MISSION The Bureau of Internal Revenue is committed to collect taxes for nation-building through excellent, efficient and transparent

service, just and fair enforcement of tax laws, uplifting the life of every Filipino. LAYUNIN Ang Kawanihan ng Rentas Internas ay walang pasubaling lilikom ng buwis para sa pagpapaunlad ng ating bansa sa pamamagitan ng mahusay, masinop at tapat na paglilingkod, walang kinikilingan at patas na pagpapatupad ng mga batas sa pagbubuwis upang maiangat ang antas ng pamumuhay ng bawat mamamayang Pilipino. VISION The Bureau of Internal Revenue is an institution of service excellence, a partner in nation-building, manned by globally competitive professionals with integrity and patriotism. PANANAW Ang Kawanihan ng Rentas Internas ay institusyon na tinitingala sa larangan ng paglilingkod at kaagapay sa pagpapaunlad ng ating bansa, na pinaglilingkuran ng mga kawani na may sapat na kaalaman, karanasan, paninindigan at pagkamakabansa. GUIDING PRINCIPLE "Service Excellence with Integrity and Professionalism" VALUES God-fearing Consistency Competency Innovativeness Accountability Synergy Respect Fairness Transparency

BIR History
Spanish Era During the 17th and 18th centuries, the Contador de' Resultas served as the Chief Royal Accountant whose functions were similar to the Commissioner of Internal Revenue. He was the Chief Arbitrator whose decisions on financial matters were final except when revoked by the Council of Indies. During these times, taxes that were collected from the inhabitants varied from tribute or head tax of one gold maiz annually; tax on value of jewelries and gold trinkets; indirect taxes on tobacco, wine, cockpits, burlas and powder. From 1521 to 1821, the Spanish treasury had to subsidize the Philippines in the amount of P 250,000.00 per annum due to the poor financial condition of the country, which can be primarily attributed to the poor revenue collection system. American Era In the early American regime from the period 1898 to 1901, the country was ruled by American military governors. In 1902, the first civil government was established under William H. Taft. However, it was only during the term of second civil governor Luke E. Wright that the Bureau of Internal Revenue (BIR) was created through the passage of Reorganization Act No. 1189 dated July 2, 1904. On August 1, 1904, the BIR was formally organized and made operational under the Secretary of Finance, Henry Ide (author of the Internal Revenue Law of 1904), with John S. Hord as the first Collector (Commissioner). The first

organization started with 69 employees, which consisted of a Collector, Vice-Collector, one Chief Clerk, one Law Clerk, one Records Clerk and three (3) Division Chiefs. Following the tenure of John S. Hord were three (3) more American collectors, namely: Ellis Cromwell (1909-1912), William T. Holting (1912-1214) and James J. Rafferty (1914-1918). They were all appointed by the Governor-General with the approval of the Philippine Commission and the US President. During the term of Collector Holting, the Bureau had its first reorganization on January 1, 1913 with the creation of eight (8) divisions, namely: 1) Accounting, 2) Cash, 3) Clerical, 4) Inspection, 5) Law, 6) Real Estate, 7) License and 8) Records. Collections by the Real Estate and License Divisions were confined to revenue accruing to the City of Manila. In line with the Filipinization policy of then US President McKinley, Filipino Collectors were appointed. The first three (3) BIR Collectors were: Wenceslao Trinidad (1918-1922); Juan Posadas, Jr. (1922-1934) and Alfredo Yatao (1934-1938). On May 1921, by virtue of Act No. 299, the Real Estate, License and Cash Divisions were abolished and their functions were transferred to the City ofManila. As a result of this transfer, the Bureau was left with five (5) divisions, namely: 1) Administrative, 2) Law, 3) Accounting, 4) Income Tax and 5) Inspection. Thereafter, the Bureau established the following: 1) the Examiner's Division, formerly the Income Tax Examiner's Section which was later merged with the Income Tax Division and 2) the Secret Service Section, which handled the detection and surveillance activities but was later abolished on January 1, 1951. Except for minor changes and the creation of the Miscellaneous Tax Division in 1939, the Bureau's organization remained the same from 1921 to 1941. In 1937, the Secretary of Finance promulgated Regulation No. 95, reorganizing the Provincial Inspection Districts and maintaining in each province an Internal Revenue Office supervised by a Provincial Agent. Japanese Era At the outbreak of World War II, under the Japanese regime (1942-1945), the Bureau was combined with the Customs Office and was headed by a Director of Customs and Internal Revenue. Post War Era On July 4, 1946, when the Philippines gained its independence from the United States, the Bureau was eventually re-established separately. This led to a reorganization on October 1, 1947, by virtue of Executive Order No. 94, wherein the following were undertaken: 1) the Accounting Unit and the Revenue Accounts and Statistical Division were merged into one; 2) all records in the Records Section under the Administrative Division were consolidated; and 3) all legal work were centralized in the Law Division. Revenue Regulations No. V-2 dated October 23, 1947 divided the country into 31 inspection units, each of which was under a Provincial Revenue Agent (except in certain special units which were headed by a City Revenue Agent or supervisors for distilleries and tobacco factories). The second major reorganization of the Bureau took place on January 1, 1951 through the passage of Executive Order No. 392. Three (3) new departments were created, namely: 1) Legal, 2) Assessment and 3) Collection. On the latter part of January of the same year, Memorandum Order No. V-188 created the Withholding Tax Unit, which was placed under the Income Tax Division of the Assessment Department. Simultaneously, the implementation of the withholding tax system was adopted by virtue of Republic Act (RA) 690. This method of collecting income tax upon receipt of the income resulted to the collection of approximately 25% of the total income tax collected during the said period. The third major reorganization of the Bureau took effect on March 1, 1954 through Revenue Memorandum Order (RMO) No. 41. This led to the creation of the following offices: 1) Specific Tax Division, 2) Litigation Section, 3) Processing Section and the 4) Office of the City Revenue Examiner. By September 1, 1954, a Training Unit was created through RMO No. V-4-47. As an initial step towards decentralization, the Bureau created its first 2 Regional Offices in Cebu and in Davao on July 20, 1955 per RMO No. V-536. Each Regional Office was headed by a Regional Director,

assisted by Chiefs of five (5) Branches, namely: 1) Tax Audit, 2) Collection, 3) Investigation, 4) Legal and 5) Administrative. The creation of the Regional Offices marked the division of the Philippine islands into three (3) revenue regions. The Bureau's organizational set-up expanded beginning 1956 in line with the regionalization scheme of the government. Consequently, the Bureau's Regional Offices increased to (8) eight and later into ten (10) in 1957. The Accounting Machine Branch was also created in each Regional Office. In January 1957, the position title of the head of the Bureau was changed from Collector to Commissioner. The last Collector and the first Commissioner of the BIR was Jose Aranas. A significant step undertaken by the Bureau in 1958 was the establishment of the Tax Census Division and the corresponding Tax Census Unit for each Regional Office. This was done to consolidate all statements of assets, incomes and liabilities of all individual and resident corporations in the Philippines into a National Tax Census. To strictly enforce the payment of taxes and to further discourage tax evasion, RA No. 233 or the Rewards Law was passed on June 19, 1959 whereby informers were rewarded the 25% equivalent of the revenue collected from the tax evader. In 1964, the Philippines was re-divided anew into 15 regions and 72 inspection districts. The Tobacco Inspection Board and Accountable Forms Committee were also created directly under the Office of the Commissioner. Marcos Administration The appointment of Misael Vera as Commissioner in 1965 led the Bureau to a "new direction" in administration. The most notable programs implemented were the "Blue Master Program" and "Voluntary Tax Compliance Program". The first program was adopted to curb the abuses of both taxpayers and BIR personnel, while the second program was designed to encourage professionals in private and government sectors to report their true income and to pay the correct amount of taxes. tax the the the

It was also during Commissioner Vera's administration that the country was further subdivided into 20 Regional Offices and 90 Revenue District Offices, in addition to the creation of various offices which included the Internal Audit Department (replacing the Inspection Department), Administrative Service Department, International Tax Affairs Staff and Specific Tax Department. Providing each taxpayer with a permanent Tax Account Number (TAN) in 1970 not only facilitated the identification of taxpayers but also resulted to faster verification of tax records. Similarly, the payment of taxes through banks (per Executive Order No. 206), as well as the implementation of the package audit investigation by industry are considered to be important measures which contributed significantly to the improved collection performance of the Bureau. The proclamation of Martial Law on September 21, 1972 marked the advent of the New Society and ushered in a new approach in the developmental efforts of the government. Several tax amnesty decrees issued by the President were promulgated to enable erring taxpayers to start anew. Organization-wise, the Bureau had also undergone several changes during the Martial Law period (1972-1980). In 1976, under Commissioner Efren Plana's administration, the Bureau's National Office transferred from the Finance Building in Manila to its own 12-storey building in Quezon City, which was inaugurated on June 3, 1977. It was also in the same year that President Marcos promulgated the National Internal Revenue Code of 1977, which updated the 1934 Tax Code. On August 1, 1980, the Bureau was further reorganized under the administration of Commissioner Ruben Ancheta. New offices were created and some organizational units were relocated for the purpose of making the Bureau more responsive to the needs of the taxpaying public. Aquino Administration

After the People's Revolution in February 1986, a renewed thrust towards an effective tax administration was pursued by the Bureau. "Operation: Walang Lagay" was launched to promote the efficient and honest collection of taxes. On January 30, 1987, the Bureau was reorganized under the administration of Commissioner Bienvenido Tan, Jr. pursuant to Executive Order (EO) No. 127. Under the said EO, two (2) major functional groups headed and supervised by a Deputy Commissioner were created, and these were: 1) the Assessment and Collection Group; and 2) the Legal and Internal Administration Group. With the advent of the value-added tax (VAT) in 1988, a massive campaign program aimed to promote and encourage compliance with the requirements of the VAT was launched. The adoption of the VAT system was one of the structural reforms provided for in the 1986 Tax Reform Program, which was designed to simplify tax administration and make the tax system more equitable. It was also in 1988 that the Revenue Information Systems Services Inc. (RISSI) was abolished and transferred back to the BIR by virtue of a Memorandum Order from the Office of the President dated May 24, 1988. This transfer had implications on the delivery of the computerization requirements of the Bureau in relation to its functions of tax assessment and collection. The entry of Commissioner Jose Ong in 1989 saw the advent of the "Tax Administration Program" which is the embodiment of the Bureau's mission to improve tax collection and simplify tax administration. The Program contained several tax reform and enhancement measures, which included the use of the Taxpayer Identification Number (TIN) and the adoption of the New Payment Control System and Simplified Net Income Taxation Scheme. Ramos Administration The year 1993 marked the entry into the Bureau of its first lady Commissioner, Liwayway Vinzons-Chato. In order to attain the Bureau's vision of transformation, a comprehensive and integrated program known as the ACTS or Action-Centered Transformation Program was undertaken to realign and direct the entire organization towards the fulfillment of its vision and mission. It was during Commissioner Chato's term that a five-year Tax Computerization Project (TCP) was undertaken in 1994. This involved the establishment of a modern and computerized Integrated Tax System and Internal Administration System. Further streamlining of the BIR was approved on July 1997 through the passage of EO No.430, in order to support the implementation of the computerized Integrated Tax System. Highlights of the said EO included the: 1) creation of a fourth Revenue Group in the BIR, which is the Legal and Enforcement Group (headed by a Deputy Commissioner); and 2) creation of the Internal Affairs Service, Taxpayers Assistance Service, Information Planning and Quality Service and the Revenue Data Centers. Estrada Administration With the advent of President Estrada's administration, a Deputy Commissioner of the BIR, Beethoven Rualo, was appointed as Commissioner of Internal Revenue. Under his leadership, priority reform measures were undertaken to enhance voluntary compliance and improve the Bureau's productivity. One of the most significant reform measures was the implementation of the Economic Recovery Assistance Payment (ERAP) Program, which granted immunity from audit and investigation to taxpayers who have paid 20% more than the tax paid in 1997 for income tax, VAT and/or percentage taxes. In order to encourage and educate consumers/taxpayers to demand sales invoices and receipts, the raffle promo "Humingi ng Resibo, Manalo ng Libo-Libo" was institutionalized in 1999. The Large Taxpayers Monitoring System was also established under Commissioner Rualo's administration to closely monitor the tax compliance of the country's large taxpayers. The coming of the new millennium ushered in the changing of the guard in the BIR with the appointment of Dakila Fonacier as the new Commissioner of Internal Revenue. Under his administration, measures that would enhance taxpayer compliance and deter tax violations were prioritized. The most significant of these measures include: full utilization of tax computerization in the Bureau's operations; expansion of the use of electronic Documentary Stamp Tax metering machine and establishment of tie-up with the national government agencies and local government units for the prompt remittance of withholding taxes; and

implementation of Compromise Settlement Program for taxpayers with outstanding accounts receivable and disputed assessments with the BIR. Memoranda of Agreement were also forged with the league of local government units and several private sector and professional organizations (i.e. MAP, TMAP, PCCI, FFCCCI, etc.) to help the BIR implement tax campaign initiatives. In September 1, 2000, the Large Taxpayers Service (LTS) and the Excise Taxpayers Service (ETS) were established under EO No. 175 to reinforce the tax administration and enforcement capabilities of the BIR. Shortly after the establishment of said revenue services, a new organizational structure was approved on October 31, 2001 under EO No. 306 which resulted in the integration of the functions of the ETS and the LTS. In line with the passage of the Electronic Commerce Act of 2000 on June 14, the Bureau implemented a Full Integrated Tax System (ITS) Rollout Acceleration Program to facilitate the full utilization of tax computerization in the Bureau's operations. Under the Program, seven (7) ITS back-end systems were released in stages in RR 8 - Makati City and the Large Taxpayers Service. Arroyo Administration Following the momentous events of EDSA II in January 2001, newly-installed President Gloria MacapagalArroyo appointed a former Deputy Commissioner, Atty. Ren G. Baez, as the new Commissioner of Internal Revenue. Under Commissioner Baez's administration, the BIRs thrust was to transform the agency to make it taxpayer-focused. This was undertaken through the implementation of change initiatives that were directed to: 1) reform the tax system to make it simpler and suit the Philippine culture; 2) reengineer the tax processes to make them simpler, more efficient and transparent; 3) restructure the BIR to give it financial and administrative flexibility; and 4) redesign the human resource policies, systems and procedures to transform the workforce to be more responsive to taxpayers' needs. Measures to enhance the Bureau's revenue-generating capability were also implemented, the most notable of which were the implementation of the Voluntary Assessment Program and Compromise Settlement Program and expansion of coverage of the creditable withholding tax system. A technologybased system that promotes the paperless filing of tax returns and payment of taxes was also adopted through the Electronic Filing and Payment System (eFPS). With the resignation of Commissioner Baez on August 19, 2002, Finance Undersecretary Cornelio C. Gison was designated as interim BIR Commissioner. Eight days later (on August 27, 2002), former Customs Commissioner, Guillermo L. Parayno, Jr. was appointed as the new Commissioner of Internal Revenue (CIR). Barely a month since his assumption to duty as the new CIR, Commissioner Parayno offered a Voluntary Assessment and Abatement Program (VAAP) to taxpayers with under-declared sales/receipts/income. To enhance the collection performance of the BIR, Commissioner Parayno adopted the use of new systems such as the Reconciliation of Listings for Enforcement or RELIEF System to detect under-declarations of taxable income by taxpayers and the electronic broadcasting system to enhance the security of tax payments. It was also under Commissioner Paraynos administration that the BIR expanded its electronic services to include the web-based TIN application and processing; electronic raffle of invoices/receipts; provision of e-payment gateways; e-substituted filing of tax returns and electronic submission of sales reports. The conduct of special operations on high profile tax evaders, which resulted to the filing of tax cases under the Run After Tax Evaders (RATE) Program marked Commissioner Paraynos administration as well as the conduct of Tax Compliance Verification Drives and accreditation and registration of cash register machines and point-of-sale machines. To improve taxpayer service, the Bureau also established a BIR Contact Center in the National Office and eLounges in Regional Offices. On October 28, 2006, Deputy Commissioner for Legal and Inspection Group, Jose Mario C. Buag was appointed as full-fledged Commissioner of Internal Revenue. Under his administration, the Bureau attained success in a number of key undertakings, which included the expansion of the RATE Program to the Regional Offices; inclusion of new payment gateways, such as the Efficient Service Machines and the G-Cash and SMART Money facilities; implementation of the Benchmarking Method and installation of the Bureaus e-Complaint System, a new e-Service that allows taxpayers to log their complaints against erring

revenuers through the BIR website. The Nationwide Rollout of Computerized Systems (NRCS) was also undertaken to extend the use of the Bureaus Integrated Tax System across its non -computerized Revenue District Offices. In 2007, the National Program Support for Tax Administration Reform (NPSTAR), a program funded by various international development agencies, was launched to improve the BIR efficiency in various areas of tax administration (i.e. taxpayer compliance, tax enforcement and control, etc.). On June 29, 2007, Commissioner Buag relinquished the top post of the BIR and was replaced by Deputy Commissioner for Operations Group, Lilian B. Hefti, making her the second lady Commissioner of the BIR. Commissioner Hefti focused on the strengthening of the use of business intelligence by embarking on data matching of income payments of withholding agents against the reported income of the concerned recipients. Information sharing between the BIR and the Local Government Units (LGUs) was also intensified through the LGU Revenue Assurance System, which aims to uncover fraud and non-payment of taxes. To enhance the Bureaus audit capabilities, the use of Computer-Assisted Audit Tools and Techniques (CAATTs) was also introduced in the BIR under her term. With the resignation of Commissioner Hefti in October 2008, former BIR Deputy Commissioner for Legal and Enforcement Group, Sixto S. Esquivias IV was appointed as the new Commissioner of Internal Revenue. Commissioner Esquivias administration was marked with the conduct of nationwide closure of erring business establishments under the Oplan Kandado Program. A Taxpayer Feedback Mechanism (through the eComplaint facility accessible via the BIR Website) was also established under his term where complaints on erring BIR employees and taxpayers who do not pay taxes and do not issue ORs/invoices can be reported. In 2009, the Bureau revived its Handang Maglingkod Project where the best frontline offices were recognized for rendering effective taxpayer service. When Commissioner Esquivias resigned in November 2009, Senior Deputy Commissioner, Joel L. TanTorres assumed the position of Commissioner of Internal Revenue. Under his administration, Commissioner Tan-Torres pursued a high visibility public awareness campaign on the Bureaus enforcement and taxpayers service programs. He institutionalized several programs/projects to improve revenue collections, and these include Project R.I.P (Rest in Peace); intensified filing of tax evasion cases under the re-invigorated RATE Program; conduct of Taxpayers Lifestyle Check and development of Industry Champions. Linkages with various agencies (i.e. LTO, SEC, BLGF, PHALTRA, etc.) were also established through the signing of several Memoranda of Agreement to improve specific areas of tax administration. P-Noy Aquino Administration Following the highly-acclaimed inauguration of President Benigno C. Aquino III on June 30, 2010, a former BIR Deputy Commissioner, Atty. Kim S. Jacinto-Henares, was appointed as the new Commissioner of Internal Revenue. During her first few months in the BIR, Commissioner Henares focused on the filing of tax evasion cases under the

RATE Program, in compliance with the SONA pronouncements of President Aquino

Kim S. Jacinto-Henares Commissioner of Internal Revenue Rm.511, BIR National Office Building, BIR Road Diliman, Quezon City [email protected] 922-3293/981-7121/981-7124

Lilia C. Guillermo Deputy Commissioner-Information Systems Group Room 409 BIR National Office Building, BIR Road, Diliman, Quezon City [email protected] 922-4817/924-7309

Estela V. Sales Deputy Commissioner-Legal and Inspection Group Room 504 BIR National Office Building, BIR Road,Diliman, Quezon City [email protected] 925-5274/928-0480

Nelson M. Aspe Deputy Commissioner-Operations Group Room 404 BIR National Office Building, BIR Road, Diliman, Quezon City [email protected] 924-3242/926-5425

Celia C. King Deputy Commissioner-Resource Management Group Room 410 BIR National Office Building, BIR Road, Diliman, Quezon City [email protected] 928-7946/928-5833 LIST OF MAJOR FORMS (ENCS VERSION) Note: Some forms were compressed by PKZIP program. You need PKUNZIP program, to uncompress the files. Click here to download PKUNZIP program. To unzip the file, for example the file you have downloaded is 1600.zip, click the DOS icon (to temporarily exit from WINDOWS to DOS), go to the directory where the file is located , type pkunzip 1600.zip . The screen can be like this: C:> pkunzip 1600.zip For PDF file, you need to install Acrobat Reader in your PC. To download Acrobat Reader, go to http://www.adobe.com/ or click here.

FORM NO.
1702 1701 1700 2110 1600WP

FORM TITLE
Annual Income Tax Return For Corporation, Partnership and Other Non-Individual Taxpayer Annual Income Tax Return For Self-Employed Individuals, Estates and Trusts (Including those with both Business and Compensation Income) Annual Income Tax Return For Individuals Earning Purely Compensation Income (Including Non-Business/Non-Profession Income) Application for Abatement or Cancellation of Tax, Penalties and/or Interest Under Rev. Reg. No. ______ Remittance Return of Percentage Tax on Winnings and Prizes Withheld by Race Track

Operators 1601C 1601E 1604CF 2200 A; 2200 AN; 2200 M; 2200 P; 2200 T 2000-OT 1900 1901 0605 1701Q 1703 1704 1706 1707 1707-A 1902 1903 1904 1905 Monthly Remittance Return of Income Taxes Withheld on Compensation Monthly Remittance Return of Creditable Income Taxes Withheld (Expanded) Annual Information Return of Income Tax Withheld on Compensation and Final Withholding Taxes Excise Tax Returns

Documentary Stamp Tax Declaration/Return (One Time Transactions) Application to Use Loose-Leaf / Computerized Books of Accounts and/or Accounting Records Application for Registration for Self-Employed and Mixed Income Individuals, Estates/Trusts Payment Form Quarterly Income Tax Return for Self-employed Individuals, Estates, and Trusts (Including Those with both Business and Compensation Income) Annual Income Information Return for Non-Resident Citizens / OCWs and Seamen (for foreign-sourced income) Improperly Accumulated Earnings Tax Return Capital Gains Tax Return for Onerous Transfer of Real Property Classified as Capital Asset (both Taxable and Exempt) Capital Gains Tax Return for Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange Annual Capital Gains Tax Return for Onerous Transfer of Shares of Stock Not Traded Through the Local Stock Exchange Application for Registration For Individuals Earning Purely Compensation Income, and Non-Resident Citizens / Resident Alien Employee Application for Registration for Corporations/ Partnerships (Taxable/Non-Taxable) Application for Registration for One-Time Taxpayer and Persons Registering under E.O. 98 (Securing a TIN to be able to transact with any Government Office) Application for Registration Information Update for Updating / Cancellation of Registration / Cancellation of TIN / New Copy of TIN card / New copy of Certificate of Registration Application for Authority to Print Receipts and Invoices Application for Permit to Use Cash Register machines/Point-of-Sale Machine Account Information Form (AIF) for Self-employed Individuals, Estates and Trusts (engaged in trade and business) Account Information Form (AIF) For Corporations and Partnerships in General Certificate of Income Payment Not Subject to Withholding Tax (Excluding Compensation Income) Certificate of Update of Exemption and of Employer's and Employee's Information Certificate of Final Income Tax Withheld Certificate of Creditable Tax Withheld at Source Certificate of Compensation Payment / Tax Withheld For Compensation Payment With or Without TAx Withheld

1906 1907 1701-AIF 1702-AIF 2304 2305 2306 2307 2316

2000 1602 1601F 1604E 1606

Documentary Stamps Tax Declaration/ Return Monthly Remittance Return of Final Income Taxes Withheld (On Interest Paid on Deposits and Yield on Deposit Substitutes/Trusts/Etc.) Monthly Remittance Return of Final Income Taxes Withheld Annual Information Return of Creditable Income Taxes Withheld (Expanded)/ Income Payments Exempt from Withholding Taxes Withholding Tax Remittance Return (For Transactions Involving Real Property other than Capital Asset including Taxable and Exempt)

GENERAL AUDIT PROCEDURES AND DOCUMENTATION

2. What is a Letter of Authority? The Letter of Authority is an official document that empowers a Revenue Officer to examine and scrutinize a Taxpayers books of accounts and other accounting records, in order to determine the Taxpayers correct internal revenue tax liabilities. 3. Who issues the Letter of Authority? Letter of Authority, for audit/investigation of taxpayers under the jurisdiction of National Office, shall be issued and approved by the Commissioner of Internal Revenue, while, for taxpayers under the jurisdiction of Regional Offices, it shall be issued by the Regional Director. 4. When must a Letter of Authority be served? A Letter of Authority must be served to the concerned Taxpayer within thirty (30) days from its date of issuance, otherwise, it shall become null and void. The Taxpayer shall then have the right to refuse the service of this LA, unless the LA is revalidated. 5. How often can a Letter of Authority be revalidated? A Letter of Authority is revalidated through the issuance of a new LA. However, a Letter of Authority can be revalidated Only once, for LAs issued in the Revenue Regional Offices or the Revenue District Offices; or Twice, in the case of LAs issued by the National Office. Any suspended LA(s) must be attached to the new LA issued (RMO 38-88). 6. How much time does a Revenue Officer have to conduct an audit?A Revenue Officer is allowed only one hundred twenty (120) days from the date of receipt of a Letter of Authority by the Taxpayer to conduct the audit and submit the required report of investigation. If the Revenue Officer is unable to submit his final report of investigation within the 120-day period, he must then submit a Progress Report to his Head of Office, and surrender the Letter of Authority for revalidation. 7. How is a particular taxpayer selected for audit?Officers of the Bureau (Revenue District Officers, Chief, Large Taxpayer Assessment Division, Chief, Excise Taxpayer Operations Division, Chief, Policy Cases and Tax Fraud Division) responsible for the conduct of audit/investigation shall prepare a list of all taxpayer who fall within the selection criteria prescribed in a Revenue Memorandum Order issued by the CIR to establish guidelines for the audit program of a particular year. The list of taxpayers shall then be submitted to their respective Assistant Commissioner for pre-approval and to the Commissioner of Internal Revenue for final approval. The list submitted by RDO shall be pre-approved by the Regional Director and finally approved by Assistant Commissioner, Assessment Service (RMOs 64-99, 67-99, 18-2000 and 19-2000). 8. How many times can a taxpayer be subjected to examination and inspection for the same taxable year? A taxpayers books of accounts shall be subjected to examination and inspection only once for a taxable year, except in the following cases: When the Commissioner determines that fraud, irregularities, or mistakes were committed by Taxpayer;

When the Taxpayer himself requests a re-investigation or re-examination of his books of accounts; When there is a need to verify the Taxpayers compliance with withholding and other internal revenue taxes as prescribed in a Revenue Memorandum Order issued by the Commissioner of Internal Revenue. When the Taxpayers capital gains tax liabilities must be verified; and When the Commissioner chooses to exercise his power to obtain information relative to the examination of other Taxpayers (Secs. 5 and 235, NIRC). 9. What are some of the powers of the Commissioner relative to the audit process?In addition to the authority of the Commissioner to examine and inspect the books of accounts of a Taxpayer who is being audited, the Commissioner may also: Obtain data and information from private parties other than the Taxpayer himself (Sec.5, NIRC); and Conduct inventory and surveillance, and prescribe presumptive gross sales and receipts (Sec. 6, NIRC). 10. What is a Notice for Informal Conference ?A Notice for Informal Conference is a written notice informing a Taxpayer that the findings of the audit conducted on his books of accounts and accounting records indicate that additional taxes or deficiency assessments have to be paid. If, after the culmination of an audit, a Revenue Officer recommends the imposition of deficiency assessments, this recommendation is communicated by the Bureau to the Taxpayer concerned during an informal conference called for this purpose. The Taxpayer shall then have fifteen (15) days from the date of his receipt of the Notice for Informal Conference to explain his side. 11. Within what time period must an assessment be made?An assessment must be made within three (3) years from the last day prescribed by law for the filing of the tax return for the tax that is being subjected to assessment or from the day the return was filed if filed late. However, in cases involving tax fraud, the Bureau has ten (10) years from the date of discovery of such fraud within which to make the assessment. Any assessments issued after the applicable period are deemed to have prescribed, and can no longer be collected from the Taxpayer, unless the Taxpayer has previously executed a Waiver of Statute of Limitations. 12. What is "Jeopardy Assessment"? A Jeopardy Assessment is a tax assessment made by an authorized Revenue Officer without the benefit of complete or partial audit, in light of the ROs belief that the assessment and collection of a deficiency tax will be jeopardized by delay caused by the Taxpayers failure to: Comply with audit and investigation requirements to present his books of accounts and/or pertinent records, or Substantiate all or any of the deductions, exemptions or credits claimed in his return. 13. What is a Pre-Assessment Notice (PAN)? The Pre-Assessment Notice is a communication issued by the Regional Assessment Division, or any other concerned BIR Office, informing a Taxpayer who has been audited of the findings of the Revenue Officer, following the review of these findings. If the Taxpayer disagrees with the findings stated in the PAN, he shall then have fifteen (15) days from his receipt of the PAN to file a written reply contesting the proposed assessment. 14. Under what instances is PAN no longer required? A Preliminary Assessment Notice shall not be required in any of the following cases, in which case, issuance of the formal assessment notice for the payment of the taxpayers deficiency tax liability shall be sufficient: When the finding for any deficiency tax is the result of mathematical error in the computation of the tax appearing on the face of the tax return filed by the taxpayer; or

When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent; or When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable quarter or quarters of the succeeding taxable year; or When the excise tax due on excisable articles has not been paid; or When an article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital equipment, machineries and spare parts, has been sold, traded or transferred to non-exempt persons. 15. What is a Notice of Assessment/Formal Letter of Demand? A Notice of Assessment is a declaration of deficiency taxes issued to a Taxpayer who fails to respond to a Pre-Assessment Notice within the prescribed period of time, or whose reply to the PAN was found to be without merit. The Notice of Assessment shall inform the Taxpayer of this fact, and that the report of investigation submitted by the Revenue Officer conducting the audit shall be given due course. The formal letter of demand calling for payment of the taxpayers deficiency tax or taxes shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the formal letter of demand and the notice of assessment shall be void.
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TAXPAYERS OBLIGATIONS AND PRIVILEGES 16. What is required of a taxpayer who is being audited?A Taxpayer who is being audited is obliged to: Duly acknowledge his receipt of the appropriate Letter of Authority upon its presentation by the Revenue Officer authorized to conduct the audit by affixing in the Letter of Authority the name of the recipient and the date of receipt. Present within a reasonable period of time, his books of accounts and other related accounting records that may be required by the Revenue Officer; and Submit the necessary schedules as may be requested by the Revenue Officer within a reasonable amount of time from his (Taxpayers) receipt of the Letter of Authority. 17. What is the recourse of a Taxpayer who cannot submit the documents being required of him within the prescribed period of time? If a Taxpayer, believing that he cannot present his books of accounts and/or other accounting records, intends to request for more time to present these documents in order to avoid the issuance of a Jeopardy Assessment, the Taxpayer may execute what is referred to as a Waiver of the Statute of Limitations. 18. What is a Waiver of the Statute of Limitations? The Waiver of the Statute of Limitations is a signed statement whereby the Taxpayer conveys his agreement to extend the period within which the Bureau may validly issue an assessment for deficiency taxes. If a Taxpayer opts to execute a Waiver of the Statute of Limitations, he shall likewise be, in effect, waiving his right to invoke the defense of prescription for assessments issued after the reglementary period. No Waiver of the Statute of Limitations shall be considered valid unless it is accepted by a duly authorized Bureau official.

19. If a Taxpayer does not agree with the assessment made following an audit, can he protest this Assessment?Yes, he can. A Taxpayer has the right to contest an assessment, and may do so by filing a letter of protest stating in detail his reasons for contesting the assessment. 20. What are the characteristics of a valid protest? A protest is considered valid if it satisfies the following conditions: It is made in writing, and addressed to the Commissioner of Internal Revenue; It contains the information, and complies with the conditions required by Sec. 6 of Revenue Regulations No. 12-85; to wit: a.) Name of the taxpayer and address for the immediate past three (3) taxable year. b.) Nature of request whether reinvestigation or reconsideration specifying newly discovered evidence he intends to present if it is a request for investigation. c.) The taxable periods covered. d.) Assessment number. e.) Date of receipt of assessment notice or letter of demand. f.) Itemized statement of the findings to which the taxpayer agrees as a basis for computing the tax due, which amount should be paid immediately upon the filing of the protest. For this purpose, the protest shall not be deemed validly filed unless payment of the agreed portion of the tax is paid first. g.) The itemized schedule of the adjustments with which the taxpayer does not agree. h.) A statement of facts and/or law in support of the protest. The taxpayer shall state the facts, applicable law, rules and regulations or jurisprudence on which his protest is based, otherwise, his protest shall be considered void and without force and effect on the event the letter of protest submitted by the taxpayer is accepted, the taxpayer shall submit the required documents in support of his protest within sixty (60) days from date of filing of his letter of protest, otherwise, the assessment shall become final, executory and demandable.

It is filed within thirty (30) days from the Taxpayers receipt of the Notice of Assessment and formal Letter of Demand. 21. In the event the Commissioners duly authorized representative denies a Taxpayers protest, what alternative course of action is open to the Taxpayer? If a protest filed by a Taxpayer be denied by the Commissioners duly authorized representative, the Taxpayer may request the Commissioner for a reconsideration of such denial and that his tax case be referred to the Bureaus Appellate Division. The Appellate Division serves as a "Court", where both parties, i.e. the Revenue Officer on one hand, and the Taxpayer on the other, can present testimony and evidence before a Hearing Officer, to support their respective claims. 22. What recourse is open to a Taxpayer if his request for reconsideration is denied or his protest is not acted? Should the Taxpayers request for reconsideration be denied or his protest is not acted upon within 180 days from submission of documents by the Commissioner, the Taxpayer has the right to appeal with the Court of Tax Appeals (CTA).

