Prescribing the Procedures on the Issuances and Use of the Oil Firms' Reimbursement Certificate (RC) and Reimbursement Certificate — Tax Debit Memo (RC-TDM)

October 12, 1998 REVENUEMEMORANDUM ORDER NO. 77-98 SUBJECT : Prescribing the Procedures on the Issuances and Use of the Oil Firms' Reimbursement Certificate (RC) and Reimbursement Certificate Tax Debit Memo (RC-TDM) TO : All Internal Revenue Officers and Others Concerned I. Objectives : This Order is issued: A. To prescribe new guidelines and procedures in the processing of Oil Firms' Reimbursement Certificate (RC) and Reimbursement Certificate Tax Debit Memo (RC-TDM); B. To provide standard forms in the issuance and utilization of Oil Firms' Reimbursement Certificate; dctai C. To effectively monitor and control all approved Oil Firms' Reimbursement Certificate and RC-TDMs. II. Definition of Terms : A. Reimbursement Certificates (RC) Refers to an accountable form issued by DOE to reimburse qualified oil companies for the additional cost of crude oil and imported petroleum products due to increase in world crude oil prices and fluctuations in foreign exchange rates which may be used to pay specific taxes due the government. B. Reimbursement Certificate Debit Memo (RCDM) Refers to an accountable form issued by DOE authorizing the BIR to utilize Reimbursement Certificate in payment of specific taxes. C. Reimbursement Certificate Tax Debit Memo (RC-TDM) Refers to an accountable form issued to a taxpayer by the BIR as a written notice that his tax liability has been charged against his Reimbursement Certificate and serves as a form of payment when presented to a duly accredited agent bank or duly deputized collection agent. This is the regular TDM specially reserved for the use of Reimbursement Certificates. D. Oil Company Refers to a company which purchases crude oil and other petroleum products and is authorized to draw claims against the Oil Price Stabilization Fund (OPSF). III. Guidelines : A. The "Reimbursement Certificate" duly issued by the Department of Energy (DOE) in settlement of the outstanding claims of the concerned Oil Companies against the OPSF, pursuant to Section 21, Chapter VII of Republic Act No. 8479, may be used in payment of the Oil Company's liability for specific taxes, subject to the following rules: 1. The "Reimbursement Certificate" has been duly issued by the Department of Energy. 2. The Certificate may be accepted by the Bureau of Internal Revenue only in payment of specific taxes on the Oil Company's local production and removal of petroleum products subject to specific taxes pursuant to Section 148 of the National Internal Revenue Code, as amended by Republic Act No. 8424, and a Reimbursement Certificate Debit Memo has been issued therefor by the Department of Energy (DOE) prior to the actual utilization. In no case may such Reimbursement Certificate be used in payment of the Oil Company's other tax liabilities. 3. Utilization of each Reimbursement Certificate shall be made with only one collection agency. In case a Certificate has been partially utilized in payment of excise tax with the Bureau of Internal Revenue (BIR) or duty with Bureau of Customs (BOC), the subsequent application(s) for payment of unutilized balance thereof shall be accepted only by the collection agency where the said certificate has been initially applied. 4. Payment by an Oil Company's specific taxes through the aforesaid "Reimbursement Certificate" shall be treated as indirect or a constructive collection of tax money; hence, shall be credited to the account of the Bureau of Internal Revenue as actual collection of tax revenues. 5. The concerned Oil Company shall secure from the Large Taxpayers Division (LTD), BIR National Office a Payment Form (BIR Form No. 0605) or an Excise Tax Form (BIR Form 2200) for the total amount of specific tax due inclusive of the amount to be paid through the aforementioned "Reimbursement Certificate". prLL 6. The Oil Company concerned shall present to the Collection Programs Division, BIR National Office, the (1) original copies of its "Reimbursement Certificate" and "Reimbursement Certificate Debit Memo" duly issued by Department of Energy (DOE); and (2) all copies of the ATAPET duly issued by Large Taxpayer Division (LTD), for processing, leading to issuance by the Collection Programs Division of the corresponding Tax Debit Memo (TDM) evidencing application of the amount shown in the said "Reimbursement Certificate" in payment of the said Oil Company's liability for specific tax as shown in the aforesaid Payment Form (BIR Form No. 0605) or an Excise Tax Form (BIR Form 2200). 7. The "Reimbursement Certificate" herein provided shall not be transferable by the Oil Company in whose name the same has been duly issued by the Department of Energy (DOE). B. The Reimbursement Certificate (RC) shall be used in the payment of excise tax liabilities of a taxpayer subject to the following: 1. "Reimbursement Certificate" shall not exceed an amount equivalent to ten percent (10%), per payment, based on the amount of the specific tax due on its removal from place of production of such petroleum products. C. The Collection Programs Division is the office authorized to requisition TDM from the Accountable Forms Division. D. RC-TDM shall be issued by the Collection Programs Division (CPD) whenever a Reimbursement Certificate (RC) issued by the Department of Energy (DOE) is used for payment of current excise tax obligation with the Bureau. IV. Procedures : A. The Collection Programs Division shall follow the succeeding steps in the issuance of RC-TDM: 1. Receive Department of Energy (DOE) list of Reimbursement Certificate (RC) issued as per Memorandum of Agreement between the BIR and Department of Energy (DOE). cdll 2. Receive letter-request for the issuance of RC-TDM together with the original Reimbursement Certificate (RC) from the taxpayer. In case DOE Reimbursement Certificate (RC) shall be applied, a corresponding TDM issued by DOE shall accompany the original Reimbursement Certificate (RC). 3. Date-stamp letter-request and record receipt of it and other pertinent information in the RC-TDM Issuance Logbook (ANNEX A). 4. Verify the authenticity of the DOE-RC presented by the taxpayer against the triplicate copy on file furnished by the Department of Energy and the DOE list of Reimbursement Certificates (RCs) issued. 5. Prepare in five (5) copies the corresponding RC-TDM, filling in all items thereon, to be distributed as follows: Original - Taxpayer Duplicate - Collection Programs Division Triplicate - TDM-issuing Officer/Attached to docket Quadruplicate - COA Resident Auditor Quintuplicate - Department of Energy 6. Fill in and update the "Utilization of Reimbursement Certificate (RC)" portion at the attached subsidiary ledger which should always be attached to the original and triplicate copies on file of the Reimbursement Certificate (RC) and affix signature on the column(s) thereof. The BIR is to adopt the headings of the utilization of tax credit portion of the regular tax credit to serve as the aforesaid subsidiary ledger. 7. Record all required information in the RC-TDM Issuance Logbook and require taxpayer to sign on the space provided in the logbook. 8. Post the RC-TDM number and amount on the RC-TDM portion of the Payment Form (BIR Form No. 0605) or an Excise Tax Form (BIR Form 2200). 9. Release to the taxpayer the original RC and RC-TDM with the tax return/assessment notice/demand letter/ the Excise Tax Form (BIR Form 2200) or Payment Form ( BIR Form No. 0605) if the amount of the Reimbursement Certificate has not been fully utilized. Otherwise, retain the Reimbursement Certificate (RC) for cancellation. llcd Note: Maintain separate file for each Reimbursement Certificate (RC) not yet fully utilized. 10. Prepare Monthly Report of Collection thru RC-TDMs (listed sequentially) (Annex B) in three (3) copies to be distributed as follows within ten (10) days after the end of each month: Original- Revenue Accounting Division (RAD) (together with attached duplicate copies of RC-TDMs issued and all copies except the triplicates of cancelled RC-TDMs, if any). Duplicate- COA Resident Auditor together with the quadruplicate copies of RC-TDMs issued). Triplicate- Collection Programs Division (to be filed together with the triplicate copies of cancelled RC-TDMs, if any). 11. Transmit monthly within 5 days after the end of each month, the quintuplicates of RC-TDMs to the Department of Energy (DOE) concerned. 12. Transmit monthly the cancelled original copies of fully utilized Reimbursement Certificates (RCs) to the Records Division for safekeeping in accordance with the existing rules and regulations. 13. Prepare Monthly Report of Accountability (Gen. Form 16A) for RC-TDMs issued, in five (5) copies to be distributed as follows: Original - COA Resident Auditor Duplicate - Revenue Accounting Division Triplicate - Large Taxpayers Division Quadruplicate - Accountable Forms Division Quintuplicate - Collection Programs Division 14. Report lost RC-TDM, if any, to the Accountable Forms Division for publication/dissemination thru Revenue Memorandum Circular. prcd B. The Revenue Accounting Division shall: 1. Record in the books of accounts only Reimbursement Certificates (RCs) and all RC-TDMs issued by the Collection Programs Division based on the Monthly Reports of Reimbursement Certificates (RCs) Issued and Monthly Report of Collections thru TDMs received using the journal entries prescribed by Commission on Audit (COA). 2. Verify completeness of Reimbursement Certificates RCs/RC-TDMs received against the Monthly Reports of Accountability. Issue call-ups to concerned offices for missing RCs/TDMs. C. The Accountable Forms Division shall: 1. Upon receipt of requisition, distribute sufficient RC-TDM booklets to Collection Programs Division. 2. Receive report(s) of lost RC-TDM booklets, if any and prepare/issue corresponding Revenue Memorandum Circular (RMC) for information of all concerned. D. The availment of RCs will require the BIR to record non-cash collection of tax payments. In order to monitor the amount of non-cash deposits, a new account cash-Treasury Agency Account Current, Non-cash Deposits (8-70-702) as prescribed in item V hereunder shall be used. V. New Account : The use and definition of the new account herein prescribed is as follows: 8-70-702 Cash-Agency Account Current, Non Cash Deposit This account is used to record collection of the Bureau of Internal Revenue (BIR) for payment of obligation due to the government such as excise taxes. prLL Book of the BIR Debit this account for: Deposits of non-cash collection of the national government agency (BIR) Adjustment/collections-reduction (in parenthesis) Credit this account for: Year-end closing to the National Clearing Account Adjustment-reduction (in parenthesis) Books of the Bureau of the Treasury Debit this account for: Year-end closing to the National Clearing Account Adjustment-reduction (in parenthesis) Credit this account for: Deposits of non-cash collection of the national government agency (BIR) Adjustment/collections-reduction (in parenthesis) VI. The Commissioner of Internal Revenue shall submit to the Department of Energy a list of Reimbursement Certificate Debit Memo (RCDM) and Reimbursement Certificate Tax Debit Memo (RC-TDM) received and issued on a quarterly basis. VII. The Commissioner of Internal Revenue shall submit to the Bureau of Treasury a monthly utilization report of Reimbursement Certificates duly applied against specific tax liabilities of oil companies on or before the 5 th day of the month immediately following the month of utilization. This report shall serve as the basis of the Bureau of Treasury in recognizing BIR's actual excise tax collections from this mode of payment. VIII. Effectivity Clause : Reimbursement Certificate Tax Debit Memos shall be issued until all Reimbursement Certificates are exhausted. IX. Repealing Clause : This Order supersedes all other existing issuances or portions thereof inconsistent with this Order. X. Effectivity : This Order shall take effect immediately. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue