Prescribing the Procedures on the Receipt, Transmittal and Processing of Internal Revenue Tax Returns of Large Taxpayers Whose Principal Place of Business is Located in Metro Manila

December 9, 1993 REVENUE MEMORANDUM ORDER NO. 53-93 SUBJECT : Prescribing Additional Guidelines for the Implementation of RMO 45-93 Dated September 29, 1993 Including the Use of BIR Form 189-A (Application of Compromise Settlement/Abatement of Penalties under RMO 45-93) and BIR Form 189 (Action on Application of Compromise Settlement/Abatement of Penalties) and the Procedures for Processing the Same TO : All Internal Revenue Officers and Others Concerned I. OBJECTIVES: This Order is issued to: A. Establish an effective system to monitor internal revenue tax returns filed and payments/remittances made by Large Taxpayers whose principal place of business is in Metro Manila; B. State the delineation of functions of each office/division/ unit/bank involved in the receipt and processing of tax returns of Large Taxpayers; and acd C. Enhance further efforts to improve revenue collections. II. HIGHLIGHTS OF PROCEDURES: A. Large Taxpayers (LTs) who have been identified and notified by the BIR pursuant to Republic Act No. 7646, as implemented by Revenue Regulations No. 12-93, shall file all internal revenue tax returns, papers and statements covered in said regulations and pay corresponding taxes due at any of the banks of their choice in accordance with same regulations. B. The centralization of venue will not affect the present scheme of crediting revenue collections among Revenue District Offices (RDOs). Collections from Large Taxpayers shall be credited to the RDO in accordance with existing procedures. In the case of payments/remittances made by head offices of Large Taxpayers in behalf of their branches or units covered by returns transmitted by such branches/units to the head office, collections shall be credited to the RDO having jurisdiction over the branch/unit where withholding was done or the returns were prepared. This applies to taxes which at present are allowed to be paid or remitted in the revenue district office having jurisdiction over the taxpayer's place of actual operations (e.g., withholding taxes, percentage taxes). The Large Taxpayers Division shall be responsible for allocating such collections to the respective Revenue District Offices and transmitting the corresponding returns to said offices. aisa dc C. In case of tax payments in check made by a head office for its taxes and that of its branches/units, one check may be issued for the amount to be paid for the returns of the head office and its branches. However, the receipt of the covering transmittal and attached supporting returns ( of the head office and its branches/units) shall be acknowledged separately with each return having a separate validation. D. The Large Taxpayers Division shall regularly provide each accredited bank with an updated listing of Large Taxpayers who have chosen the bank to receive their returns, statements and/or payments. Penalties to be imposed on Large Taxpayers shall be computed on the same basis as penalties on other taxpayers in accordance with existing law and procedures. E. Color-coded pre-printed stick-on TIN labels shall be used and affixed by Large Taxpayers to the original of returns/ATAPs for taxes covered in the above regulations to facilitate their identification. F. Accredited bank head offices or designated branches shall segregate returns/ATAPs of Large Taxpayers from those of other taxpayers and shall prepare separate Batch Control Sheets for these returns. G. The Large Taxpayers Division (LTD) shall be primarily responsible for ensuring prompt compliance by Large Taxpayers relative to internal revenue tax filing and payment/remittance requirements. Specifically, the LTD shall assume the following responsibilities: 1. Pick up from bank head offices or designated branches copies of Batch Control Sheets and supporting documents pertaining to Large Taxpayers and distribution of the same to proper offices/units of the Bureau; cd 2. Undertake initial follow-up and verification on Large Taxpayer stop/non-filers, including the preparation and delivery of Reminder Letters. Subsequent verification and/or investigation shall be done by the proper investigating offices in accordance with existing procedures; and 3. Process of tax returns/ATAPs and Batch Control Sheets (BCS) A and B and generation of related reports undertaken by the CISS per RMO No. 16-92, insofar as Large Taxpayers are concerned. H. Reporting of collections from Large Taxpayers in relation to total collections shall be made as follows: 1. In the collection reports submitted by RDOs (BIR Form No. 12.09), collections from Large Taxpayers shall be combined with collections from all other taxpayers as the objective of these reports is mainly to determine collections by RDO and type of tax. Hence, there will be no change in the reporting format/requirements as regards BIR Form No. 12.09 reports. Collections to be reported by RDOs in Metro Manila shall not include those from returns prepared by Large Taxpayers' branches/units outside the RDO transmitted to their head office as mentioned in letter B above. aisa dc 2. Reports of collections from Large Taxpayers by type of tax or other basis of classification shall be generated by the LTD. III. PROCEDURES: The offices involved in the receipt and processing of returns, papers, statements and payments of Large Taxpayers are enumerated hereunder with their corresponding functions and responsibilities. A. Bank Head Office/Designated Branch 1. Receive three (3) copies of tax return/ATAP from Large Taxpayer (LT) except in case of ATAP for Excise Taxes which shall be in four (4) copies, the original of which has a color-coded pre-printed TIN label, to be distributed as follows: Original - Large Taxpayers Division (LTD) Duplicate - Taxpayer Triplicate - RDO or Investigating Division/Unit Quadruplicate - ATAP Issuing Office ( for Excise tax ATAP only) 2. Verify whether the taxpayer: a. Has sticked the color-coded pre-printed label on the original copy of the return/ATAP. Deny acceptance of return/ATAP without the appropriate label and advise the taxpayer to secure said label from the LTD; b. Has officially designated the bank to receive its returns and/or payments based on the list of Large Taxpayers provided by the LTD; c. Has fully accomplished and signed all copies of the tax returns; and d. Is not a late filer; 3. If the taxpayer is a late filer or has not officially designated the bank to receive its tax returns and/or payments, inform him that penalties are imposed for late filing of return, late payment of tax and/or filing or payment at other than officially designated banks, as the case may be. acd 4. Compute the corresponding penalties if the taxpayer is willing to pay the same; if not, stamp "Increments Not Paid" on every copy of the tax return filed. 5. Receive tax returns/ATAPs following the procedures prescribed in III.A.7 to III.A.9 of RMO No. 29-91. 6. Segregate immediately Large Taxpayers' returns/ATAPs from other tax returns/ATAPs received during the banking day to facilitate preparation of the corresponding Batch Control Sheets for Large Taxpayers' returns/ATAPs. 7. At the end of the banking day, segregate Large Taxpayers' tax returns/ATAPs with payment in cash/check from those without any cash/check payment. 8. Segregate original from the triplicate copy of the tax returns/ATAPs and batch them separately up to a maximum of twenty-five (25) returns per batch. 9. Prepare separately at the end of each banking day Batch Control Sheets A and B (BCS-A and BCS-B) for Large Taxpayers' Returns/ATAPs in accordance with the formats prescribed in Annexes C1 and C2 of Revenue Memorandum (RMO) No. 29-91, as follows: a. Five (5) copies of BCS-A, if Head Office, or six (6) copies, if Designated Branch, for each batch of tax returns/ATAPs with cash/check payments on taxes due and/or penalties received, to be distributed as follows: Original - LTD file Duplicate - Processing Section, Revenue Accounting Division (RAD) Triplicate - COA Resident Auditor Quadruplicate - RDO Quintuplicate - Bank Head Office (BHO) file Sextuplicate - Bank Branch file b. Three (3) copies of BCS-B, if Head Office, or four (4) copies, if Designated Branch, for each batch of tax returns/ATAPs without cash/check payments, such as those fully paid with TDM, zero-rated, even, refundable and no transaction returns, to be distributed as follows: Original - LTD file Duplicate - RDO Triplicate - Bank Head Office (BHO) file Quadruplicate - Bank Branch file Note: BCS for all other tax returns shall be prepared separately. 10. Number all Batch Control Sheets for Large Taxpayers prepared during the year consecutively and separately by type of BCS (BCS-A or BCS-B) starting with 80001 for the first batch of Large Taxpayers returns/ATAPs for each BCS type received at the beginning of the year, 80002 for the second batch, and so on, regardless of whether there are less than 25 Large Taxpayer returns/ATAPs received per banking day. For example: If during the first day of filing Large Taxpayer tax returns for the year 1993 less than 25 Large Taxpayer returns were filed, the BCS-A or BCS-B of the batch of returns will be numbered 93-80001. On the other hand, if during the first day of filing there were 35 Large Taxpayer tax returns filed, there will be two batches, the first BCS-A and BCS-B containing 25 tax returns will be numbered 93-80001 and the second BCS-A or BCS-B containing 10 tax returns will be numbered 93-80002. acd 11. For designated bank branches: a. At the end of each banking day, report to the Bank Head Office (BHO) by fax, telephone, telex, radiogram or any means of fast communication the total amount of taxes collected from all taxpayers in the usual manner in accordance with Revenue Memorandum Order No. 29-91. b. Forward quintuplicate copies of BCS-As and triplicate copies of BCS-Bs of Large Taxpayers to BHO within three (3) days from date of receipt of tax returns/ATAPs; c. Retain corresponding sextuplicate copies of BCS-As and quadruplicate copies of BCS-Bs for file. 12. For Bank Head Office: a. Prepare the Advance Report of Daily Collections (ARDC), Consolidated Report of Daily Collections (CRDC) and BIR Form No. 12.58, if any, in the usual manner in accordance with RMO No. 29-91 and Revenue Regulations (RR) No. 5-84, covering collections from all taxpayers. Data on branches' collections from Large Taxpayers to be included in the CRDC will be based only on the quintuplicate copies of the BCS-A furnished by these branches. Note: The above reports shall be forwarded to corresponding offices in accordance with the procedures prescribed in RMO No. 29-91. 13. Attach to each original copy of BCS-A and BCS-B the corresponding batch of original copies of the Large Taxpayers' returns/ATAPs for the LTD. Likewise, attach to the quadruplicate copies of BCS-As and duplicate copies of BCS-Bs the corresponding batch of triplicate copies of tax returns/ATAPs for the RDO. cd 14. Bundle the BCSs of Large Taxpayers, together with attached returns/ATAPs according to office destination as provided in nos. 9 and 13 above. All BCSs of Large Taxpayers with corresponding tax returns/ATAPs, including the duplicate and triplicate copies of BCS-A intended for RAD and COA Resident Auditor, shall be picked-up only by the designated representative of the LTD based on an agreed schedule between the bank and the BIR. Note: For Excise Tax ATAPs, the quadruplicate copy shall be picked up by designated Excise Tax/RDO personnel in accordance with procedures/special arrangement between the taxpayer and the ATAP-Issuing Office pursuant to RMO No. 1-93, as amended by RMO No. 18-93. 15. Coordinate with PO/CR Monitoring Division concerning NPCS Exception Reports on incomplete/inaccurate reporting and remittances of collections from Large Taxpayers. B. Large Taxpayers Division 1. Furnish each bank authorized to receive returns/papers/ statements and/or payments of Large Taxpayers with a list of Large Taxpayers who have chosen said bank to receive their returns and/or payments. Update such list as required whenever changes in the choice of banks are communicated by Large Taxpayers. 2. Inform Large Taxpayers of the designated branches of their chosen banks which are authorized to receive returns and/or payments of Large Taxpayers. 3. Pick-up from bank head offices/designated branches in accordance with agreed schedule original copies of BCS-As and BCS-Bs of Large Taxpayers together with the corresponding bundled batch of original copies of returns/ATAPs for the LTD, quadruplicate copies of BCS-As, and duplicate copies of BCS-Bs, together with the corresponding bundled batch of triplicate copies of returns/ATAPs for the RDOs and the duplicate and triplicate copies of BCS-A for distribution to the Revenue Accounting Division (RAD) and the COA Resident Auditor, respectively. 4. Stamp "RECEIVED" and initial on copies of BCS reports from banks, indicating therein the date of receipt and record the reports sequentially in the register book. 5. Check the completeness and correctness of the reports/returns received. Complete/correct reports/returns must conform with the following requirements: a. Original copies of the returns have the appropriate stick-on TIN labels for Large Taxpayers; b. All tax returns are stamped "RECEIVED" and those with cash and/or check payment separately validated; c. BCS reports bear all the following required data: 1) Name and address of bank; 2) Bank code number; 3) BCS number; 4) Date of collection; 5) Date of preparation; and 6) Nature and kind of tax payment; d. All taxpayers listed in the BCS reports have corresponding tax returns/ATAPs; and e. Reports submitted are signed. 6. Prepare monthly in three (3) copies NPCS Exception Reports on Large Taxpayers (Annex A) based on the discrepancies or inconsistencies noted in the documents to be distributed as follows: Original - PO/CR Monitoring Division Duplicate - BHO (thru PO/CR Monitoring Div.) Triplicate - LTD file 7. Forward NPCS Exception Reports on Large Taxpayers to offices concerned not later than the 25th day of the following month for reports received in a particular month. 