Instituting Corrective Measures for Errors Committed in Issuing Payment Orders (POs), Confirmation Receipts (CRs) and in Handling Value-Added Tax (VAT) Returns and Amendments to Previous Instructions

December 1, 1988 REVENUE MEMORANDUM ORDER NO. 55-88 SUBJECT : Instituting Corrective Measures for Errors Committed in Issuing Payment Orders (POs), Confirmation Receipts (CRs) and in Handling Value-Added Tax (VAT) Returns and Amendments to Previous Instructions TO : All Internal Revenue Officers, Bank Officials and Employees and Others Concerned Hereunder is a list of errors commonly committed by Revenue Collection Officers and by the employees of Banks authorized to accept tax payments in issuing POs and CRs, in handling VAT returns, and in submitting or transmitting corresponding collection reports. These errors have resulted in confusion and difficulty in correcting them because errors are committed in places or units far distant from the Head Offices of the BIR and of the Bank where errors are discovered. To determine where and who committed the error and to send back the reports and documents for correction (to places where the errors were committed) requires a lot of time and money. acd To remedy these problems, this Order is issued for the information of all concerned, for their immediate corrective action and in order to avoid penalties imposed for errors committed. I. Errors Committed in the Preparation of: a) Payment Order and/or Revenue Official Receipt 1. In abbreviating the correct name of the taxpayer. - What appears as name in the return should be copied accurately. 2. In writing the name of the payee, instead of the name of withholding tax agent. - Withholding tax should be accepted in the name of payor or withholding tax agent, and not in the name of the payee. 3. In writing the name of the administrator or executor, rather than the name of the deceased. - Estate tax receipt should be issued always in the name of the deceased. Likewise, gift tax receipt should be issued always in the name of the donor. 4. In forgetting to indicate the correct tax account number of the taxpayer. - Computer method of posting payment can not be done if the TAN of the taxpayer is improperly copied. 5. In accepting general addresses of the taxpayers. - The specific address of the taxpayer should be the one written on the Payment Order on the Payment Order or Receipt, for when his check is dishonored, it will be difficult to locate him. Also when notice of assessment is sent to him, he may not receive it. 6. In forgetting to fill the space under Item 6 of the Payment Order. - Always indicate the "date due" to distinguish payment made before or after due date. In the case of deficiency tax assessment, "due date" is stated in the notice and demand. In the case of self-assessing tax, the due date is provided for in the law. 7. In omitting the spaces for basic tax, surcharge, interest and compromise, under Items 5, 10, 12 and 15, of Payment Order especially in cases where payment was made after due date. 8. In forgetting to indicate under Item 11, the "period covered" by the payment, whether monthly, quarterly, or annually, in the case of self-assessing tax. 9. In failing to indicate the mode of payment under Item 16, whether "part payments" or "installment payment". - "Part payment" refers to cases where the taxpayer paid a part of his tax, or where he was allowed by the Commissioner or by authorized representative to pay in several installment. "Installment payment" refers to the installment payment authorized by law upon filing the tax return as in the case of income tax. 10. In forgetting to indicate under Item 7 of the Payment Order the kind of document or return filed to support tax payment such as the ITR, ATIPO/ATAP, Assessment Notice/Demand Letter, Withholding Tax, etc. 11. In failing to describe the kind of tax that was paid under Item 8. 12. In signing the Payment Order without typing clearly the complete name of the Issuing Officer. 13. In failing to indicate the number of the revenue district and the name of the station town where the Payment Order was issued. 14. In forgetting to indicate correctly the Alpha-numeric Tax Code (ATC) in order to classify the kind of tax paid. - It will be very difficult to accomplish the report under BIR Form No. 12.08 or 12.09, when there is improper or non-classification of the tax paid. 15. In forgetting to indicate the "place of issue" and the "date" of the Payment Order under Item 19. 16. In forgetting to fill the space under Item 20 in order to clarify any ambiguity in the payment. 