Providing for Policies and Guidelines for the Abatement of Surcharges and/or Compromise Penalties in Relation to the Filing of Tax Returns and Payment of Taxes under Certain Conditions

September 13, 2010 REVENUE REGULATIONS NO. 09-10 SUBJECT : Providing for Policies and Guidelines for the Abatement of Surcharges and/or Compromise Penalties in Relation to the Filing of Tax Returns and Payment of Taxes under Certain Conditions TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Background. The Run After Tax Evaders (RATE) Program is being implemented by the Department of Finance (DOF) and Bureau of Internal Revenue (BIR) to investigate and prosecute individuals and/or entities engaged in tax evasion and other criminal violations of the National Internal Revenue Code of 1997 (Code), as amended. In line with this program, the BIR has adopted the policy to deter, to the greatest possible degree, tax evasion practices and to encourage voluntary compliance with the internal revenue tax laws. STEacI Recently, various taxpayers have expressed their willingness to voluntarily file and pay taxes and/or rectify the returns they have previously filed and pay any and all deficiency taxes and increments thereto, but at the same time, they requested for the abatement of corresponding surcharges and/or compromise penalties. SECTION 2 . Scope of Abatement of Surcharges and/or Compromise Penalties. In view of the foregoing, and in the exercise of the power granted to the Commissioner of Internal Revenue under Section 204 (B) (2), in relation to Section 7 (c) of the Code, as amended, the following shall be allowed for the period beginning from the effectivity of these Regulations until October 29, 2010: A. Filing of Original Tax Returns. Taxpayers who failed to file their returns and/or pay the correct taxes due may file their returns and pay the deficiency taxes due inclusive of interests. No surcharges as mandated under Section 248 of the Code, as amended, and compromise penalty prescribed under Revenue Memorandum Order (RMO) No. 19-2007 shall be imposed, provided that the following conditions are complied with: i. The return is filed and the full payment of the tax, inclusive of interest due thereon, is received by the BIR not later than October 29, 2010; ii. No Letter of Authority (LA), Tax Verification Notice (TVN), Audit Notice (AN), Letter Notice (LN), or discrepancy notices of whatever nature has/have been served on the taxpayer concerned for the tax period for which a return is being filed for pursuant to Section 6 (A) of the Code, as amended; iii. The tax type involved is not the subject of any pending criminal case for tax evasion and other criminal offenses under the Code, as amended, filed in court or in the Department of Justice (DOJ) or subject of final and executory judgment by court; iv. If the return or deficiency tax payment arises from or relates to an importation, the taxpayer must file the return and pay the tax to the BIR; and v. The taxpayer shall execute a Declaration of Availment of Abatement under these Regulations (Annex A) with the following attachments: a) Photocopy of the return filed together with attachments required under pertinent revenue issuances; and b) Proof of payment of taxes B. Filing of Amended Tax Returns. Taxpayers who desire to rectify their returns and pay the correct taxes due may file amended returns and pay the deficiency taxes due thereon, inclusive of interests on the upward adjustments. No compromise penalty prescribed under RMO No. 19-2007 shall be imposed provided that the following conditions are complied with: i. The amended return is filed and the full payment of the deficiency tax, inclusive of interest due thereon, is received by the BIR not later than October 29, 2010; ii. The amendment made on the return involves an upward adjustment of the amount pertaining to the gross sales/revenues/receipts and/or a downward adjustment of deductions from the gross revenue/receipts or reduction in tax credits; or upward adjustments of both gross sales/revenues/receipts and deductions; provided that in all cases, the amendment or adjustment will result to an additional tax payment; iii. No LA, TVN, AN, LN, or discrepancy notices of whatever nature has/have been served on the taxpayer concerned for the tax period for which an amendment is being filed for pursuant to Section 6 (A) of the Code, as amended; DECcAS iv. The return to be amended and/or the tax type involved is not the subject of any pending criminal case for tax evasion and other criminal offenses under the Code, as amended, filed in court or in the DOJ or subject of final and executory judgment by court; v. If the amended return or deficiency tax payment arises from or relates to an importation, the taxpayer must file the amended return and pay the tax to the BIR; and vi. The taxpayer executes a Declaration of Availment of Abatement under these Regulations (Annex A) with the following attachments: a) Photocopy of the original return filed and proof of payment of taxes; b) For amended returns arising from or relating to an importation proof of previous payments of duties and taxes paid to the Bureau of Customs (BOC); c) Photocopy of the amended return filed together with attachments required under pertinent revenue issuances; and d) Proof of payment of taxes for the amended tax return. The Declaration of Availment of Abatement (Declaration) under these Regulations (Annex A) shall be accomplished in triplicate (3) copies and filed on a per tax type and per taxable period basis: Original and duplicate BIR Triplicate Taxpayer SECTION 3 . Limitations. The filing of original returns/amended returns and payment of deficiency taxes made pursuant to these Regulations presupposes full and accurate disclosure by the taxpayer, and shall not preclude the BIR from investigating the correctness of such returns or sufficiency of the attachments, and/or prosecuting criminal violations in appropriate cases under the Code, as amended. SECTION 4 . Procedures. The original returns/amended returns shall be filed with and the corresponding tax paid to an Authorized Agent Bank (AAB) or Revenue Collection Officer (RCO) within the revenue district where the taxpayer is registered or is required to register, except for eFPS-enrolled taxpayers which are required to follow specific eFPS regulations. All taxpayers who shall avail of the privileges under these Regulations shall submit the Declaration in three (3) copies, together with the attachments prescribed in Sections 2 (A) (v) and 2 (B) (vi) hereof, with the Revenue District Office (District)/Large Taxpayers District Office (LTDO)/Large Taxpayers Division (LT Division) where he is registered or is required to register, after payment of the taxes and interests. TAEcCS All concerned offices shall mandate their respective "Officers-of-the-Day" to receive the Declarations together with the returns/amended returns filed and other required attachments under these Regulations and to conduct preliminary evaluation/processing ( e.g. , check mathematical computation, ascertain sufficiency of documentary requirements, etc.). In case of any deficiency tax or insufficiency of documentary requirements, the "Officers-of-the-Day" shall immediately communicate in writing such findings, through registered mail with return card, to the taxpayer and require additional payment and/or submission of lacking required documents, as the case may be, within forty eight (48) hours from receipt of the notification. If the taxpayer fails to comply within forty eight (48) hours, he shall be presumed not to have opted to avail of the privileges under these Regulations. In case no deficiencies/insufficiencies are found, the "Officers-of-the-Day" shall immediately forward the Declarations, together with the required attachments and the original return/amended return (if applicable), to their respective Revenue District Officers (RDOs)/LTDO or LT Division Chiefs for appropriate review. If approved, the RDOs/LTDO or LT Division Chiefs shall immediately endorse the two (2) copies of the Declarations to the Office of the Commissioner (OCIR). The original copy of the Declaration shall be endorsed together with the duplicate original copy of the return/amended return (if applicable) including the required attachments, and the duplicate copy of the Declaration shall be endorsed together with the photocopy of the said attachments. In all cases, the RDOs/LTDO or LT Division Chiefs shall endorse to the OCIR said Declarations with complete attachments not later than five (5) working days from receipt thereof from the taxpayers. The RDOs/LTDO or LT Division Chiefs shall also submit to the OCIR a monthly summary report on or before the 5th day of the following month in the format prescribed in Annex B hereto. For estate tax, donor's tax, and capital gains tax returns, the Certificate Authorizing Registration (CAR) shall be issued by the concerned offices after the approval of the Declaration by the Commissioner of Internal Revenue (Commissioner) pursuant to Section 204 (B) (2), in relation to Section 7 (c), of the Code, as amended. SECTION 5 . Processing Time. The Declaration should be acted upon by the evaluating/processing officers (designated "Officers-of-the-Day") and by the reviewing officers (RDOs/LTDO or LT Division Chiefs) within two (2) days from their receipt thereof. The TWC and OCIR have thirty (30) days within which to act on the Declaration. If the matter is not acted upon within thirty (30) days, the abatement shall be deemed duly approved. SECTION 6 . Technical Working Committee. The Commissioner shall constitute a Technical Working Committee (TWC) for the review of all Declarations filed by availing taxpayers. The TWC shall send a notification to the concerned taxpayer that the availment of abatement under these Regulations was approved/disapproved by the Commissioner. In case of approval or disapproval, the TWC shall issue a certification of the acceptance and approval or a notice of disapproval thereof in three (3) copies and in the format prescribed in Annex C or Annex C-1 hereto. The original copy of the certificate of acceptance and approval or notice of disapproval shall be communicated to the taxpayer concerned, while the other two (2) copies shall be attached to the dockets containing the original and duplicate Declarations. The docket of the original Declaration shall be forwarded to the District/LTDO or LT Division concerned for proper disposition and the issuance of a Certificate Authorizing Registration (if applicable). The TWC shall retain the other docket containing the duplicate Declaration. cEaDTA After the implementation of these Regulations, the TWC shall prepare a consolidated report to the Commissioner on approved and denied availments of abatements in the format prescribed in Annex D hereto. SECTION 7 . Effectivity. These Regulations shall take effect immediately after publication in two (2) leading newspapers of general circulation. Approved by: (SGD.) CESAR V. PURISIMA Secretary of Finance Recommending Approval: (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX A Declaration of Availment of Abatement Under Revenue Regulations No. ___-2010 _______________ (Date) The Commissioner of Internal Revenue BIR National Office Building Diliman, Quezon City Madame: I/We hereby declare that I am/we are availing the abatement of surcharge and/or compromise penalty under Revenue Regulations No. ___-2010. The following are the details of my/our tax liability: Name of Taxpayer :_________________________________ Address :_________________________________ TIN :____________________ Taxable Year/Quarter/ Month Covered :____________________ Type of Tax :____________________ Description : Total Amount For Payment For Abatement Basic Tax _______________ _______________ _______________ Interest _______________ _______________ _______________ Surcharge _______________ _______________ _______________ Compromise Penalty _______________ _______________ _______________ Total Amount _______________ _______________ _______________ I/We offer to pay the amount of Php_____________ as basic _____________ (kind of tax) tax due and Php_____________ as interest in payment of my/our above-stated tax liability. I/We declare under the penalties of perjury that this statement has been made in good faith, verified by me/us and to the best of my/our knowledge and belief is a true, correct and complete declaration. ______________________________ _________________________ TAXPAYER/PRESIDENT/ TIN VICE-PRESIDENT/PRINCIPAL OFFICER ACCREDITED TAX AGENT/AUTHORIZED REPRESENTATIVE (Signature Over Printed Name) ______________________________ _________________________ TAX AGENT ACCREDITATION ADDRESS NO./ATTY'S. ROLL NO. (IF APPLICABLE) SUBSCRIBED AND SWORN to before me this ____ day of ______ 2010 in _____________, affiant exhibiting to me his/her Community Tax Certificate No. _______________ issued on __________ in _________________, and presenting competent evidence of his/her identity, ____________________, bearing his/her photograph and signature, issued by _____________________. Doc. No. __________; Page No. __________; Book No. __________; Series of 2010. To be filled-up by BIR Name of Taxpayer :_______________________________________ Address :_______________________________________ TIN :___________________ RR No./LTS :___________________ RDO No./LTDO/ LTS Division :___________________ Date Received :___________________ Date submitted to RDO/ LTDO/Division Chief :___________________ Date Received by RDO/ LTDO/Division Chief :___________________ Received/Evaluated/ Processed by :____________________________ Signature:__________ (name of Revenue Officer) Reviewed/Endorsed by :____________________________ Signature:__________ (name of RDO/LTDO/Div. Chief) Date Endorsed to OCIR :___________________ Office of the Commissioner (OCIR) Date Received :___________________ Date endorsed to TWC :____________________________ Date received by TWC :____________________________ Reviewer :____________________________ Signature:__________ (name) Head, TWC :____________________________ Signature:__________ (name) [ ] Approved the abatement/cancellation of the amount of Php________________ representing the following increments on the filed original/amended tax returns: [ ] Surcharge [ ] Compromise Penalty [ ] Disapproved Reason(s) for disapproval: ______________________________ KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX B Report on Availment of Abatement Under Revenue Regulations No. ______-2010 ANNEX C Republic of the Philippines DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City CERTIFICATE OF ACCEPTANCE AND APPROVAL This is to certify that ________________________________ (name of taxpayer) of __________________________ (address) with Taxpayer Identification Number _____________ has availed of the provisions of Revenue Regulations No. _____-2010, and his/her/its offer of payment in the amount of Php_____________ on ______________ (date) for the abatement of ___________________ (kind of tax) liability amounting to Php________________ covering the period __________________ (year/quarter/month) has been accepted and approved. IDTcHa This certification is issued on the basis of the facts represented by the above taxpayer. The BIR is not precluded from investigating, imposing sanctions and prosecuting violations upon discovery/determination that the information supplied are incorrect/inaccurate or the actual facts are different. Issued this ________ day of _______________, 2010. KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX C-1 Republic of the Philippines DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City _________________ (Date) NOTICE OF DISAPPROVAL Please be informed that the availment of ________________________ (name of taxpayer) of ___________________________ (address) with Taxpayer Identification Number ____________ of the provisions of Revenue Regulations No. ___-2010, and his/her/its declaration of abatement of surcharges and/or compromise penalty amounting to Php_______________ for its _________________ (kind of tax) liability covering the period ________________ (year/quarter/month) has been disapproved due to: _____________________ (reason for disapproval). KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX D TWC Report on Availment of Abatement Under Revenue Regulations No. _____-2010 Amount Applied for Abatement Action Taken Name of TIN Period Kind of Tax BIR Form Surcharge Compromise Approved Disapproved Reason(s) for Taxpayer Covered (Tax Return) Penalty Disapproval _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ _________ _______ _______ _________ ________ __________ _______________ _______ _______________ ___________ Submitted by: ______________________________ (Signature Over Printed Name) Head, TWC Published in Manila Bulletin/Philippine Star on September 15, 2010.