8. From the batches of triplicate copies of returns, segregate out-of-district returns/ATAPs for each Revenue District, e.g., returns prepared by Large Taxpayers' branches/units outside the revenue district where their head office is located. Prepare a separate transmittal list (Annex B) of such out-of-district returns indicating therein the bank branch code and BCS number of the batch where the tax returns were taken among others and attach thereto the corresponding tax returns/ATAPs. 9. Forward quadruplicate copies of BCS-A, duplicate copies of BCS-B and transmittal lists of out-of-district returns/ATAPs, together with corresponding returns/ATAPs to respective RDOs. 10. Forward duplicate and triplicate copies of BCS-A to RAD and COA Resident Auditor, respectively. 11. Maintain a Register of BCS reports received for each bank showing the date of receipt and BCS number. aisa dc 12. Coordinate with Computer and Information Systems Service (CISS) regarding data and file specifications to ensure compatibility of data and reports generated by the Large Taxpayers Division with the overall computerized system adopted by CISS. 13. Encode from original copies of Large Taxpayer returns/ATAPs and BCS reports data pertaining to returns filed and payments made by each Large Taxpayer. 14. Generate computer totals of the different batches and match them with their respective BCS-A totals. Note any discrepancy discovered. 15. Generate the following and forward copies to the following offices concerned not later than the 25th day of the following month for returns during a particular month: Report Office Concerned a. Batch Discrepancy Report for - Processing Section, Large Taxpayers' Returns/ RAD ATAPs (Annex C) b. Bank Collection Control - PO/CR Monitoring Ledger for Large Taxpayers Division (Annex D) - RAD c. List of Late Batches for - PO/CR Monitoring Large Taxpayers' Returns/ Division ATAPs (Annex E) 16. Generate the following reports that will provide basic information on Large Taxpayers and forward to offices concerned, copy furnish Collection Service and/or Collection Branch: a. Monthly Alphabetical List of Large Taxpayer-Filers by Type of Tax (containing the name of drawee bank, check number and amount paid by taxpayer) 1) By revenue region Regional Office concerned 2) By city/municipality Revenue District Office concerned b. Statistical data, as required Statistical Analysis Div. or other offices concerned 17. Prepare the Monthly Summary of Large Taxpayer Returns Filed in three (3) copies using the format in Annex F and distribute to the following offices not later than the 25th day of the following month for returns received for a particular month: cd Original - Statistical Analysis Division Duplicate - CISS Triplicate - LTD file Note: This is a report on Large Taxpayers as a separate class of taxpayers and data herein are incorporated in the Monthly Summary of Returns Filed submitted by RDO's to the Statistical Division under RMO No. 2-92. Hence, in the recording of the total number of returns filed, the report of the RDO shall suffice. Such report will not, however, show the breakdown of returns into Large Taxpayers' and other taxpayers'. 18. Generate Alphabetical List of Large Taxpayer Stop/Non-Filers by RDO and by type of tax, copy furnish the RDO concerned and the CISS. 19. Make an immediate follow-up on delayed filers and/or non-filers as determined based on the above-mentioned Alpha List thru telephone or other fast means of communication. 20. Generate in two (2) copies initial Reminder Letters (Annex G) to LTs who disregard call-ups by LTD within ten (10) days from receipt of tax return, for distribution as follows: Original - Taxpayer Duplicate - LTD file 21. Deliver personally to stop/non-filers the original copies of Reminder Letters. aisa dc 22. Generate in duplicate follow-up Reminder Letter (Annex___) and send to Large Taxpayers who do not respond to the initial Reminder Letter after ten (10) days from receipt of said initial Letter. 23. Conduct inquiry with the Bank Head Office/Bank Branch concerned in case taxpayer responds to the initial follow-up or to any of the Reminder Letters sent by LTD. If the tax return/evidence presented by the taxpayer is authentic, report to PO/CR Monitoring Division the non-transmittal/reporting of tax returns filed. Otherwise, refer the case to RDO/Investigating Office concerned for investigation. 24. Monitor results of audit/verification conducted on Large Taxpayer stop/non-filers based on the monthly status reports submitted by the RDOs. 25. Update Alphabetical List of Large Taxpayer Stop/Non-filers based on reports submitted by RDOs. 26. Transmit original copies of processed tax returns, together with copies of the corresponding BCSs, to CISS for further processing. 27. Maintain a complete and systematic file of BCS reports by bank. 28. Request from CISS pre-printed color-coded TIN labels and release to Large Taxpayers as needed. C. Revenue Accounting Division (RAD) 1. Reconcile Batch Discrepancy Reports for Large Taxpayers received from LTD against its copies of BCSs. Make the necessary adjustment and inform LTD of the same. cd i 2. Prepare the usual NPCS Exception Reports on inaccurate/late reporting using the Schedule of Delayed Reporting/Remittances of Internal Revenue Tax Collections thru Banks and submit to PO/CR Monitoring Division for proper action. Note: The procedures stated in Section III G of RMO No. 29-91 shall be followed by RAD in the processing of all documents concerning Large Taxpayers. 3. Prepare Daily Report of Collections per ARDC, Daily Collection Reports per BCS and CRDC and Monthly Reports of Collections per CRDC and BCS with adjustment, if any, in accordance with procedures in RMO No. 29-91. D. Revenue District Office (RDOs) 1. Receive from LTD quadruplicate copies of BCS-As, duplicate copies of BCS-Bs of Large Taxpayers and transmittal lists, if any, together with corresponding bundled batch of triplicate copies of Large Taxpayer Returns/ATAPs. 2. Stamp "RECEIVED" and initial on copies of BCS reports, indicating therein the date of receipt, and record the reports sequentially in the register book. 3. Maintain a Register of BCS reports received, for each bank, showing the date of receipt and BCS number. 4. Assign Document Locator Number. (DLN) to tax returns/ATAPs of Large Taxpayers as follows: a. For income tax returns (ITRs) of Large Taxpayers, follow provisions of RMO Nos. 9-91 and 10-91. b. For other Large Taxpayer returns/ATAPs, follow provisions of paragraph 11.8 of RMO No. 29-91 adding thereto the line number in the BCS, i.e., DLN will consist of Bank Branch Code - BCS No. - TIN - Line No. of taxpayer in BCS. cdt 5. Receive copy of Monthly Alphabetical List of Large Taxpayer Stop/Non-Filers generated by LTD. 6. Conduct verification of Large Taxpayer stop/non-filers who did not respond to the reminder letters sent by LTD. 7. Prepare report addressed to CISS on Large Taxpayers who stopped filing due to closure of business as discovered during verification stage. Furnish a duplicate copy of the same to the LTD and retain a triplicate copy for file. 8. Prepare report to Tax Fraud Evaluation Committee on tax evaders discovered during the verification of Large Taxpayer stop/non-filers. Furnish a duplicate copy of the same to the LTD and retain a triplicate copy for file. 9. Furnish LTD with an updated List of Large Taxpayer Stop/Non-Filers based on the results of the above verification. Retain duplicate copy for file. 10. Prepare and distribute copies of the Monthly Summary of Tax Returns Filed covering all returns, including Large Taxpayers' in the manner prescribed in RMO No. 16-92. 11. Distribute returns of Large Taxpayers to appropriate offices/units who shall conduct audit/investigation of Large Taxpayers in accordance with existing procedures on the audit/investigation of taxpayers in general. 12. Prepare report of result of audit/investigation conducted on Large Taxpayers in accordance with existing procedures and furnish LTD with copy of said report. Note: Nos. 11 and 12 shall apply even to designated investigating offices other than Revenue District Offices. E. PO/CR Monitoring Division 1. Receive NPCS Exception Reports on collections from Large Taxpayers generated by LTD and RAD. 2. Communicate to the Bank such exception reports received and bill corresponding penalties, if necessary. 3. Prepare report on results of the Division's action on the non-compliance of banks with reporting/remittance requirements based on above-mentioned exception reports relative to Large Taxpayers following the format in Annex I and copy furnish the LTD. IV. REPEALING CLAUSE : The provisions of existing orders and other issuances inconsistent herewith are hereby revoked or amended accordingly. V. EFFECTIVITY: This Order takes effect immediately. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue ANNEX A NPCS Exception Report on Large Taxpayers ANNEX B List Returns of Large Taxpayers Branches/Units ANNEX C Batch Discrepancy Report for Large Taxpayer Returns/ATAPS ANNEX D Bank Collection Control Ledger for Large Taxpayers ANNEX E List of Late Batches for Large Taxpayers ANNEX F Monthly Summary of Large Taxpayer ANNEX G Reminder Letter (For Large Taxpayers) ANNEX H Follow-up Reminder Letter (For Large Taxpayers) ANNEX I Report of Action Taken on NPCS Exception Reports on Large Taxpayers Referred to PO/CR Monitoring Division