17. In forgetting to instruct the taxpayer to which particular bank should the Payment Order be presented. - There will be difficulty in reconciling the Payment Order and the Confirmation Receipt if the PO is presented to another bank rather than to the Bank stated in the PO. acd 18. In issuing only one Payment Order for several kinds of self-assessed taxes, or for several deficiency tax assessments belonging to the same taxpayer. - One Payment Order should be issued for each kind of self-assessed tax or for each kind of deficiency tax assessment. If payment is made partly in cash and partly in check, two (2) POs should be issued and two (2) CRs should also be issued, one for cash and another for the check. 19. In issuing Payment Order to acknowledge tax payment through the application of Tax Credit Memo or Tax Credit Certificate. - No Payment Order shall be issued to acknowledge payment through the application of Tax Credit Memo or Tax Credit Certificate. Instead, Tax Debit Memo or Tax Debit Certificate shall be issued. For taxpayers doing business within Metro Manila, the Tax Debit Memo or Tax Debit Certificate shall be issued through the Receivable Accounts Division. For those outside Metro Manila, the Tax Debit Memo or Tax Debit Certificate shall be issued by the Chief, Collection Branch of the Regional Office concerned. Samples of Tax Credit Memo, Tax Credit Certificate, Tax Debit Memo and Tax Debit Certificate are attached as Annexes A, B, C, and D of this Order. See separate instruction on how and when to issue Tax Debit Memo or Tax Debit Certificate. If payment is partly in cash and partly in Tax Credit Memo or Tax Credit Certificate, only the payment in cash shall be issued by a PO when payment is made for deficiency Value-Added Tax and for other taxes. No PO is issued for Value-Added Tax when paid upon filing the tax return. II. Errors in Issuing Confirmation Receipts 1. In failing to copy correctly the name of the taxpayer as indicated in the Payment Order or the VAT returns or in abbreviating the name of the taxpayer in the confirmation receipt. - No abbreviation of name is allowed in issuing confirmation receipt. 2. In accepting VAT returns whose specific address is not indicated. - General address is not allowed to be stated in the return and in the confirmation receipt. 3. In failing to indicate in the Confirmation Receipt, the serial number of the Payment Order for which the Confirmation Receipt was issued. 4. In issuing one Confirmation Receipt to cover two or more Payment Orders. - For every Payment Order issued, in case there is only check to cover several assessment notices, there should be one CR for every kind of tax or for every assessment. 5. In cancelling Confirmation Receipt without indicating the reason for cancellation. - The reasons should be indicated in all copies of the cancelled receipt. All copies of the cancelled receipt must be attached to the report under BIR Form No. 12.56 or BCS where they are reported as cancelled. 6. In submitting machine or xerox copy of CRs, in lieu of missing CRs without certifying them as true copies. - Machine copies of CRs should always be certified as true copy by responsible official of the Bank. 7. In issuing Confirmation Receipts for Payment Orders addressed to other Banks. - It will be very difficult for the Reconciliation Officer to reconcile the Payment Order without corresponding Confirmation Receipt, because only those Payment Orders presented to the bank where they were addressed to can be reconciled. Banks shall accept payments only from POs addressed to them. 8. In failing to indicate the name of the drawee bank and number of the check in the Confirmation Receipt, where payment is made by a check. III. Errors in Receiving and Transmitting VAT Returns 1. In accepting VAT returns and payments, even if the returns were filed late. - Late filing of VAT returns and payments shall be accepted by the Bank only after the Revenue Collection Officer concerned has indicated in the VAT returns his computation of the increments for late filing and late payment and after duly signed by him. This is a new instruction, amending RMO 14-88. casia 2. In accepting VAT returns from taxpayers who do not reside within the same Revenue Districts where the bank operates. - Taxpayers are penalized under Section 248 (A)2 of the Tax Code with a 25% surcharged based on the amount due. 3. In accepting 2% percentage tax return as VAT returns (BIR Form No. 2552). - The 2% tax on the sale of goods and/or services are classified as percentage tax, and not Value-Added Tax as provided for under Section 112 of the Tax Code. Therefore 2% tax returns should not be accepted by the bank. 4. In failing to staple together the duplicate and quadruplicate copies (green and pink copies) of the Confirmation Receipt, and in failing to staple these two documents to the original copy of the VAT returns. 5. In failing to staple the triplicate or blue copy of the Confirmation Receipt to the duplicate copy of the VAT returns. 