Pilot Implementation of a Technical Procedures Unit in the Collection Division, Revenue Region No. 12, Bacolod City

August 6, 1997 REVENUE MEMORANDUM ORDER NO. 48-97 SUBJECT : Pilot Implementation of a Technical Procedures Unit in the Collection Division, Revenue Region No. 12, Bacolod City TO : All Internal Revenue Officials and Employees of Revenue Region No. 12, Bacolod City I. OBJECTIVES : This Order is being issued for the following purposes: 1. To create a Technical Procedures Unit for pilot testing in Revenue Region No. 12, Bacolod City; and 2. To specify the policies and guidelines governing the operations of the Unit. II. POLICIES AND GUIDELINES : The following policies and guidelines shall be observed in the creation and administration of the Technical Procedures (TP) Unit: 1. The TP Unit shall be attached to the Collection Division of Revenue Region No. 12, Bacolod City. 2. Initially, the TP Unit shall be staffed by one (1) revenue official, who shall act as both TP Unit Chief and Technical Procedures Advisor. The TP Unit staff shall be augmented once the volume of work at the Unit has reached sufficient levels to warrant the assignment of additional personnel. 3. The TP Advisors shall provide assistance and technical advice to the Revenue Collection Officers of the various Revenue Districts of Revenue Region No. 12, relative to the following collection functions: 3.1 Seizure and sale of real or personal property; 3.2 Sale and disposal of forfeited and acquired assets; 3.3 Review and evaluation of compromise settlements; 3.4 Creation and maintenance of the Regional Tax Lien Data Base; and 3.5 Identification of non-filers for one-time tax liabilities. 4. Chapter IX of the BIR Collection Manual (Annex A hereof) shall specify the duties and responsibilities of the Technical Procedures Advisors. 5. The Chief of the TP Unit shall report to the Collection Division Chief on the progress of the Unit's pilot operations. 6. The Collection Division Chief shall exercise direct supervision over the TP Unit Chief, and shall report to the Assistant Commissioner (Collection), through the Revenue Regional Director, on all developments in the pilot operations of the Unit. The Revenue Regional Director shall, in turn, have full control over the TP Unit Pilot Project. 7. The pilot test operations shall be evaluated until August 30, 1997, to determine appropriate adjustments, if any, that must be made to the Project, and to assess the feasibility of establishing similar TP Units at other Regional Offices. III. REPEALING CLAUSE This Order shall NOT amend or repeal any Revenue Memorandum Order, Revenue Administrative Order, or any promulgation of similar nature, concerning the performance of the Bureau's collection function. IV. EFFECTIVITY This Order shall take effect immediately. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue ANNEX A CHAPTER IX TECHNICAL PROCEDURES 901 SEIZURE AND SALE OVERVIEW: The Bureau of Internal Revenue Manual (BIRM) will serve as the overall resource and guide for the actions of Technical Procedures Advisors in assisting District revenue officers to conduct the seizure and sale of property. The National Internal Revenue Code (NIRC) and all current promulgations of the Commissioner will serve as additional resources for the Technical Advisor. The role of the Technical Advisor in seizures and sales will be as follows: 1) Serve as a technical resource for field revenue officers before their seizure of real or personal property; 2) Receive, control and review all required seizure and sale documents prepared and submitted by revenue officers; 3) Help and advise the revenue officer throughout the seizure and sale process; 4) Serve as one of the two employees designated to help the revenue officer at the sale. The following describes the actions of the Technical Advisor in the area of seizure and sale. 901.1 PRE-SEIZURE 1) Before issuance of the Notice of Levy to the taxpayer, the revenue officer will contact the advisor to discuss the anticipated seizure and sale of the taxpayer's property. This discussion will include: a) The statute of limitations prescription date and WDL service date; b) The description of the property; c) The revenue officer's personal observation of the property; d) The valuation of the property in relation to the tax liability ( including the basis for the valuation ); e) The revenue officer's opinion concerning the potential sale of the property ( including factors, such as squatters, location and condition of the property ). 2) Based upon the above, the advisor will help the revenue officer to determine if the BIR should seize the property. If it is determined that the property will not be seized, the advisor will prepare a memorandum to the revenue officer stating the facts and the reason(s) for not seizing the property. The recommendation not to seize the property could include the following factors: a) There are squatters living on the property and the cost of removal for the buyer would be too great in relation to what the property could be sold for; b) The property is not useable or it is in such poor condition that the property could not be sold; c) If the property is agricultural, the revenue officer has contacted the local Land Bank and they have decided that the Land Bank would not be able to sell the property; d) The property cannot be used by the BIR or any other government agency or department; e) The value of the property to be seized is very small in relation to the tax liability; f) The cost of seizure and sale would consume most of the potential sale proceeds; g) Any other condition that would make the property not fit for sale to a willing buyer at the tax sale or as acquired property. 3) If it is determined the property will be seized, the revenue officer will note in the case history the relevant factors favoring the seizure discussed with the advisor. 4) Before the service of the Notice of Levy, the revenue officer will contact Technical Procedures to obtain a seizure serial number ( see section 901 . 2 ). 901.2 DOCUMENT CONTROL AND REVIEW 1) Technical Procedures is responsible for assigning seizure serial numbers and maintaining a permanent serial number control register for all seizures conducted within the region ( Exhibit 900-A ). 2) During the seizure and sale process, each seizure and sale document should be transmitted to Technical Procedures within five working days after the related action has taken place. Each document must be timely reviewed upon receipt in Technical Procedures. Upon receipt of the initial seizure documents, Technical Procedures will establish an "Open Seizure" file. 3) A transmittal form ( Exhibit 900-B ) will be used to transmit each seizure document from the revenue officer to Technical Procedures. 4) Copies of the following documents will be sent forward by the revenue officer for review by the advisor and included in the "Open Seizure" file. These documents will form the initial file and will include: Warrant of Distraint or Levy (WDL), the Notice of Tax Lien, and Form 2801/2802 ( for personal property ) or Form 2802A ( for real property ). See BIRM 300 and BIRM 400. 5) The "Open Seizure" file will be closed after the revenue officer submits the appropriate documents to Technical Procedures reflecting that all seized property has been disposed of. Disposition of property is accomplished through release of levy, or sale, or forfeiture to the government. The advisor must ascertain that all seized property is accounted for accordingly. When a seizure case is closed, all related documents will be placed in the Closed Seizure Files for subsequent disposition. Before placing cases in the Closed Seizure Files, the advisor will ascertain that all required documents were received and reviewed. All closed seizure files will be retained for two years from the property disposition date. 6) A status report should be requested by the advisor of the group manager and revenue officer for any seizure file open beyond 90 days, calling attention to the provision of BIRM sections 301 and 401. 7) Technical Procedures has the responsibility to perform certain review and post-review functions. This review is a multi-purpose review. Its primary purpose is to assure that all required information is present and adequately documented both in the narrative and with supporting documents. 8) A secondary responsibility is to identify any trends that become apparent during the review process. Any noted trends should be the subject of a report to the Regional Director and the Chief, Collection Division. This report should also recommend appropriate remedial action. In addition, the appropriate RDO should receive a copy to ensure measures are taken within the District to correct the process. 9) The Advisors Report Technical Procedures ( Exhibit 900-C ) is designed to be an aid in the Technical Procedures review. It provides a vehicle to make observations to management, furnish advisory information to the revenue officer, and to request additional information if needed. The Advisors Report Technical Procedures form may also be used to recognize professional handling of unique or extremely difficult situations. Part one will be retained in the case file and part two will be sent to the revenue officer through the group manager. Part three will be used as a follow up document if additional information has been requested from the revenue officer. 901.3 SALE OF PROPERTY 1) The advisor will be available at all times to provide advice to the revenue officer on the sale of seized property. The advisor will receive and review the memorandum to the Commissioner requesting the authority to advertise the sale (BIRM 301 or 401). A copy of this memorandum will become a part of the Open Seizure file. This memorandum will be reviewed by the advisor and forwarded to the Regional Director for approval. 