Strict Monitoring and Verification of Government Offices' Compliance to the Withholding Tax Requirements as Part of the "Government Withholding Tax Program"

October 13, 1999 REVENUE MEMORANDUM ORDER NO. 88-99 SUBJECT : Strict Monitoring and Verification of Government Offices' Compliance to the Withholding Tax Requirements as Part of the "GOVERNMENT WITHHOLDING TAX PROGRAM" TO : All Regional Directors/Chief, Collection Divisions Assistant Commissioner (Collection)/Chief, Withholding Agents Monitoring Division Revenue District Officers Revenue Officers of RDOs and WAMD And Others Concerned A. SCOPE: This memorandum shall cover the 1997 to 1999 and subsequent years verification/monitoring of withholding tax compliance of government offices specifically the National Government Agencies (NGAs), Local Government Units (LGUs), and the Government Owned or Controlled Corporations (GOCCs), as one of the main thrusts of the "GOVERNMENT WITHHOLDING TAX PROGRAM". B. OBJECTIVE: 1. To prescribe policies and procedures in the verification and monitoring of compliance of government offices to the withholding tax requirements. 2. To pinpoint responsibility of concerned revenue officers in the revenue regions, districts and the Withholding Agents Monitoring Division (WAMD) of the National Office (NO), specifically in the conduct of verification/monitoring to various government offices. 3. To prescribe uniform reporting requirements to effectively monitor compliance of all offices concerned as well as the compliance of government officials designated as withholding agents. C. POLICIES: 1. Compliance of all government offices with the withholding tax laws, rules and regulations should be strictly monitored and checked by the offices concerned to improve voluntary compliance of responsible officials and thereby increase the Bureau's Collections. 2. Every Revenue Officers of the district offices should be assigned at least ten (10) government offices to monitor and assist in the implementation of withholding tax rules and regulations, in addition to their regular investigative function except those listed in ANNEX "B" hereof which shall be the responsibility of WAMD in the N.O. 3. All collections made by the WAMD as a result of their audit shall be automatically credited to the respective RDO's collection report upon payment with the Authorized Agent Banks where the withholding agents are registered. D. PROCEDURES: I. REVENUE DISTRICT OFFICES in general, shall: 1. Maintain a complete computerized masterfile (using the attached format, Annex "A") of all registered Government Offices within their jurisdiction, with the following classifications: a) National Government Agencies b) Local Government Units c) Government Owned or Controlled Corporation 2. Submit to the Chief, Withholding Agents Monitoring Division a diskette containing the updated registered government offices classified above for monitoring purposes. 3. For RDOs within Metro Manila (under Revenue Regions 5, 6, 7 & 8) Post remittances made by government offices in the prescribed masterfile based on BIR Form Nos. 1600 and 1601 returns filed by the withholding agents. Assign Revenue Officers to all government offices (NGAs, LGUs and GOCCs) except those listed in ANNEX "B" , which shall be handled by Revenue Officers of WAMD, to conduct field verification and to strictly monitor compliance with the withholding tax requirements. Verify if GOCCs are filing/paying their income tax returns for 1998 and subsequent years. LibLex Take appropriate action on RCS' identified stop filers of withholding tax returns. Compute penalties for late filing/late remittance/non-remittance/under remittance/underwithholding. 4. For RDOs outside Metro Manila: Post remittances made by government offices in the prescribed masterfile based on BIR Form Nos. 1601 and 1600 returns filed by the Withholding Agents. Assign Revenue Officers to all government offices (NGAs, LGUs and GOCCs) within their respective jurisdiction to conduct field verification and to strictly monitor compliance to the withholding tax requirements. Verify if GOCCs are filing paying their income tax returns for 1998 and subsequent years. Take appropriate action on RCS' identified stop-filers of withholding tax returns. Compute penalties for late filing/late remittance/underremittance/underwithholding. II. COLLECTION DIVISION OF THE REGIONAL OFFICE shall: 1. Receive and monitor the submission of diskettes by their respective RDOs. 2. Process and analyze reports submitted by RDOs. 3. Maintain a computerized masterfile of withholding agents within their jurisdiction for monitoring purposes. 4. Send call-up letters to RDOs s ho failed to comply with this reporting requirements. 5. Prepare and submit a list of RDOs within their jurisdiction who are not complying regularly with the reporting requirements to the office of the Commissioner, for appropriate administrative sanctions. III. WITHHOLDING AGENTS MONITORING DIVISION: 1. Maintain a complete master file of registered withholding agents nationwide for monitoring purposes based on the information furnished by RDOs and DBM classified as follows: a) PRIVATE offices b) GOVERNMENT offices NGAs LGUs GOCCs 2. Receive and process reports of RDOs in diskette form transmitted by the Collection Division of Regional Offices. 3. Send call-up letters to Chief of Collection Divisions, Regional Offices, who failed to submit reports or have submitted an incomplete reports. cdll 4. Match compliance of government offices against the masterfile. 5. Send call-up letters to RDOs thru: the Regional Directors re: RCS' identified stop filers of withholding tax returns, for their verification. a) For non-ITS send call-up letters b) For ITS RDOs-RDC to monitor thru RCS and prepare appropriate call-up letters. 6. Conduct field verification to NGAs, GOCCs and LGUs listed in ANNEX "B" to strictly monitor their compliance to the withholding tax requirements. Those not included in the list shall be the responsibility of the RDOs concerned. 7. Compute penalties for late filing/late remittance/underremittance/underwithholding committed by these identified government offices. E. REPORTING REQUIREMENTS: 1. The duly accomplished report using the prescribed format (Annex "A") shall be submitted in diskette form (Microsoft Excel) by the Revenue District Officers to the respective Regional Directors. Attention: Collection Division, on or before the 7th day of the following month after collection. 2. The Collection Division in turn shall, upon receipt and evaluation of the reports, transmit the diskette to the Assistant Commissioner (Collection), Attention: The Chief, Withholding Agents Monitoring Division, not later than the 10th day of the same month, together with a list of RDOs who have not submitted the required reports with the remarks of the action taken to these RDOs. 3. The Withholding Agents Monitoring Division shall submit a monthly report containing the listed government offices' compliance, the action taken by the office and the total amount of Assessments and Collection (if any), to the Commissioner and the DCIR (Operations), thru: The Assistant Commissioner (Collection), every 15th day of the month. prcd Strict compliance to this memorandum is enjoined. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue ANNEX A Remittance of Registered National Government Agencies (NGAs) ANNEX B LIST OF LGUs/NGAs/GOCCs LOCAL GOVERNMENT UNITS 1. CITY GOVERNMENT OF CALOOCAN 2. CITY GOVERNMENT OF MAKATI 3. CITY GOVERNMENT OF MANDALUYONG 4. CITY GOVERNMENT OF MANILA 5. CITY GOVERNMENT OF MARIKINA 6. CITY GOVERNMENT OF PASIG 7. MUNICIPAL GOVERNMENT OF CAINTA 8. MUNICIPAL GOVERNMENT OF MALABON 9. MUNICIPAL GOVERNMENT OF NAVOTAS 10. MUNICIPAL GOVERNMENT OF PATEROS 11. MUNICIPAL GOVERNMENT OF SAN JUAN 12. MUNICIPAL GOVERNMENT OF TAGUIG 13. MUNICIPAL GOVERNMENT OF VALENZUELA 14. PASAY CITY GOVERNMENT 15. QUEZON CITY GOVERNMENT 16. CITY GOVERNMENT OF MUNTINLUPA 17. CITY GOVERNMENT OF PARAAQUE 18. CITY GOVERNMENT OF LAS PIAS NATIONAL GOVERNMENT AGENCIES 1. AFP FINANCE CENTER 2. BOARD OF INVESTMENT 3. BUREAU OF BROADCAST SERVICES (NMPC) 4. BUREAU OF CUSTOMS 5. BUREAU OF FISHERIES & AQUATIC RESOURCES 6. BUREAU OF INTERNAL REVENUE NATIONAL OFFICE 7. BUREAU OF JAIL MANAGEMENT & PENOLOGY 8. BUREAU OF LAND MANAGEMENT 9. BUREAU OF TREASURY 10. CIVIL SERVICE COMMISSION 11. COMMISSION ON HIGHER EDUCATION 12. COURT OF APPEALS 13. COURT OF TAX APPEALS 14. DEPT. 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