Intensified Investigation of Restaurants and Other Eating Places

September 6, 1965 REVENUE MEMORANDUM ORDER NO. 55-65 SUBJECT : Intensified Investigation of Restaurants and Other Eating Places TO : All Regional Directors, Chief Revenue Officers and others concerned Reports reaching this Office are to the effect that restaurants, coffee shops, bars and other eating places, especially in Manila and suburbs, are resorting to practices in violation of existing laws and promulgated revenue rules and regulations in their desire to evade taxes, thus resulting to a substantial drain in the government revenues. Among the common practices are the following: (1) Use of two sets of invoices. (2) Non-issuance of sales invoices and/or non-recording of sales. (3) Padding of purchase invoices and receipts of expenses. (4) Use of unregistered invoices and books of accounts. (5) Non-recording or under-declaring of receipts by caterers or receipts from banquets or parties. (6) Use of two sets of books of accounts and other related accounting records. (7) Shifting of sales of items subject to a higher rate of tax to a lower rate. (8) Preparation of payrolls in compliance with the Minimum Wage Law but actually paying less. (9) Operating without payment of taxes, like the "Membership Clubs" which are actually serving the public. In order to put an end to these acts which are inimical to the interests of the government, Regional Directors of Regional Offices Nos. 4, 5 and 6 are hereby directed to conduct an intensive campaign against the aforesaid practices. To carry out this objective, the Regional Director shall: (1) Designate the special assistant, or one of the special assistants if there be more than one assigned to his Office, as Regional Coordinator. (2) Assign from the existing groups in his region one group to handle the business tax phase and one group to handle the income tax phase of the investigation. (3) Issue only one letter of authority for both business and income tax investigation of one taxpayer. Such letter of authority shall be issued in the name of two examiners one from the business tax group and the other from the income tax group. (4) Direct the Income and Business Tax Branch to prepare a consolidated list of all income and percentage tax returns of the taxpayers referred to in this memorandum order. (5) Recall all returns concerned already raffled to examiners and/or agents for re-assignment to the groups mentioned herein. Returns recalled should be replaced in accordance with existing procedures. To give effect to the campaign, the investigation must be exhaustive and comprehensive, including the detailed verification of purchase and sales invoices, surveillance and detection work, especially before and after office hours when non-issuance of sales invoices is very rampant. Verification of records and invoices of suppliers of these establishments and the use of any/and all acceptable means and procedures with the end in view to detecting the aforesaid anomalies may be resorted to. The Revenue Operations Head (Assessment) is hereby named National Coordinator of the campaign. A monthly progress report on the work accomplished shall be submitted, thru the Revenue Operations Head (Assessment), to the Commissioner of Internal Revenue on or before the 5th day of each month. This Memorandum Order shall take effect immediately. (SGD.) MISAEL P. VERA Acting Commissioner of Internal Revenue