2) The advisor will work closely with the revenue officer to assist with the sale of seized property. This assistance can take several forms which, for example, can include the following; a) The advisor will maintain a list of potential bidders on property seized by the bureau. This bidders' list will include the name, address and telephone number of the potential bidder as well as the type of property ( real or personal ) the bidder is interested in buying. b) The advisor will assemble and maintain lists of commonly seized personal property, such as vehicles, equipment, tools, and their values. Using these lists and other available information, the advisor will assist the revenue officer in determining the value or the property seized. c) The advisor will assist the revenue officer in selecting the best types and places to advertise the sale of seized property ( BIRM 301 or 401 ). The advertising can be augmented by using the bidders lists noted above. Potential bidders can be contacted by mailing them a copy of the notice of sale. d) If the sale will be enhanced, the revenue officer can hold an "open house" for the purpose of showing prospective bidders the property being offered for sale. The date and time for the open house can be included in the advertisements for sale, if appropriate. Otherwise, the revenue officer will establish and announce the date and time of the open house as deemed appropriate. The advisor will assist the revenue officer in holding the open house when necessary. e) Should the taxpayer redeem the seized property prior to sale, the advisor will be informed by the revenue officer so the open seizure file can be closed. This notice should be sent to the advisor within five working days after the property has been redeemed by the taxpayer. 3) The advisor will be one of the two BIR employees required to assist the revenue officer at the sale ( BIRM 402 . 3 ). The advisor's assistance at the sale should help the revenue officer deal with unusual issues or problems that might arise during the sale. 4) The advisor will receive and review a copy of the report of sale prepared by the revenue officer ( BIRM 301 . 2 or 405 ). The report will be included in the open seizure file. 902 FORFEITED AND ACQUIRED ASSETS OVERVIEW: The Bureau of Internal Revenue Collection Manual will serve as the overall resource and guide for the actions of Technical Procedures Advisors to assist the district revenue officers to dispose of forfeited and acquired assets. The National Internal Revenue Code and all current promulgations of the Commissioner will serve as additional resources for the Technical Procedures Advisor. The role of the Technical Procedures Advisor in the area of forfeited and acquired assets will be as follows: 1) Provide guidance and assistance to revenue officers enabling them to dispose of acquired assets; 2) Ensure the timely disposition of all forfeited and acquired assets within three years of the transfer of title to the Republic of the Philippines; 3) Receive, control and review all property disposition documents prepared and submitted by revenue officers; 4) Identify and control all income received from income-bearing acquired assets; 5) Establish liaison with other government agencies to facilitate the turn over of acquired assets; 6) Create all necessary controls to follow-up on property sold through a negotiated sale. The following describes the actions of the Technical Advisor in the area of forfeited and acquired property. 902.1 DOCUMENT PREPARATION, CONTROL AND REVIEW 1) The Technical Advisor will be responsible for controlling, reviewing, and assisting revenue officers in the sale and disposition of forfeited and acquired property. 2) If the amount bid for property under distraint is not equal to the amount of the tax, or is very much less than the value of the articles for sale, the Commissioner or an authorized representative may purchase the same in behalf of the national government. A report of forfeited and acquired property will be prepared by the revenue officer and sent to the advisor for review and inclusion in the open seizure file. Upon receipt and review of this report, the advisor will close the open seizure file and establish an "Open Acquired Property" file. 3) Technical Procedures is responsible for assigning all acquired assets a serial number and maintaining a permanent serial number control register and Open Acquired Asset file for all acquired assets within the region ( Exhibit 900-D ). All documents relating to the sale of forfeited and acquired assets will be transmitted by the revenue officer to the advisor for review and retention in the Open Acquired Asset file. The revenue officer will use The Seizure and Sale and Acquired Assets Transmittal Sheet to transmit these documents to the advisor. 4) Copies of the following documents will be sent forward by the revenue officer to be reviewed by the advisor and included in the Open Acquired Asset file. The initial file will consist of the following documents: Declaration of Forfeiture of Real Property, Analysis of Seized and Forfeited Properties, Consolidation of Titles of Absolutely Forfeited Real Properties in Favor of the Republic of the Philippines. These documents are in addition to the documents from the prior Open Seizure File. 5) A status report should be requested by the advisor of the group manager and revenue officer for any acquired property open beyond 90 days after being acquired by the national government. Subsequent reports will be requested quarterly from the district revenue officer. 6) The "Open Acquired Property" file will be closed after the revenue officer submits the appropriate documents to Technical Procedures reflecting that the acquired asset has been disposed of. Disposition of property is accomplished through public auction, negotiated sale, turn over to the proper government agency for disposition or utilization, or kept for official use. The advisor must ascertain that all acquired property is accounted for accordingly. When acquired property has been sold or transferred for official use, all related documents will be placed in a corresponding folder and reported to both the Regional Director and to the Acquired Assets Monitoring Section, Collection Programs Division National Office. Before placing cases in closed files, the advisor will ascertain that all required documents were received and reviewed. The closed acquired property files will be retained for two years. 7) Technical Procedures has the responsibility to perform certain review and post-review functions. This review is a multi-purpose review. Its primary purpose is to assure that all required information is present and adequately documented both in the narrative and with supporting documents. 8) A secondary responsibility is to identify any trends that become apparent during the review process. Any noted trends should be the subject of a report to the Regional Director and the Chief, Collection Division. This report should recommend appropriate remedial action. In addition, the appropriate RDO should receive a copy to ensure measures are taken within the District to correct the process. 902.2 SALE AND DISPOSITION OF ACQUIRED ASSETS 1) It will be the responsibility of the advisor to evaluate each acquired asset and to determine the best possible method of disposition. Once the advisor has made that determination, the advisor will assign the acquired asset to the appropriate revenue officer for disposition. Generally, it will be the revenue officer who originally seized the property who will be assigned the case for disposition. This evaluation, analysis and asset assignment should be completed within thirty days of establishing the Open Acquired Asset file. 2) The advisor will be available at all times to provide guidance and assistance to the revenue officer on the sale or disposition of the acquired asset. The advisor will receive and review the Analysis of Acquired Assets Forms and/or the Survey of Property prepared by the district revenue officer ( refer to BIRM 703 ). A copy of this document will become part of the Open Acquired Property file. 3) The advisor will receive and review for accuracy and correctness, the Affidavit of Consolidation of Titles ( Exhibit 700-B ). The advisor will establish controls to insure that this document is prepared and recorded no later than one year and 30 days from the date of registration of the Declaration of Forfeiture in the Office of the Register of Deeds ( refer to BIRM 705 ). 4) The advisor will identify all acquired properties and determine if they are income-bearing. The advisor will establish a special control for these income-bearing properties which will identify the kind of income, the source of payment, and the frequency and amount of payment ( Exhibit 900-E ). The advisor will notify the revenue officer assigned to dispose of the acquired property and advise the revenue officer to initiate collection of the income from the acquired property. The advisor will receive and review the original, duplicate and triplicate copies of the semi-annual Report of Income-Bearing Acquired Assets. After review, the original will be forwarded to the Finance Division, the duplicate will be forwarded to the Regional Collection Division and the triplicate will be placed in the Open Acquired Asset file ( refer to BIRM 706 ). 5) The advisor will serve as liaison with other government agencies within the region to determine if any of these agencies could use properties acquired by the Bureau. If another government agency does have an interest in forfeited or acquired property, the advisor will contact the revenue officer and advise him to complete the transfer of title ( refer to BIRM 709 . 1 and 709 . 2 ). The advisor will receive and review the Deed of Transfer from the district revenue officer. If it is correct and complete, the advisor will forward it through the Regional Director to the Commissioner for signature. If the real property is transferred to the Department of Agrarian Reform, the advisor will receive and review the memorandum report from the district revenue officer reciting the proceedings of the transaction. The advisor will establish a control to ensure the remittance from the Land Bank is subsequently received. 6) Should the property be returned from the Land Bank as "not suitable for agriculture" the advisor will notify the district revenue officer to disposed of the property as noted in BIRM 709.3. 7) Should the revenue officer sell the acquired property through public auction, the advisor will follow procedures set out in BIRM 901.3 ( see also BIRM 400 ). 8) The advisor will assist the district revenue officer to further dispose of the acquired property by selling the property through a negotiated sale. Potential bidders at a negotiated sale could include adjacent land owners or current occupants of the property. If these occupants are squatters and a squatters' association has been formed, they may be contacted for the purpose of submitting a bid. 9) Should the property be sold at a negotiated sale, the revenue officer must prepare a memorandum describing conditions and circumstances of the negotiated sale. This memorandum must be received and reviewed by the advisor. It is critical that the memorandum of negotiated sale clearly and completely describes why the negotiated sale is in the best interest of the government and reflects the maximum amount possible to be realized considering the condition of the property. This memorandum will serve as the basis for the recommendation of approval of the negotiated sale by the Commissioner who will subsequently submit it to the Department of Finance for approval. 10) The advisor will monitor the approval process at both the Bureau and Department of Finance levels and advise the revenue officer of the progress of approval. If there are any special conditions imposed by the buyer, such as a limited time period for the approval of the sale, the advisor will closely monitor the progress of the approval process. 11) Upon approval of the negotiated sale, the advisor will make a copy of the approval and include it in the Open Acquired Asset file. The advisor will receive a copy of the Deed of Transfer from the revenue office. This document will be reviewed and filed with the Open Acquired Asset file. At that time the Open Acquired Asset file can be closed. 903 COMPROMISE SETTLEMENT OVERVIEW: The National Internal Revenue Code, the BIRM, applicable Revenue Memorandums and Circulars shall serve as the overall reference and guide for the actions of the Technical Procedures Advisor. The role of the advisor in the area of Compromise will be as follows: 1) Serve as a technical resource for field revenue officers; 2) Receive, control and review all tax Compromise recommendations from revenue officers within the region; 3) Ensure all tax Compromise recommendations conform to all Bureau requirements; 4) Make recommendations to the Regional Director concerning the acceptance or rejection of the Compromise settlement. The following describes the role of the Technical Procedures Advisor in the area of Compromise settlements. 903.1 ASSISTANCE TO REVENUE OFFICERS The advisor will be contacted by field revenue officers from time to time concerning tax compromise questions. The advisor should be available at all times to respond to these inquiries from revenue officers. Typical questions will cover the sufficiency of the amount offered, assets or expenses listed on the taxpayer's financial statement, etc. 903.2 CONTROL AND REVIEW OF DOCUMENTS 1) The revenue officer will submit the compromise to the advisor for control and review. The revenue officer's recommendation for compromise settlement will include all documents listed in BIRM 205.3. 2) The revenue officer will also submit a Recommendation to Accept Compromise Memorandum ( Exhibit 900-F ) and an Offer Acceptance Report ( Exhibit 900-G ). These two documents will become part of the compromise file and will be used as documentation for the acceptance of the compromise. 3) Upon receipt of the revenue officer's recommendation for compromise settlement, the advisor will establish a case control and file ( Exhibit 900-H ). Each numbered Compromise will be maintained in the Regional Open Compromise Case File for all recommendations received in the Regional office. The case control will be sequentially numbered to identify the Region, District Office, year and number, ( e . g . , the first compromise file received by the advisor in the Bacolod Region, from the Victorias District in 1997 would receive control number 12-76-97-001 ). 4) After establishing the case control and file, the advisor will review each document for accuracy and completeness. The purpose of the review is to insure that all required documents were sent forward and the maximum amount of money was offered based upon the financial condition of the taxpayer. 5) If a careful review of the compromise documents reveals that additional information must be secured, the advisor will contact the revenue officer. The advisor will use Form 5942 to request the additional information. The advisor will explain why additional information is required and provide the revenue officer with a date this new information must be submitted to the advisor. Normally, this requested information should be submitted by the revenue officer within 30 days. 6) If the advisor determines that the offered amount is not sufficient to compromise the tax, based upon the documents submitted, the advisor will return the entire file to the revenue officer. The advisor will attach these documents to the Form 5942 where the advisor will list the reason(s) why the compromise is being returned. 7) Upon review and the compromise file, the advisor determines that the offered amount is sufficient based upon the facts of the case, the advisor will recommend acceptance to the Regional Director for signature and approval, if below P1,000,000. If the compromise amount is more than P1,000,000 the advisor will recommend to the Regional Director to forward the compromise to the Commissioner for final approval. The compromise case control file will be held open until the compromise is approved or rejected by the Regional Director or the Commissioner. Upon acceptance, the advisor will document the case control and file, and notify the revenue officer. At that time, the advisor can close the compromise case control file. 904 TAX LIENS OVERVIEW: Title VIII, Section 220 of the National Internal Revenue Code describes the nature and extent of the tax lien. For the tax lien to be valid against any mortgagee, purchaser, or judgment creditor, the Bureau must first file the Notice of Tax Lien in the Office of the Register of Deeds of the province or city where the property of the taxpayer is situated or located. The NIRC, Section 208 describes the process to be followed by the revenue officer to determine when, where and how a notice of tax lien should be filed for both real and personal property. Because of the overall importance and effect of the tax lien, a copy of all tax liens should be maintained by Technical Procedures at the Regional level in the Regional Lien Data Base. 904.1 REGIONAL LIEN DATA BASE 1) The advisor will receive copies of all filed notices of tax lien from revenue officers within five days of filing. If the tax lien attaches to real property, the revenue officer will also provide a copy of the annotated title that was obtained from the Register of Deeds. These tax liens will be filed alphabetically by the taxpayer's last name. The advisor will be responsible for maintaining the Regional Lien Data Base. 2) The advisor will serve as a resource for all revenue officers concerning the notice of tax lien. Issues to be discussed with the advisor could include, the method and format to release the notice of tax lien; the period of effectiveness of the tax lien; how the lien competes with other creditors; when the lien should be filed, the effect of the prescription period on the notice of tax lien, etc. Contact with the advisor can be made by telephone or in person. 3) The advisor will also receive copies of all Letters for Lifting the Notice of Tax Lien. Upon receipt of this document, the advisor will pull the copy of the original lien, attach the letter for lifting the lien to it and file it in the Closed Lien File. Tax Liens filed in the Closed Lien File will be maintained for a period of two years after issuance of the Letter Lifting the Notice of Tax Lien. The advisor will be responsible for the integrity of both the open and closed lien data bases. 4) The advisor will respond to all inquiries from taxpayers and their representatives concerning an open filed tax lien for accounts no longer being worked by the revenue officer. These inquiries could include accounts that have prescribed and a Letter for Lifting the Notice of Tax Lien had not been filed; accounts that had been paid through a Compromise and the lien had not been released; accounts that had been closed through an ATCA and the lien had not been released; or a reinvestigation has been grated and the Notice of Tax Lien was to have been lifted. Upon investigation and verification, the advisor will issue the appropriate Letter for Lifting the Notice of Tax Lien and provide a copy to the taxpayer. The advisor will then place the tax lien in the Closed Lien File. 905 ONE TIME TAX LIABILITIES OVERVIEW: The Bureau of Internal Revenue Collection Manual will serve as the overall resource and guide for the actions of Technical Procedures Advisors in carrying out their administrative responsibilities in the area of one time tax liabilities. Examples of one time tax liabilities are Estate Tax, Donors Tax, and Capital Gains Tax. The role of the advisor in the area of one time tax liabilities will be to identify non-filers and to secure unfiled tax returns. The advisor will work closely with various government offices/agencies, such as the Civil Registrars Office and the Register of Deeds within the Region. 905.1 ESTATE TAX 1) The NIRC, Title III, Section 83 establishes the requirement for filing Estate Tax Returns. The Estate Tax Return should be filed no later than six months from the taxpayer's date of death. Title III, Section 77 discusses the requirements and tax rates for filing an Estate Tax Return. To insure that all required tax returns are filed within the Region, the advisor will identify non-filers by checking internal and third party information available within the Region. 2) The following offices will be used by the advisor as sources of information to determine if the required Estate tax return has been filed; a) The Civil Registrars Office which is responsible for recording and maintaining a list of all deaths within the municipality; b) The province or city Register of Deeds which is responsible for the registration of properties; and c) The District Office of the Bureau of Internal Revenue which is responsible for issuing a tax clearance certificate, enabling the transfer of the decedent's property. 3) The advisor will obtain a monthly list of all death records from the Civil Registrars office. The advisor will identify with the help of the Civil Registrars office, those taxpayers that are most likely to be required to file an Estate Tax Return. In addition, the advisor may rely upon other sources of information that would assist in the identification of those required to file an Estate Tax Return. Those taxpayers so identified will be contacted by the advisor by mail, informing them of the requirement to file an Estate Tax Return. 4) To identify non-filers, the advisor will match the following information: a) The monthly list of deceased individuals from the Civil Registrars office; b) A list of property transactions as recorded by the Register of Deeds; and c) The tax clearance certificates maintained by the BIR. If the advisor determines that property of the deceased has been transferred [without obtaining the required tax clearance certificate, the advisor will contact the representative of the estate and request the tax return to be filed. Generally, the representative will be given two weeks to file and pay the delinquent tax return. If the representative of the estate fails to file the tax return, the advisor will refer the case to the District Assessment Unit. 905.2 DONOR'S TAX 1) The NIRC, Title III, Section 91 establishes the requirement for filing Donor's Tax Returns. The Donor's Tax Return should be filed no later than 30 days after the gift is made. Title III, Section 92 discusses the requirements and tax rates for filing a Donor's Tax Return. To insure that all required tax returns are filed within the Region, the advisor will identify non-filers by checking internal and third party information available within the Region. 2) The following offices will be used by the advisor as sources of information to determine if the required Donor's tax return has been filed; a) The province or city Register of Deeds; b) The District office of the Bureau of Internal Revenue; and c) Public notices. 3) The advisor will obtain a monthly list of all property transactions from the province or city Register of Deeds. This list will be matched against the tax clearance records maintained within each district office. If the advisor determines that property has been transferred without obtaining the required tax clearance certificate, the advisor will contact the prior owner of the property inquiring about the transfer of the property and the need for a Donor's Tax Return. Generally, the taxpayer will be given two weeks to file and pay the delinquent tax return. If the prior owner of the property fails to file the tax return, the advisor will refer the case to the District Assessment Unit. 905.3 CAPITAL GAINS TAX 1) The NIRC, Title II, Section 44 establishes the requirement for reporting the sale of stock or real property by filing a Capital Gains Tax Return. The Capital Gains Tax Return should be filed no later than thirty days after the transaction. Title II, Section 21 discusses the requirements and rates for computing the tax to be reported on the Capital Gains Tax Return. To insure that all required tax returns have been filed within the region, the advisor will identify non-filers by checking internal and third party information available within the region. 2) For discovering noncompliance with filing and paying the capital gains on the sale of real property, the advisor will use the information provided by the province or city Register of Deeds and the District office of the Bureau of Internal Revenue. 3) To identify non-filers, the advisor will match the following information; the list of property transactions from the Register of Deeds and the tax clearance certificates maintained by the BIR. If the advisor determines that real property has been sold and transferred without the issuance of the required tax clearance certificate, the advisor will contact the previous owner of the property and request the tax return to be filed. Generally, the taxpayer will be given two weeks to file and pay the delinquent tax. If the taxpayer fails to file the tax return, the advisor will refer the case to the District Assessment Unit. ANNEX A Internal Communications Network ACKNOWLEDGMENT RECEIPT This is to acknowledge receipt of the following document(s) in clear and legible condition, from the Corporate Communications Office (CCO) on (date of receipt) __________. (Enumerate documents received): This Office shall transmit to the CCO any comment(s) it may have on the issuance(s)/communication(s), within twenty (20) days from the said date of receipt. ____________________ Signature ____________________ Printed Name of Official ____________________ Designation ____________________ Place of Assignment ANNEX B Internal Communications Network FEEDBACK SHEET MEMO TO: The Head, Corporate Communications Office This refers to _______________________ dated _________ which was (Issuance/Communication) received by this Office on _____________. Please consider our comments, as follows: Please relay action/clarification to this Office the soonest possible time. ____________________ Signature ____________________ Printed Name of Official ____________________ Designation ____________________ Place of Assignment