6. In listing in the Batch Control Sheet (BCS) more than 25 VAT returns. - The space provided for in each BCS is good only for 25 VAT returns. If in a given day not all of the CRs in a stub are issued, the BCS shall contain only the number of CRs issued that day. Assuming that the CR stub bears serial numbers 1348626 to 1348650, and only from serial number 1348626 to 36 were issued, the first 10 spaces of the BCS for that day shall contain the list of VAT returns. The second 15 spaces from 1348626 to 50 shall be vacant. On the following day, assuming that all of the remaining CRs of the same stub were issued, the second 15 spaces of the BCS from 1348637 to 50 shall be filled, meaning, the first 10 spaces of the BCS shall be vacant, while second 15 spaces shall contain the list of VAT returns. 7. In transmitting VAT returns to PO/CR Monitoring Unit, at CB Complex, Manila, with only one (1) copy of the BCS, instead of three (3) copies as required. 8. In attaching the Payment Orders to the BCS. - Payment Orders are issued only for deficiency VAT payments, and the same shall not be included in the BCS, but instead, the POs for deficiency value-added tax shall be reported and attached to BIR Form No. 12.56. 9. In listing in disorderly manner the VAT returns in the BCS. - VAT returns should be listed in accordance with the numerical sequence of the Confirmation Receipts issued for them in order to know which VAT returns were not transmitted and which CRs are missing. 10. In failing to indicate in the BCS or in the BIR Form No. 12.56 the word "Cancelled" or "Missing" for Confirmation Receipt cancelled or missing. - All four copies of the cancelled CRs should be attached to the BCS or to the report under BIR Form 12.56 where they are reported as cancelled. 11. In failing to attach to the BCS or to the report under BIR Form No. 12.56 as the case may be, the "Affidavit of loss" where CR is reported to have been "lost" or "missing". 12. In failing to submit promptly copies of newspaper publication (once a week for three consecutive weeks) for CRs reported lost or missing. IV. Imposition of Penalties 1. Salaries of BIR Officials and employees shall be withheld for failure to submit their collection reports on time. aisa dc 2. Bank Officials and employees should be aware of the penalties imposable for late reporting, late remittance of revenue collections, and inaccurate and incomplete reporting, as provided for in the agreement between the BIR and the Bank. 3. In the past, penalties imposed were mainly for late reporting and late remittance. This time the penalties will include inaccurate and incomplete reporting. 4. Before any penalty shall be imposed, the Bank shall be given a chance to explain why no penalty shall be imposed. If the explanation is not satisfactory, a formal demand for the penalty shall be issued. V. Required Reading Materials 1. It is possible that one of the reasons why errors are committed is because the personnel, either those in the bank or those in the Bureau who are involved in accepting tax payment do not have in their possession copies of the revenue regulations, memorandum orders, and agreement between the BIR and the Bank. 2. The following are the issuance which should be in the hands of those who are involved in the collection of taxes to wit: a. Revenue Regulation No. 5-84 . This defines the procedure in accepting tax payments and reporting the same by the Bank through BIR Form Nos. 12.55; 12.56; 12.57; 12.57A; 12.58; 12.59 and 12.60. b. Revenue Regulation No. 1-85 . This amends paragraphs 8 of the agreement between the BIR and the bank, to read as follows: "pay a fine of P100 for every delay in submission of each required report or the submission of inaccurate and incomplete reports; likewise, a 25% surcharge on late remittance of and/or unremitted collections to be annualized which when added to the interest thereon as provided for under paragraph 4 of the agreement shall not be less than the prevailing interest or bank borrowing rate, plus 5% except if the delay or failure to remit on time is due to fortuitous event." c. Revenue Memorandum Order No. 3-82 . This defines the procedure followed in the BIR in issuing Payment Order, in reconciling the reports under BIR Form Nos. 809 and 12.56, in controlling the CRs, etc. d. Revenue Memorandum Order No. 14-88 . This defines the procedure both in the Bank and in the BIR in accepting VAT returns and VAT payments. acd e. Agreement signed between the BIR and the Bank wherein the bank submits to the jurisdiction and control of the BIR in the matter of collecting and/or accepting internal revenue taxes. 3. The Revenue Regional Directors and/or Officials of the Bank charged with the collection of internal revenue taxes shall furnish copies of the above-stated revenue regulations, memorandum orders and agreement should any of the personnel of the Bureau or of the Bank shall ask for their copies. VI. Effectivity of this Order This Order shall take effect immediately. Any previous order or provision thereof which are inconsistent herewith are deemed modified or amended. (SGD.) BIENVENIDO A. TAN, JR. Commissioner