Voluntary Assessment Program

October 27, 1997 REVENUE MEMORANDUM ORDER NO. 59-97 SUBJECT : Voluntary Assessment Program TO : All Internal Revenue Officers and Others Concerned I. RATIONALE The Third Party Information Program (TPIP) and the Integrated Tax System (ITS) generate vital information which enables the Bureau to uncover discrepancies that could be the bases for assessing delinquency taxes and prosecuting taxpayers. Recent efforts under TPIP led to the identification of taxpayer groups which are potential sources of uncollected taxes. Under the ITS data warehousing, we expect to further draw data to support our efforts to reach delinquent taxpayers for discrepancies in their declared tax bases. While the Bureau is determined to enforce the criminal justice system against identified erring taxpayers, it would like to give taxpayers a final opportunity to come up with a clean slate. Thus, the Bureau introduced the Voluntary Assessment Program (VAP), which was initially offered to petroleum dealers under Revenue Memorandum Order No. 39-96, as amended by Revenue Memorandum Order No. 10-97. In an effort to extend the same privilege to other similarly-situated taxpayers, this Order is being issued to expand the coverage of VAP to all taxpayers who would be interested to avail of the benefits under the program, subject to the conditions herein prescribed. On the other hand, taxpayers with undeclared or underdeclared taxable incomes/sales/receipts who will not avail of VAP under this Order shall be subject to investigation and possible prosecution immediately after the conclusion of this Program. II. POLICIES AND GUIDELINES 1. Coverage The Voluntary Assessment Program (VAP) shall cover taxable years 1993 to 1996 for Income Tax on business and compensation income, Value-Added Tax and Other Percentages under Titles II, IV and V, respectively of the National Internal Revenue Code (NIRC), as amended. However, taxes pertaining to one-time transactions, such as the estate and donor's taxes, documentary stamp taxes and final capital gains tax, shall likewise be covered by VAP for 1996 and prior years. 2. Who may avail Any person liable to pay any of the above-cited internal revenue taxes for the above specified period; who due to inadvertence or otherwise, has under-declared his internal revenue tax liabilities or has not filed the required tax return may avail of the benefits under VAP. 3. Persons/Cases not covered The following shall be excluded from the coverage of the VAP under this Order: 3.1. Dealers of petroleum products and purchasers of goods and services from petroleum companies who have availed of the VAP under RMO No. 39-96, as amended by RMO No. 10-97; 3.2. Withholding Agents with respect to their withholding tax liabilities; 3.3. Persons to whom a validly issued Letter of Authority has been served; 3.4. Persons under investigation as a result of verified information filed by an informer under Section 281 of the NIRC, as amended, and duly recorded in the Official Registry Book of the Bureau before the date of availment under VAP; and 3.5. Tax cases filed in Court. III. AVAILMENT PROCEDURES 1. For the period for which the voluntary assessment is made, the taxpayer-applicant must file: 1.1. An amended tax return to correct previous declarations of incomes, purchases, deductions, etc.; and 1.2. The required tax return where none has been previously filed. The amended or required tax return must be accompanied by a duly accomplished Voluntary Assessment Form (Annex A), as well as a photocopy of the original return. In case of non-filing of an income tax return, the required income tax return shall be accompanied by the prescribed Financial Statement and a certification of an independent auditor. For availment concerning taxes on one-time transactions, only the required tax return must be filed. For each return to be filed under this Order, the taxpayer must indicate on the face of such return the phrase "Filed under VAP per RMO No. 59-97." 2. The taxpayer shall file the amended or the required return, together with the attachments and pay the corresponding taxes due thereon with the Accredited Agent Bank (AAB) within the Revenue District where the taxpayer is presently registered or is required to register. IV. TIME FOR AVAILMENT OF VAP The amended or the required tax return, together with attachments must be filed, and the corresponding tax payment thereon paid, not later than November 30, 1997. V. BENEFITS OF THE VAP A taxpayer-applicant may avail of the following benefits under the VAP: 1. A bona fide rectification of filing errors and assessment of tax liabilities under the VAP shall relieve the taxpayer-applicant from any criminal or civil liability incident to the misdeclaration of incomes, purchases, deductions ,etc. and non-filing of a return. 2. The taxpayer who shall avail of the VAP shall be liable only for the payment of the basic tax due. 3. There shall be no investigation of taxpayers who have availed under VAP authorized under this Order and who have correctly declared their true tax liabilities, except upon approval and authorization of the Commissioner of Internal Revenue, when there is evidence or finding of misdeclaration of any information on the return filed under the VAP. At the conclusion of the Voluntary Assessment Program under this Order, the Voluntary Assessment Committee shall prepare a list of taxpayers who should have availed, but did not take advantage of the benefits under the VAP, for investigation and possible prosecution. Relevant Third Party Information shall be forwarded to the appropriate authorities assigned to conduct the investigation of such cases. VI. EFFECTIVITY This Order shall take effect immediately. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue