Procedure in Processing Corporate Annual Income Tax Returns Involving Refunds/Credits of Excess Income Taxes Paid on Corporate Quarterly Declarations of Net Income

July 1, 1974 REVENUE MEMORANDUM ORDER NO. 35-74 SUBJECT : Procedure in Processing Corporate Annual Income Tax Returns Involving Refunds/Credits of Excess Income Taxes Paid on Corporate Quarterly Declarations of Net Income TO : All Internal Revenue Officers and Others Concerned I. Receipt and Transmittal of Returns : Corporate annual income tax returns showing refundable amounts arising from overpaid quarterly income taxes received in all field offices should immediately be segregated and transmitted to the Assessment Branch of the Region. All "out-of-region refundable returns" should immediately be transmitted by the Assessment Branches to the Regional Office having jurisdiction over the taxpayer. Those received in the divisions in the National Office authorized to receive income tax returns should also be segregated and transmitted immediately to the Income Tax Division which office shall send them to the Regional Office having jurisdiction over the taxpayers. cdt To insure prompt action on these returns, all transmittal letters should be appropriately flagged with "Rush" slips with the word "REFUNDABLE" written in bold letters to catch the attention of all those involved in its processing. II. Pre-Audit of Returns : All corporate annual income tax returns showing refundable amounts falling within the jurisdiction of the Revenue Region shall be pre-audited in the Assessment Branch upon receipt of the same. The three quarterly returns of the corporation shall be pre-audited at the same time as the annual return. Pre-audit shall consists mainly of checking the mathematical accuracy of the figures in the return. No disallowances of expenses or inclusion of additional income shall be made during pre-audit, unless the information shown on the return clearly renders any expense claimed unallowable or unless any taxable income declared in the return was not included in the computation of taxable income. Checking of the accuracy of the computations shall extend up to and including the refundable amount. The "Audit Sheet for Corporate Annual Income Tax Returns Showing Overpayment of Income Taxes Paid" attached as Annex "A" shall be accomplished for every return regardless of whether or not any adjustment was made. All the blanks in the audit sheet should be filled in with pertinent information. The audit sheet shall be prepared in duplicate. The original shall be attached to the original copy of the income tax return and the duplicate copy of the audit sheet to the duplicate copy of the return. III. Numbering : To avoid delay in the processing of refundable corporate returns, all such returns need not be segregated from the other returns of the same classification for separate numbering. After pre-audit, all refundable corporate income tax returns shall be numbered immediately in accordance with existing procedures. The original copies of these refundable returns should be immediately pulled out of the block of returns and a dummy shall be inserted in its place to alert the Data Processing Center that the same is being processed for refund purposes. The dummy shall consist of a legal size bond paper which shall indicate the following information: 1. Name and address of the Corporation 2. Taxpayer Account Number 3. Assessment Number 4. A notation "Under Processing For Refund Purposes" The duplicate copies shall remain with the block of duplicate returns and shall be processed in the same manner as all other duplicate corporate returns. IV. Tax Refund : The refundable returns duly pre-audited and numbered shall be transmitted to the Income Tax Division, which office shall prepare the "Authority for Tax Refund/Credit" attached as Annex "B" for the signature of the Revenue Operations Head (Assessment) and for the approval of the Commissioner of Internal Revenue, after having verified the correctness of the audit sheet prepared in the regional office. The "Authority for Tax Refund/Credit" attached as Annex "B" shall be forwarded to the Accounting Division for processing of the refund and the preparation of the refund check. The Accounting Division shall be responsible for determining whether or not the amount found to be refundable was actually paid to the Bureau of Internal Revenue before actual refund is made. After the preparation of the refund check, the Accounting Division shall notify the taxpayer of its refund in the form letter attached as Annex "C". V. Tax Credit : Unless the corporate taxpayer specifically requests for a tax credit of the amount refundable as shown in the annual or adjustment return, the claim shall be considered a request for refund and shall be processed in accordance with the procedure outline in paragraph IV of this Revenue Memorandum Order. After ascertaining that the amount to be credited has actually been paid as represented by the taxpayer to the Bureau of Internal Revenue, the Accounting Division shall immediately notify the taxpayer of his tax credit using the form letter attached as Annex "D". The "Tax Credit Memo" duly signed by the Commissioner of Internal Revenue (Annex "E") should be enclosed with the "Tax Credit Notification". VI. Transmittal of Returns to Data Processing Center : After the preparation of the "Tax Refund Notice" or the "Tax Credit Notification", the original copy of the income tax return with the attachments shall be forwarded to the Data Processing Center for computer processing. VII. Effectivity : The provisions of this Revenue Memorandum Order are effective immediately and all those concerned are enjoined to be guided accordingly. The 1973 refundable corporate returns which have been transmitted to the Data Processing Center, shall be returned to their respective regional offices for immediate processing in accordance with this Revenue Memorandum Order. MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 ANNEX "A" AUDIT SHEET FOR CORPORATE ANNUAL INCOME TAX RETURNS SHOWING OVERPAYMENT OF INCOME TAXES PAID _________________________________ ____________________ Corporate Name Taxpayer Account No. _________________________________ ____________________ Address Assessment No. Period Covered: CALENDAR/FISCAL Year Ending ____________________ Gross Income per Annual Return P ____________ Total Deductions ____________ Net Income per Annual Return P ____________ Add/Deduct: Adjustments Nature Amount _____________________ P ____________ _____________________ ____________ _____________________ ____________ Total/Net Adjustments P ____________________ Net Income as Audited P ____________________ Amount of Tax Due P ____________________ Less: Tax Credits (Specify) P _____________________ Balance of Tax Due P ____________________ Deduct: Quarterly Tax Payments P ____________________ Net Income Amount Quarter for the quarter O.R. No. Date of Tax _________ _______________ ________ ______ P _________ _________ _______________ ________ ______ _________ _________ _______________ ________ ______ _________ Total P _________ Deduct: Delinquency Penalties Paid _________ Total Amount to be Credited P ________________ Amount for Refund/Credit P ============== Audited by : _______________________ Examiner Date : _______________________ Recommending Approval: _______________________ Regional Director APPROVED : ______________________________ Revenue Operations Head (Assessment) (Attach Xerox copies of Official Receipts) ANNEX "B" AUTHORITY FOR TAX REFUND/CREDIT ________ Date Subject: ___________________________________ ____________________ Corporate Taxpayer T.A.N. ___________________________________ ____________________ Address Assessment No. Period Covered: Calendar/Fiscal Year Ending ________________________ Amount Refundable: ________________________ ________________________ (in words and figures) MEMORANDUM FOR: The Chief, Accounting Division Bureau of Internal Revenue Manila That Office may refund/grant a tax credit in the amount of _____________________ to the aforementioned corporate taxpayer, representing overpayment of income taxes paid for the period indicated above, after ascertaining the authenticity of the official receipts presented. The computation of the amount refundable/of the credit is shown in the attached audit sheet. _______________________ Revenue Operations Head (Assessment) APPROVED: ______________________________ Commissioner of Internal Revenue ANNEX "C" TAX REFUND NOTICE _________________ Date __________________________ ____________________ Corporate Taxpayer Taxpayer Account No. __________________________ Address Gentlemen : Please be informed that your claim for a tax refund, representing overpayment of income taxes paid for the calendar/fiscal year ending ____________________ in the amount of ______________________ has been approved. You may now send your duly authorized representative to the Chief, Accounting Division, at the 6th Floor, BIR Building (formerly the DBP Building) corner David and Muelle del Banco Nacional Sts., Manila, to take delivery of the check. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue By: _______________________________ Revenue Operations Head (Management Planning) ANNEX "D" TAX CREDIT NOTIFICATION _________________ Date __________________________ ____________________ Corporate Taxpayer Taxpayer Account No. __________________________ Address Gentlemen : Pursuant to your request for a tax credit, representing overpayment of income taxes paid for the calendar/fiscal year ending ___________________, please be informed that a tax credit in the amount of P __________________ has been approved in your favor. Application of this tax credit to any internal revenue tax liability may be made presenting the enclosed Tax Credit Memo to the Chief, Tax Accounts Division, Finance Building, Manila. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue By: ________________________ Revenue Operations Head (Management Planning) I N S T R U C T I O N S Your tax credit with the BIR or any portion thereof can be applied to any outstanding tax liability you have with the Bureau upon a written request to the Commissioner of Internal Revenue , Attention : Tax Accounts Division, Finance Bldg ., Manila . If you apply this tax credit to an income, business or transfer tax liability, attach your request to your tax return upon filing the same. ANNEX "E"