Any appeal must be done within thirty (30) days from the date of the Taxpayers receipt of the Commissioners decision denying the request for reconsideration or from the lapse of the 180 day period counted from the submission of the documents. (Sec. 228 of the Tax Code, as amended). 23. If the Taxpayer is not satisfied with the CTAs decision, can he appeal the decision to a higher Court? Yes, he can. Decisions of the Court of Tax Appeals may be appealed with the Court of Appeals within fifteen (15) days from the Taxpayers receipt of the CTAs decision. In the event that the Taxpayer is likewise unsatisfied with the decision of the Court of Appeals, he may appeal this decision with the Supreme Court. 24. Can a Taxpayer claim a refund or tax credit for erroneously or illegally collected taxes? Yes, he can. The Taxpayer may file such a claim with the Commissioner of Internal Revenue (Sec.229, NIRC), within two (2) years from the payment of the tax or penalty sought to be refunded. Failure of the Taxpayer to file such a claim within this prescribed period shall result in the forfeiture of his right to the refund or tax credit. 25. If a Taxpayer has filed a claim for refund and the Bureau has yet to render a decision on this claim, can the Taxpayer elevate his claim to the CTA? Yes, he can, if the two (2) year period stated above is about to end, and the Commissioner has yet to render a decision on the claim. (Gibbs v. Collector, L-13453, February 29, 1960).
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REMEDIES OF THE BUREAU IN THE AUDIT PROCESS AND COLLECTION OF DELINQUENT ACCOUNTS 26. What means are available to the Bureau to compel a Taxpayer to produce his books of accounts and other records? A Taxpayer shall be requested, in writing, not more than two (2) times, to produce his books of accounts and other pertinent accounting records, for inspection. If, after the Taxpayers receipt of the second written request, he still fails to comply with the requirements of the notice, the Bureau shall then issue him a Subpoena Duces Tecum. 27. What course of action shall the Bureau take if the Taxpayer fails to comply with the Subpoena Duces Tecum? If, after the Taxpayer fails, refuses, or neglects to comply with the requirements of the Subpoena Duces Tecum, the Bureau may: File a criminal case against the Taxpayer for violation of Section 5 as it relates to Sections 14 and 266, of the NIRC, as amended; and/or Initiate proceedings to cite the Taxpayer for contempt, under Section 3(f), Rule 71 of the Revised Rules of Court. 28. What alternatives are open to Government for the collection of delinquent accounts? Once an assessment becomes final and demandable, the Government may employ any, or all, of the following remedies for the collection of delinquent accounts: Distraint of personal property; Levy of real property belonging to the Taxpayer; Civil Action; and

Criminal Action. 29. What is "Distraint of Personal Property"? Distraint of personal property involves the seizure by the Government of personal property - tangible or intangible - to enforce the payment of taxes, followed by the public sale of such property, if the Taxpayer fails to pay the taxes voluntarily. 30. What is "Levy of Real Property"? Levy of real property refers to the same act of seizure, but in this case of real property, and interest in or rights to such property in order to enforce the payment of taxes. As in the distraint of personal property, the real property under levy shall be sold in a public sale, if the taxes involved are not voluntarily paid following such levy. 31. In what time period must collection be made? Any internal revenue tax, which has been assessed within the period prescribed shall be collected within three (3) years from date of assessment. However, tax fraud cases may be collected by distraint or levy or by a court proceeding within five (5) years from assessment of the tax or from the last waiver.
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Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale. Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto. Donor's Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer. Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to testamentary disposition. Income Tax is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on a persons income, emoluments, profits and the like. Percentage Tax is a business tax imposed on persons or entities who sell or lease goods, properties or services in the course of trade or business whose gross annual sales or receipts do not exceed P550,000 and are not VAT-registered. Value Added Tax is a business tax imposed and collected from the seller in the course of trade or business on every sale of properties (real or personal) lease of goods or properties (real or personal) or vendors of services. It is an indirect tax, thus, it can be passed on to the buyer. Withholding Tax on Compensation compensation is the tax withheld from individuals receiving purely income.

Expanded Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is creditable against the income tax due of the payee for the taxable quarter year. Final Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is not creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes the full and final payment of the Income Tax due from the payee on the said income. Withholding Tax on Government Money Payments is the withholding tax withheld by government offices and instrumentalities, including government-owned or -controlled corporations and local government units, before making any payments to private individuals, corporations, partnerships and/or associations.

Revenue Regulations (RRs) are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes Revenue Memorandum Orders (RMOs) are issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing. Revenue Memorandum Rulings (RMRs) are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices. Revenue Bulletins (RB) refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue's position on certain specific issues of law or administration in relation to the provisions of the Tax Code, relevant tax laws and other issuances for the guidance of the public. BIR Rulings are official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.