Prescribing the Policies and Procedures for Monitoring Taxes Arising from Land Transfers

September 18, 1998 REVENUE MEMORANDUM ORDER NO. 79-98 TO : All Revenue Officials and Employees and Others Concerned SUBJECT : Prescribing the Policies and Procedures for Monitoring Taxes Arising from Land Transfers I. BACKGROUND One of the major sources of revenue collections is the tax derived from transfers, consolidation and division of land titles. In order to strengthen the monitoring of these taxes, an electronic linkage between the Bureau of Internal Revenue (BIR) and Land Registration Authority (LRA) will be established. This linkage, through the use of the BIR-LRA Tax Verification System (BLTVS), will enable the LRA-RD to verify the authenticity of the documents presented to them to effect land transfers and simultaneously, will enable the BIR to check that all such transfers have corresponding BIR clearances. II. OBJECTIVES This Order is issued to: 1. Strengthen the monitoring of taxes arising from land transfers; and 2. Set policies and establish procedures for monitoring taxes arising from land transfers. III. DEFINITION OF TERMS 1. BIR-LRA Tax Verification System (BLTVS) A system that allows electronic inquiry, sending and receiving of documents and reports from one computer to another. 2. Certificate Authorizing Registration (CAR) A document issued by a non-computerized Revenue District (RDO) to a taxpayer who is requesting clearance from tax liability arising from land transfer. 3. Registry of Deeds (RD) A service unit of the Land Registration Authority whose one of the functions of which is to implement the laws of land titling, including land transfer. 4. Tax Clearance (TCL) A document issued by a computerized Revenue District Office (RDO) to a taxpayer who is requesting clearance from tax liability arising from land transfer. 5. Transfer Certificates of Title (TCT) A judicial form issued by the Registry of Deeds which attests to the ownership interest of a parcel of land and briefly describes other outstanding claims to it. IV. POLICIES A. The procedures for filing of tax returns for transactions involving land transfers and processing of Tax Clearance (TCL)/Certificate Authorizing Registration (CAR) at the Revenue District Office (RDO) shall be as provided for in Revenue Memorandum Order No. 17-97, as amended by Revenue Regulations No. 8-98. dctai B. The Land Registration Authority Registry of Deeds (LRA-RD) shall not register any taxable instrument nor issue a Transfer Certificate of Title (TCT) unless the TCL/CAR presented by the taxpayer is verified with the BIR. C. The two (2) pilot LRA-RD sites in Metro Manila shall use the BIR-LRA Tax Verification System (BLTVS) to verify if the TCL/CAR presented by the taxpayers matches the information accessed in the BIR database. D. The LRA pilot sites of RDs Quezon City and San Juan which are scheduled for rollout on October 1, 1998 shall service the following RDOs: LRA-RD RDO RD Quezon City RDO 28 - Novaliches RDO 38 - North Quezon City RDO 39 - South Quezon City RDO 40 - Cubao RD San Juan RDO 42 - San Juan V. PROCEDURES A. The Revenue District Office (RDO) shall: 1. Issue TCL/CAR to taxpayer requesting for clearance from tax liability arising from land transfer, and stamp TCL/CAR " For presentation to Registry of Deeds on ( date of the next working day ) starting 9 : 00 in the morning ." If CAR is to be issued, the grand total amount of tax paid by the taxpayer shall be indicated; 2. If non-computerized, the RDO shall send copy of CAR to Information Systems Operations Service (ISOS) through fax for every issuance of CAR to the taxpayer; 3. Receive computer generated report on Detailed TCL/CAR Discrepancy Report from ISOS. This report contains match, partial match and unmatch taxpayer's record based on the processing made at the RDs; and 4. Reconcile and resolve the discrepancy reported by the taxpayer against the discrepancy report from ISOS. Issue another CAR/TCL to the taxpayer, if needed. B. The Revenue Data Center (RDC) Computer Operations , Network and Engineering (CONE) Division shall: 1. Extract TCL and REGISTRATION (REG) information from ITS database; and 2. Transmit TCL and REG information to ISOS on a daily basis. C. The Information Systems Operations Service (ISOS) Data Entry (DE) shall: 1. Receive faxed CAR from RDO; 2. Encode CAR using BLTVS. All CARs received during the day shall be encoded on the same day; 3. Verify encoded CAR and check if there are typographical errors on the encoded data. If there are errors, correct data with errors; 4. Print the following reports at the end of the day: CAR Verification Listing for reference purposes Detailed TCL/CAR Discrepancy Report 5. For Detailed TCL/CAR Discrepancy Report, write in the " Reviewed by " portion the name, position and signature of the BIR person who guarantees that the information in this report is correct/accurate; 6. Transmit Detailed TCL/CAR Discrepancy Report to the RDO concerned through fax at the end of the day; and 7. Print daily List of TCTs Issued by LRA-RD to be submitted to the Deputy Commissioner (DCIR), Operations Group for analysis weekly. D. The Deputy Commissioner (DCIR) , Operations Group shall: 1. Receive report on beginning serial number of TCT form from LRA-RD through the BIR assigned personnel: 2. Receive weekly List of TCTs Issued by LRA-RD from ISOS-DE; 3. Analyze discrepancies in the report of TCTs issued. Discrepancies occur when: TCTs were issued without the Acknowledgment Report when there are gaps in the TCT serial number 4. Undertake necessary actions for records found to have discrepancies. prLL E. The Land Registration Authority - Registry of Deeds (LRA-RD) shall: LRA-RD Personnel 1. Receive documents presented for registration; 2. Enter documents in the Primary Book of Entry; 3. Forward documents to BIR personnel assigned at RD for verification; 4. Receive verified documents from BIR assigned personnel; 5. Undertake further processing until TCT is issued to the presentor; 6. Release TCT to the presentor; and 7. Provide the following reports to the BIR personnel assigned to RD: daily report on TCTs issued which contains the Old TCT No., New TCT No., New TCT Serial No., Acknowledgment No. and Remark, together with its corresponding Acknowledgment Reports beginning serial number of judicial forms (i.e. TCT/OCT) whenever a requisition is made by the RD on the form BIR Personnel Assigned at RD 1. From the documents submitted by the taxpayer, verify the TCL/CAR against BIR records through BLTVS: 1.a. If there is no discrepancy, the following steps shall be undertaken: 1.a.a. Print the Acknowledgment Report; 1.a.b. Write in the "Verified by" portion the name, position and signature of the BIR person who verified this report; 1.a.c. Attach the said report to the documents of the taxpayer; 1.a.d. For those documents which have been issued an Acknowledgment Report, forward the verified documents to LRA-RD. 1.b. If there is a discrepancy, advise the taxpayer to reconcile the discrepancy with the RDO where the TCL/CAR was issued. 2. Receive daily report on TCTs issued by the LRA-RD together with its corresponding Acknowledgment Reports. Daily report on TCTs issued contains Old TCT No., New TCT No., Serial No., Acknowledgment No. and Remark; 3. Encode pertinent information on TCT issued using BLTVS; 4. Print and file Summary of TCL/CAR Inquiry Discrepancy Report at the start of the day; 5. Receive report on beginning serial number of TCT form from LRA-RD whenever a requisition is made by the RD on the form; and 6. Forward to DCIR, Operations Group the report on beginning serial number of TCT form, furnishing the Inter-Agency Committee to be created under. VI. REPEALING CLAUSE All other issuances and/or portions thereof inconsistent herewith are hereby repealed and amended accordingly. VII. EFFECTIVITY This Order takes effect immediately. llcd (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue