BIR PRIORITIES

* Exceed BIR revenue target of P 765 Billion for 2007 Improve taxpayer satisfaction and * compliance * Improve taxpayer and taxfiler base

Volume 9 No.12

BIR offers abatement of penalties on disputed/litigated assessments

Deadline of application/payment is February 29, 2008
By Rowena Altura BIR ENDED the year 2007 with the issuance of Revenue Regulations (RR) No. 15-2007 last December 28 to allow the abatement of penalties/surcharges and interest on disputed/litigated assessments. Under the said Regulations, taxpayers with duly issued Assessment Notice as of November 29, 2007, involving taxable year ending December 31, 2005 and prior years, are given the opportunity to settle their preliminary or final assessments that are disputed/ protested administratively or judicially by filing an application for the payment of Basic Tax and abatement or cancellation of all penalties, including surcharge and interest. The cases covered under the Abatement Program are: a) cases under administrative protest pending in the Regional Offices, Revenue District Offices (RDOs), Legal Service, Large Taxpayers Service (LTS), Collection Service, Enforcement Service and other offices in the National Office; and b) civil tax cases being disputed before the Department of Justice and the courts, including cases with decisions which are not yet final and executory. The following cases, however, are excluded from the Abatement Program: a) cases involving issues decided by the Supreme Court with finality unless the issues involved difficult question of law or issues without established precedent ruling or Supreme Court decision at the time of the transaction; b) cases where the Presidential Commission on Good Government (PCGG) has an interest and/or there is a need to coordinate with the PCGG; and c) Withholding tax cases. Applications for abatement shall consist of a letter request by the taxpayer for abatement of penalties and interest, duly accomplished Application for Abatement Form, as well as copy of the Pre-assessment Notice or Final Assessment Notice pertaining to the case.
BIR offers... to p. 3

Tax treatment of microfinance services of NGOs, coops clarified

By Yvette Badando WITH THE INCREASING number of non-governmental organizations (NGOs) and cooperatives engaged in microfinance activities, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 14-2007 last December 12 to clarify the tax treatment of profits of said entities, which are related to their microfinance activities. Pursuant to the said RR, duly registered credit cooperatives dealing/ transacting with members only shall be exempt from paying the following taxes for which they are directly liable: Income Tax from their operations; Value-Added Tax (VAT); 3% Percentage Tax; Documentary Stamp Tax, provided, however, that the other party to the taxable document/transaction who is not exempt shall be the one directly liable for the tax; and Annual Registration Fee of P 500.00. Duly registered credit cooperatives dealing/transacting business with both members and non-members, which has accumulated reserves and undivided net savings of not more than P 10 Million, are also exempt from the aforecited taxes for which they are directly liable. For credit cooperatives with accumulated reserves and undivided net savings of more than P 10 Million, they shall be exempt from paying the following taxes: VAT; 3% Percentage Tax; and Income Tax for a period of 10 years from the date of registration with the Cooperative Development Authority, provided, that at least 25% of their net income is returned to the members in the form of interest and/or patronage refund. Said tax exemption applies only to transactions related to the microfinance
Tax treatment...to p. 2

BIR prescribes advance VAT/ Percentage Tax on transport of timber products

By Aileen Marquez THE BIR ISSUED Revenue Regulations (RR) No. 13-2007 last December 5 to prescribe the policies and procedures for the advance payment of Value-Added Tax (VAT)/ Percentage Tax on naturally grown and planted timber products harvested prior to its transport, for purposes of consummating a sale. Owners/sellers of naturally grown and planted timber products, whether natural or juridical, who are holders of permits issued by, or agreements entered into with, the Department of Environment and Natural Resources (DENR), are liable to pay the advance VAT on said timber products.
BIR prescribes...to p. 3

Taxpayers, tax agents equally liable for errors in tax documents - CIR
By Brando Bautista TAXPAYERS AND TAX agents are equally liable for any errors and violations that will be noted in their tax returns and information statements filed with the Bureau of Internal Revenue (BIR). This, in gist, is the message of Commissioner Lilian B. Hefti when she issued Revenue Memorandum Circular (RMC) No. 82-2007 last December 4, 2007. Through the Circular, Commissioner Hefti reminded the taxpayers that the contents and representations, as they are reflected in their tax returns and information statements filed with the BIR by their tax agents, remain their responsibility in their capacity as the principals stated in the aforesaid returns and information statements. Such being the case, a taxpayer is under strict obligation to check and validate the authenticity and correctness of the information contained in the tax return and/or information statement made in their behalf by their tax agents. The said RMC further stipulates that in cases where it is found that the purported tax payments made by tax agents were not actually received by the BIR, the taxpayers are liable to pay the said tax again, even if their tax agents would claim that tax payments have already been made in their behalf. The Circular was issued due to numerous disavowals from taxpayers on the errors in their tax returns discovered during tax audit, claiming that they were not the ones who personally prepared the tax documents. As such, effective January 2008, all collecting offices (the Large Taxpayers Service and the Regional and District Offices) are directed to verify and authenticate the validity and correctness of all tax returns prepared, signed and filed by tax agents in behalf of their clients. Any findings, errors, violations or infractions noted therein as a result of such verification and authentication procedures shall render both the taxpayer and his/its tax agent civilly, administratively and criminally liable, pursuant to existing laws and regulations.
Tax treament...from p. 1

NATIONAL

CIR orders conduct of pre-/ post-audit review of selected cases which were collected in 2007 and those
By Beverly Samia

TO CHECK WHETHER there are tax leakages in the system of tax audit, surveillance, stock-taking, revenue collection, among others, Commissioner Lilian B. Hefti ordered the conduct of post-audit review of audit cases, collection cases and cases covered by a Mission Order, acted upon and terminated in 2007. Said directive was contained in Revenue Memorandum Circular (RMC) No. 79-2007 issued on December 4, 2007. Starting January 2008, randomlyselected cases handled by the Regional Offices, Enforcement Service and Large Taxpayers Service shall be subjected to post-audit review by the Office of the Commissioner of Internal Revenue. The post-audit review may include audit cases, which were covered by Letter of Authority (LA)/Tax Verification Notice (TVN)/Mission Order (MO) or those which were issued Letter Notices (LNs), which were terminated in 2007, and also those cases which are still pending. Delinquent Accounts

which are still pending will also be covered by the post-audit review. The review shall focus on the Value Added Tax (VAT) Compliance and Documentary Stamp Tax Compliance of taxpayers covered by the audit or collection cases. On the same day, December 4, Commissioner Hefti issued RMC No. 81-2007 to widely circularize her unnumbered memorandum directing the pre-audit of tax returns filed by Health Maintenance Organizations (HMOs). The said RMC clarified that the taxable base of HMOs, for VAT purposes, shall be the gross receipts without any deductions, which has been already clarified and reiterated under Revenue Regulations No. 162005, as amended. The pre-audit of the HMOs tax returns will determine if HMOs are using the correct tax base/gross receipts for purposes of computing the VAT. Companies who will be found to have used incorrect tax base shall immediately be issued an Assessment Notice by the BIR.

activities of credit cooperatives. All other income of cooperatives, which undertake microfinance activities in addition to their registered purpose (except credit cooperatives and multi-purpose cooperatives), shall be subject to appropriate taxes. This is applicable to all cooperatives, whether dealing purely with members or both members and non-members. Moreover, all cooperatives, regardless of classification, are considered as withholding agents and are required to file withholding tax returns and remit withholding taxes on all income payments that are subject to withholding. All NGOs listed in Section 30 of the Tax Code, as amended, are exempt from Income Taxes, with respect to income received by them as such. However, the income of such NGOs from microfinance activities, which are not related to their registered activities, regardless of the disposition made of such income, shall be subject to tax. Just like the cooperatives, nonstock, non-profit NGOs, whether or not engaged in microfinance activities, are also required to file withholding tax returns and remit withholding taxes on all income payments that are subject to withholding, as specified in Revenue Memorandum Circular No. 76-2003.

REGIONAL
Calasiao region hosts eFPS briefing/ walkthrough
RR 1, CALASIAO, Pangasinan A total of 548 participants from the government and private sectors attended the briefing/walkthrough on the Electronic Filing and Payment System (eFPS) held on October 11, 2007 at the Pangasinan Regency Hotel in Calasiao, Pangasinan. Revenue Region No. 1 hosted the briefing/walkthrough, in coordination with Revenue District Office No. 4 headed by Revenue District Officer Joseph M. Catapia. The participants included representatives from the government and business sectors, print and broadcast media, the top 10,000 corporations, taxpayers who joined government biddings and various organizations (i.e. Philippine Institute of Certified Public Accountants, Pangasinan Accountants and Bookkeepers Association, FilipinoChinese Chamber of Commerce, Inc., etc.) that came from the revenue regions (RR) of Calasiao, Pangasinan (RR No. 1); CAR, Baguio City (RR No. 2); and
BIR prescribes ...from p. 1

eFPS BRIEFING. Mr. Jerry N. Benaning, Assistant Chief of the Withholding Tax Division discusses the various functional features of eFPS during the briefing/walkthrough conducted in Calasiao, Pangasinan.

