Guidelines and Procedures in the Issuance of Letters of Authority, Approval of Audit Reports and Issuance of Assessment Notices and Amending Certain Provisions of Revenue Memorandum Order (RMO) Nos. 26-94, 37-94 and 23-97

February 9, 1999 REVENUE MEMORANDUM ORDER NO. 36-99 SUBJECT : Guidelines and Procedures in the Issuance of Letters of Authority, Approval of Audit Reports and Issuance of Assessment Notices and Amending Certain Provisions of Revenue Memorandum Order (RMO) Nos. 26-94, 37-94 and 23-97 TO : All Internal Revenue Officers and Others Concerned I. OBJECTIVES 1. To delineate the power to issue Letters of Authority (LAs) to the Revenue Regional Directors pursuant to Sec. 10 (c) of the Tax Code. 2. To prescribe the revised guidelines and procedures in the issuance of LAs, approval of audit reports and issuance of assessment notices. II. GUIDELINES AND PROCEDURES 1. Section E of RMO No. 26-94 is hereby amended to read as follows: The Revenue Regional Director shall approve and sign LAs for all audit cases within his regional jurisdiction, except: a. cases involving civil or criminal tax fraud which fall under the jurisdiction of the Tax Fraud Division of the Enforcement Service; and b. policy cases under audit by the Special Teams in the National Office. LAs will be issued only for tax returns which correspond with the existing Audit Program. cdt 2. Section C.2.2.1 of RMO No. 23-97 is hereby amended to read as follows: The Regional Director shall issue the corresponding Letter of Authority if indications of fraud have been established, and the same has been confirmed by the Regional Tax Fraud Committee (RTFC), composed of the following: a. Regional Director Chairman b. Assistant Regional Director Vice-Chairman c. Chief, SID Member d. Chief, Assessment Division Member e. Chief, Legal Division Member xxx xxx xxx 3. Section C.2.2.5.1 of RMO No. 23-97 is hereby amended as follows: Where the SID has found substantial evidence of fraud against subject taxpayer but the evidence gathered, under the "best evidence rule", is not sufficient to warrant criminal prosecution, the investigation shall nevertheless be pursued and report of the investigation shall be submitted to the Assessment Division for appropriate review prior to approval by the Regional Director and issuance of demand letter and assessment notice, whenever applicable. 4. Section C.2.2.5.2 of RMO No. 23-97 is hereby deleted. 5. Section III. B of RMO No. 37-94 is hereby amended to read as follows: The Revenue Regional Directors shall approve the assessment notices and demand letters including the reports of investigation, for cases falling within their respective jurisdiction. Likewise, the Regional Directors shall issue Termination Letters as specified under Section III. H. of RMO No. 37-94. 6. The following additional guidelines on the issuance of LAs shall be observed: 6.1 All LA forms for use by the Revenue District Offices and Special Investigation Divisions shall be requisitioned by the Regional Director from the Accountable Forms Divisions in the National Office. 6.2 One LA shall be issued for each taxable year to include all internal revenue tax liabilities of the taxpayer. However, for purposes of verifying tax liabilities of a decedent, one consolidated LA shall be issued to cover the estate tax liability and the income tax liability for the immediately preceding year up to the time of the death of the taxpayer. 6.3 LAs shall be issued only when the duplicate copy of the tax return of the taxpayer for the taxable year covered by the LA is attached thereto. Where the return of a taxpayer selected for audit cannot be located, the LA shall be issued only when there is a certification to that effect by the Head-Revenue Data Center for taxpayers covered by ITS RDOs, and by the Assistant Commissioner, Information Systems Operations Service for taxpayers covered by non-ITS RDOs. LexLib 6.4 The same Revenue Officer/Group Supervisor shall not be allowed to audit the same taxpayer for two consecutive years. 6.5 LAs shall be revalidated only by the Regional Directors when there is an attached progress report of the investigating Revenue Officer(s) duly noted by his Group Supervisor and approved by the Revenue District Officer /Chief, SID. 6.6 The Regional Director shall maintain an LA Register for all LAs issued by him. All issuances, revalidations, cancellations, case closures, assessments and other matters in relation to LAs should be entered in the LA Register. Entries in the LA Register must be complete and updated. III. REPEALING CLAUSE All other revenue issuances inconsistent herewith are hereby modified or repealed accordingly. IV. EFFECTIVITY This Order takes effect immediately upon approval. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue