to ACIR-Collection Service stating the reason/s for recommending disapproval of the request; 6 Maintain a record of all Tax Credit Certificates (TCCs) converted into cash refund furnished by the Accounting Division indicating the following: a Name of the Taxpayer; b. TIN; c. Address d. TCC Number; e. TCC date; and f. The original/unutilized balance amount. 7. Submit to the Collection Service a monthly report of all cancelled TCCs converted into cash refund-stating the total number of cases and the amount of each TCC approved for conversion into cash refund. D. The CED, LT-CED, or Collection Division-Regional Office, as the case may be, shall 1. Upon the request of CPD, verify if the taxpayer-claimant has outstanding tax liability/ies; 2. Issue Tax Clearance in case it is found that the taxpayer-claimant has no outstanding liability/ies with the Bureau; 3. Issue Delinquency Verification Slip showing the current status of the outstanding tax liabilities of the taxpayer-claimant, if any; 4. Forward to CPD the Delinquency Verification Slip for issuance of a TDM for the settlement of outstanding tax liabilities; and 5. Record the payment of the liability and issue the corresponding clearance. E. The Collection Service (CS) shall 1. Receive and review the recommendation of the CPD; 2. Approve/disapprove recommendation for the conversion of TCC to Cash Refund; 3. Release the approved request to the Financial and Administrative Service; and 4. In case of disapproval, issue a written notice of disapproval to the taxpayer-claimant stating therein the reasons why such request has been denied. F. The Financial and Administrative Service shall 1. Receive the docket/s of the approved request for TCC conversion to cash refund; 2. Concur with the approved request; 3. Release the approved and concurred TCC docket to Budget Division together with the DV; 4. Receive the entire TCC docket and DV as processed by the Accounting Division for the approval of the DV by the ACIR-FAS by affixing his/her signature to the space provided in "Box C" thereof; and 5. Transmit the entire TCC docket and DV to the General Services Division for the issuance of the refund check. G. The Budget Division shall 1. Draw Request for Obligation of Allotment (ROA); and 2. Transmit the ROA to Accounting Division for processing. H. The Accounting Division shall 1. Process the claim for cash conversion; 2. Signify its approval to the request by signing "Box B" of the DV; 3. Cancel original TCC and immediately send photocopy/ies thereof to the CPD for control purposes; and 4. Transmit the entire docket together with the DV to the FAS for approval of DV. I. The General Services Division shall 1. Prepare refund check for the signature of the Chief of the GSD to be counter-signed by the Cashier for refunds amounting to P10,000 or below or for the signature of the Chief of GSD as counter signed by the ACIR-FAS for refunds amounting to more than P10,000; 2. Release the refund check to the taxpayer-claimant or his/its representative after receipt of the following documents: a. Official Receipt (OR) of the taxpayer as evidence of its receipt of the refund check; b. Special Power of Attorney (SPA) executed by the taxpayer-claimant authorizing his/its representative to claim the refund check in its/his behalf, if applicable; c. Board Resolution approving the issuance of SPA to authorized representative, if applicable; and d. Proper identification card of the taxpayer-claimant or the authorized representative. 3. Transmit to the resident COA auditor, on a monthly basis, all TCC dockets together with the DVs and other supporting documents processed and approved by the Office. SECTION 5 . Transitory Provisions . 1. All applications for conversion into cash refund of TCCs filed prior to the issuance of this RMO shall continue to be processed by the Office/s which have been assigned to process and evaluate the same; 2. Such applications shall be approved by ACIR-Collection Service with the concurrence of the ACIR-FAS; and 3. The processing of DVs and the preparation and issuance of refund checks as well as the signatories thereto for approved applications shall be in accordance with procedures set forth in this Order, except in cases where the application for conversion is already approved by an authorized officer but the DV has not been signed yet, in which case the ACIR-Collection Service and ACIR-Financial & Administrative Service shall jointly sign the same. SECTION 6 . Repealing Clause . This Order supersedes all revenue issuances or portions thereof inconsistent herewith. SECTION 7 . Effectivity Clause . This Order shall take effect immediately. (SGD.) REN G. BAEZ Commissioner of Internal Revenue