Tuguegarao, Cagayan (RR No. 3). OIC-Assistant Regional Director Jonas Amora, in his welcome address, encouraged the taxpayers to enroll under the eFPS and to use the system in filing their tax returns and paying taxes. Resource speakers, Jerry Benaning and Nick Regalado, both from the Withholding Tax Division, discussed the functional and technical aspects of area without the advance payment of the VAT. Absence of proof of payment of advance VAT will authorize the agents of DENR and BIR to hold in abeyance the transport/sale of said timber products. Those who can present a Certificate of Registration (BIR Form No. 2303) showing that he is subject only to 3% Percentage Tax is exempted from the payment of advance VAT but should pay the advance 3% Percentage Tax. The said Certificate and the proof of payment of the advance 3% Percentage Tax shall serve as the authority to transport the naturally grown/planted timber products. However, if the value of the products to be transported exceeds P 1.5 Million, the same shall be subject to the advance VAT. In addition to the input tax credits allowed under Section 110 of the Tax Code, as amended, the amount of advance VAT payments made by sellers/ owners of naturally grown and planted timber products shall be allowed as credits against their output VAT on the actual gross selling price of the timber products, while the advance 3%

the eFPS. They also emphasized the advantages and convenience of using the eFPS as well as the requirement for mandatory compliance by taxpayers covered in BIR-issued regulations. The event concluded with an open forum where various issues and concerns of taxpayers regarding the eFPS were clarified and addressed. Percentage Tax shall be credited to the monthly/quarterly Percentage Tax returns. The Certificate of Advance Payment of the VAT/Percentage Tax shall be attached to the Monthly VAT Declaration/Quarterly VAT Return or Percentage Tax Return to support the claim for credit of advance VAT or Percentage Tax payment.
BIR offers ...from p. 1

Naturally grown and planted timber products harvested from industrial tree plantations and in private lands covered by existing land titles and approved land applications are also subject to the advance VAT. The amount of advance payment shall be determined by applying the VAT rate of 12% on the corresponding value per cubic meter of the different species of naturally grown/planted timber products, in accordance with the schedule specified in the RR. The concerned Revenue District Office or the duly constituted unit in its place shall issue a Certificate of Advance Payment of the VAT. The Certificate, together with the BIR payment form and documents issued by the DENR, shall serve as the authority to transport the naturally grown/planted timber products from its cutting area to any destination, which will be presented upon inspection by proper authorities. The owner/concessionaire/seller of the naturally grown/planted timber products shall not allow any transport of said timber products from the cutting

The filing of the application and payment of an amount equal to 100% of the Basic Tax assessed shall have to be made not later than February 29, 2008, unless extended by the Commissioner on meritorious grounds. The payment of the Basic Tax shall be with the Accredited Agent Bank (AAB) of the RDO/LTS/Large Taxpayers District Office that has jurisdiction over the taxpayer. In the absence of an AAB, payment may be made with the Revenue Collection Officer/Deputized Treasurer of the concerned BIR office that has jurisdiction over the taxpayer.

New Revenue Issuances

FEATURES
RMC No. 65-2007 Notifies the disposal of old blank Tax Credit Certificates (BIR Form No. 2320) and Tax Debit Memos (BIR Form No. 2321) RMC No. 66-2007 Notifies the loss of original copy from one (1) set of unused BIR Form No. 2524-Revenue Official Receipt with Serial No. ROR200502537996 RMC No. 67-2007 Notifies the loss of five (5) sets of unused BIR Form No. 19.65 Letter of Authority RMC No. 68-2007 Clarifies the authorized signatory in the Certificate Authorizing Registration RMC No. 69-2007 Provides basic questions and answers to clarify the issues concerning the Tax Amnesty Program under Republic Act No. 9480 RMC No. 70-2007 Clarifies the proper treatment of cases under administrative or judicial protest for amnesty tax purposes RMC No. 71-2007 Circularizes the full text of Executive Order No. 646, on the accessibility of information on taxpayers between the BIR and the LGUs for tax collection purposes RMC No. 72-2007 Circularizes the full text of Administrative Order No. 186 directing the City Assessor, Municipal Assessor and Provincial Assessor to annotate in all Tax Declarations the serial number of the CAR issued by the BIR RMC No. 73-2007 Re-issues the guidelines on the proper treatment of block sale of sales of stock disposed of in the Stock Exchange RMC No. 74-2007 Circularizes the full text of an unnumbered Memorandum regarding the Table Audit of Preneed Companies RMC No. 75-2007 Circularizes the list of Tax Credit Certificates and Disbursement Vouchers for tax refunds issued for the month of October 2007 RMC No. 76-2007 Prescribes the additional mandatory documentary requirements for one-time transactions involving transfers of real property RMC No. 77-2007 Clarifies certain issues relative to the Tax Amnesty Program contained in Revenue Memorandum Circular No. 69-2007

RR No. 14-2007 Clarifies the tax treatment of microfinance services rendered by Non-Governmental Organizations and cooperatives RR No. 15-2007 Allows the abatement of penalties/surcharges and interest on disputed/litigated assessments RMO No. 39-2007 Prescribes the issuance of Warrants of Distraint and Garnishment, and/or Levy on disputed assessments finally decided by the BIR against the taxpayer on assessments upheld by the Court of Tax Appeals RMO No. 40-2007 Amends further pertinent provisions of RMO No. 572000, as amended, relative to the effect of lifting of closure order RMO No. 41-2007 Supplements RMO No. 39-2007 relative to the revenue officials who are authorized to issue warrants of distraint, garnishment, and/or levy for and in behalf of the Commissioner of Internal Revenue RMC No. 60-2007 Suspends temporarily the implementation of the provision of Section B.2.c.3 of Revenue Memorandum Circular No. 40-2006 RMC No. 61-2007 Notifies the loss of one (1) set of unused BIR Form No. 1954 Certificate Authorizing Registration RMC No. 62-2007 Publishes the full text of unnumbered memorandum entitled EFPS Filers Without Payment for Returns Filed in 2007 RMC No. 63-2007 Circularizes the list of Tax Credit Certificates and Disbursement Vouchers for tax refunds issued for the month of September 2007 RMC No. 64-2007 Notifies the loss of one (1) pad of unused BIR Form No. 2524 Revenue Official Receipt

Happy Birthday Happy Birthday

Chief Alfredo P. Santos RDO Artemio D. Aquino Asst Chief Jethro M. Sabariaga Asst. Chief Jose I. Urbi, Jr. ARDO Merlyn P. Callanta ARDO Isabel A. Paulino Asst. Chief Ma. Gina A. Labradores ARDO Bernadette H. Honculada Asst. Chief Virgilina B. Lector OIC-Reg. Dir. Cesar Charlie S. Lim HREA Carolyn Ann C. Reyes OIC-Asst. Chief Dennis P. Floreza RDO Yolanda B. Ferrer Chief Evelyn Z. Belen Asst. Chief Armando F. Tria Chief Susana B. Malla-Ao Asst. Chief Moses U. Ampatuan Reg. Dir. Esmeralda M. Tabule Asst. Reg. Dir. Thelma S. Milabao RDO Teodoro A. Huelva Chief Rowena G. Altura OIC-Chief Edgar S. Garilao OIC-RDO Monib M. Dimakuta ACIR Erlinda A. Simple OIC-HREA Lucita P. Oandasan RDO Wilfredo Z. Narnola Chief Arsenia C. Gente RDO Christine M. Cardona OIC-ARDO Cecilia C. Campos Chief-of-Staff Gealdina E. Reyes RDO Casan P. Azis Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 01 01 01 02 02 03 04 04 05 06 06 06 07 08 08 09 09 10 11 11 12 12 12 13 13 13 14 15 15 16 16 OIC-RDO Eduardo L. Pagulayan, Jr. Asst. Chief Ferdinand M. de Leon Asst. Chief Astrid B. Cortez Chief Josephine S. Virtucio Asst. Chief Ana Marita F. Macatangay ARDO Nemesia G. Diano OIC-Asst. Chief Romeo G. Cruz Chief Miriam P. Aguila ARDO Daisy T. Baroma OIC-Asst. Chief Mario R. Fabricante OIC-Asst. Chief Stella M. Cariaso Chief Hermeno A. Palamine CRO Daisy W. Quirino CRO Rosana P. San Vicente ARDO Aminoding B. Macarampat OIC-Asst. Chief Mary Grace R. Tan Asst. Chief Olivia E. Josue OIC-RDO Lordel T. Monteclaro OIC-Asst. Chief Sixto C. Dy, Jr. Asst. Chief Irene P. Aromin Chief Noe C. Balbedina Asst. Chief Imelda L. Morona OIC-Asst. Chief Nenette G. Epon OIC-ACIR Corazon C. Pangcog Chief Angelita C. Silla ARDO Rustico M. Bayani RDO Myrna S. Leonida ARDO Mariza Y. Uy EXTA Head Jose M. Granado Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 16 17 17 19 19 19 19 20 21 22 22 23 23 24 25 25 26 26 26 27 28 28 28 29 29 29 30 30 31

FEATURES 5 BIR Christmas Celebration

BIR celebrates Christmas

In the afternoon, the Premyo sa Resibo (PSR) Special Christmas Draws were held at the BIR National Training Center. One (1) winner of P1 Million and ten (10) winners of P100,000 were drawn by Commissioner Hefti, Deputy Commissioner Lilia C. Guillermo and Philweb President, Dennis O. Valdes. The PSR raffle draw was covered by NBN 4, and was graced by famous celebrities, such as Sarah Geronimo, Erik Santos, Rachel Ann Go, Sitti, Ana Capri and some members of the Viva Hot Babes. It was telecast simultaneously last December 24 on NBN 4, RPN 9 and IBC 13, and was broadcasted over 32 radio stations nationwide. Later that day, a program was held at the National Training Center where presentations from the various revenue groups in the National Office entertained revenuers. The program was highlighted with the raffle of exciting prizes such as washing machine, electric fan, rice cooker, among others. The Christmas Program ended with the awarding of prizes to the revenue groups with the Best Christmas Tree Decoration (Resource Management Group or RMG); Most Number of Revenue Officials who joined the morning parade (Information Systems Group) and the Best Program Presentation (RMG). To make the celebration of the Yuletide season more meaningful, the BIR also held an Outreach Program last December 20 where donations of noche-buena gift package/ s from revenuers were distributed to hospital patients at the charity ward of the East Avenue Medical Center.

CHRISTMAS CELEBRATION. Finance Secretary Margarito B. Teves (in black suit) and Commissioner Lilian B. Hefti lead the distribution of Christmas goodies to the children of BIR National Office (NO) personnel during the Christmas Parade held in the NO compound last December 21.

By Danilo Diaz THE BUREAU of Internal Revenue (BIR) celebrated Christmas last December 21 with a series of fun activities held at the BIR National Office compound. The celebration started at 8:30 AM with a thanksgiving mass officiated by Father Roger Enaje. This was followed by a parade participated in by the children of BIR

National Office (NO) personnel and officials led by Commissioner Lilian B. Hefti and the Deputy Commissioners. A program for the children was held, which featured a magic show, face painting, gift giving and other activities, the highlight of which was the dance number of Kokey (a character in ABS-CBNs science fiction fantasy series).

CSC issues additional rule on dropping from the rolls

By Minnie Quintos THE CIVIL Service Commission (CSC) issued CSC Memorandum Circular No. 13, S. 2007 to curb the practice of some employees of circumventing the rule on dropping from the rolls. The said Memorandum Circular amends Section 63, Rule XVI of the Omnibus Rule on Leave, which provides that an official/employee can be dropped from the rolls only if he/she incurs 30 working days of continued absence without official leave. The CSC noted, however, that there are instances wherein officials/ employees knowingly circumvent the rule by reporting back to work for brief periods after incurring prolonged unauthorized absences just to break the continuity of their nonattendance. To curb such practices, CSC now imposes that when it is clear under the obtaining circumstances that the official or employee concerned, has established a scheme to circumvent the rule by incurring substantial absences though less than thirty working (30) days three times in a semester, such that a pattern is already apparent, dropping from the rolls without notice may likewise be justified. If the number of unauthorized absences incurred is less than thirty (30) working days, a written Return-to-Work Order shall be served to the employee at his/her last known address on record. Failure on the part of the employee to report for work within the period stated in the Order shall be a valid ground to drop him/her from the rolls.

Rowena G. Altura Editor-in-Chief Silverio C. Sante Managing Editor Eleonor F. Capili News Editor Mary Aileen F. Marquez Writer Beverly C. Samia Brando Ador C. Bautista Layout Artists
The BIR Monitor is the official newsletter of the Bureau of Internal Revenue published by the Corporate Communications Division, under the supervision of the Policy and Planning Service. Editorial Office: Room 903, BIR National Office, Agham Road, Diliman, Quezon City Tel/Fax No. 426-2190