Guideline in the Processing of Income Tax Returns with Refundable Withholding Tax

November 25, 1970 REVENUE MEMORANDUM ORDER NO. 58-70 SUBJECT : Guideline in the Processing of Income Tax Returns with Refundable Withholding Tax TO : All Internal Revenue Officers and others concerned In order to provide a uniform course of action and facilitate the processing of all returns with refundable withholding tax, the following guidelines are hereby promulgated for compliance by all concerned: 1. All refund checks prepared on the basis of preaudited income tax returns in which the deduction claimed is the optional standard deduction, shall be released immediately without the necessity of field investigation. 2. All refund checks involving amounts of not more than P500.00 shall be released prior to investigation. 3. All income tax returns with refundable withholding tax where the proportion of the itemized deductions claimed is less than 40% of the declared gross income, should be immediately processed and the corresponding refund checks released before investigation. 4. All income tax returns involving refundable withholding tax of more than P500.00 and where the itemized deductions claimed is 40% or more of the declared gross income, should be segregated and subjected to a pre-refund audit and investigation procedure. The refund checks in these cases should be prepared and released only after the corresponding investigation report shall have been duly approved. cdt 5. The Withholding Tax Division shall attach to every check or batch of checks an "Action Routing Slip", sample attached, before forwarding the refund checks to the offices concerned, which "Action Routing Slip" shall be properly accomplished by all the offices concerned. 6. Refund checks shall be mailed to the payees immediately by the Withholding Tax Division after the same shall have been countersigned by the Auditor. 7. In instances where the taxpayer-refundees shall call for their refund checks personally, the same should not be released until the refundee has adequately identified himself. At least the presentation of the claimant's Residence Certificates A & B should be required. 8. Refund checks may be released to parties other than the taxpayer under the following requirements: (a) Where the amount of the check is less than P500.00, the agent should be required to submit a written authorization from the taxpayer-payee and present his current residence certificates A & B. Proper identification of the agent should further be required. (b) Where the amount of the check is P500.00 or more, the agent should be required to submit the corresponding power of attorney. Proper identification of the attorney-in-fact should also be required. cd This supersedes Revenue Memorandum Order No. 28-66 dated April 1, 1966. CONRADO P. DIAZ Acting Commissioner of Internal Revenue December 14, 1970 MEMORANDUM FOR The Deputy Commissioner (Operations) This is a comment on the observations made on the attached proposed Revenue Memorandum Order. 1. This Memorandum is for the information of our personnel in the processing of tax census returns received by us and not for the public. The receipt and filing of forms in the National Office is a mere accommodation to the public since it is provided in the forms that the filing should be done with the Collection Agent of the City or Municipality in which the filer resides. In our second Press Release, the National Office is omitted. 2. This proposed memorandum is the result of months of study and research by a Committee under the supervision of Mr. Abrahan. It has undergone such modifications and amendments as are necessary to suit the provisions of the Tax Census Law as amended. Nothing in this memorandum requires a fieldman to force a taxpayer to divulge any information that is not contained in the printed tax census form or in the law itself. If someone believes that the tax census law or a portion of it is unconstitutional, he would file the case in court based on the law itself and not on this proposed memorandum which is only for the information of our personnel. It is believed that our instructions to our personnel in matters of this nature should be clear and concise rather than subtle and diplomatic. Respectfully submitted, S. BATAC Revenue Operations Head (Technical Services) December 9, 1970 From the desk of: Conrado P. Diaz Deputy Commissioner OBSERVATIONS 1. In paragraph I, A, the National Office was not included as a receiving station of tax census statements. The National Office should not be ignored as the No. 1 receiving station. Its right to receive is, however, sanctioned in the second paragraph. 2. The utilization of the tax census statements in the investigation of taxpayers for tax purposes is too obvious and played up in the proposed memorandum. This is the major objection of prospective filers against the tax census law; that is, the law forces them to divulge evidence against themselves which is not allowed in the Constitution. On this score, I believe that if this memorandum order is approved, it can serve as the best evidence against the constitutionality of the tax census law . RECOMMENDATION Believe the proposed memorandum order should be revised so as to make the filed census statements as an aid in tax investigation more subtle and diplomatic.