Bureau of Internal Revenue
Republic of the Philippines

2000 REVENUE MEMORANDUM ORDERS

DIGEST OF REVENUE MEMORANDUM ORDERS

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REVENUE MEMORANDUM ORDER NO. 1-2000 issued January 4, 2000 prescribes the procedures for processing tax treaty relief applications, amending RMO No. 10-92 dated February 1, 1992. The Order covers exclusively applications for tax treaty relief, including claims or requests for tax exemption, preferential tax treaty rate and refund or credit of taxes on income derived or to be derived by the taxpayer under existing tax treaties. The processing for tax treaty relief shall be transferred from Law Division to the International Tax Affairs Division (ITAD). Any availment of the tax treaty relief shall be preceded by an application by filing BIR Form No. 0901 (Application for Relief from Double Taxation) with ITAD at least 15 days before the transaction (i.e. payment of dividends, royalties, etc.), accompanied by supporting documents justifying the relief. Consequently, BIR Form Nos. TC 001 and TC 002 prescribed under RMO No. 10-92 are declared obsolete. Claims for tax credit/refund pertinent to the tax treaty relief requested shall be filed with ITAD within the two year period prescribed by Section 229 of the NIRC, as amended under RA 8424. The Tax Credit Certificate (TCC) for this purpose shall be issued for the account of the "non-resident taxpayer/recipient of the income". Issuance of the TCC shall be done by the Appellate Division upon receipt of endorsement memo from ITAD recommending the issuance of such. The release of the signed TCC to the taxpayer/applicant, however, shall be done by ITAD.

REVENUE MEMORANDUM ORDER NO. 2-2000 issued January 6, 2000 prescribes the allocation of the BIR collection goal for CY 2000 amounting to P 397.227 Billion broken down into: P 390.789 Billion for existing measures, P 5.438 Billion for Comprehensive Tax Reform Program and P 1 Billion for other measures which covers the Redefinition of Automobiles.

REVENUE MEMORANDUM ORDER NO. 3-2000 issued January 12, 2000 prescribes the manner by which all papers and correspondence for signature of Commissioner of Internal Revenue Dakila B. Fonacier shall be prepared.

REVENUE MEMORANDUM ORDER NO. 4-2000 issued January 20, 2000 suspends immediately all on-going tax audit, examination, investigation, and/or verification of taxpayers' book of accounts and records. Exceptions to the suspension are the following cases: a) investigation of cases prescribing in year 2000; b) service of Warrants and Seizure Notices for prescribing cases; c) verification of capital gains tax returns, estate tax returns, donor's tax returns and tax returns on the sale of real property classified as ordinary asset prior to the issuance of Tax Clearance and/or Certification Authorizing Registration; d) examination and/or verification of all excise taxes; e) examination and/or verification of internal revenue tax liabilities of taxpayers retiring from business; and f) verification and processing of all claims for refunds and/or credits. The foregoing suspension shall remain in force until further notice.

REVENUE MEMORANDUM ORDER NO. 5-2000 issued January 20, 2000 suspends immediately the issuance of Letters of Authority, mission orders or any written orders to audit and/or investigate income tax, value-added tax and other internal revenue taxes. Exceptions to the suspension are the following cases: a) taxes which will prescribe in 2000 under the statute of limitations unless timely assessed or collected; b) capital gains tax, estate tax and donor's tax cases; and c) cases to be assigned by the Commissioner of Internal Revenue.

REVENUE MEMORANDUM ORDER NO. 6-2000 issued February 29, 2000 prescribes the objectives, strategies, policies and guidelines for the Bureau's conduct of year-round dialogue with taxpayers and tax information/education campaign. Towards this end, several strategies were identified, namely: i) distribution and display of information materials; ii) conduct of seminars, consultations and dialogues with taxpayers; iii) coordination with media, other government agencies and local government units in featuring information messages and materials for the BIR; and iv) enlisting the campaign participation of civic, business and professional organizations, and local government units. The Taxpayer Information and Education Division shall distribute to the regional offices necessary information materials; coordinate with public and private media offices in featuring tax information messages; arrange for the appearance of Bureau officials in tax seminars and conferences; and issue official announcements to assist in the dissemination of information. All BIR Regional and District Offices are required to undertake the activities specified in the Bureau's Taxpayer Information and Education Program.

REVENUE MEMORANDUM ORDER NO. 7-2000 issued March 20, 2000 prescribes the policies and guidelines in the generation of the list of annual top individual and corporate income taxpayers. The top taxpayers list shall be prepared for Purely Compensation Income (BIR Form 1700), Business Income (BIR Form 1701) and Corporate Income (BIR Form 1702). Primary sources of taxpayer names for inclusion in the top taxpayers list include: all those classified as large taxpayers by the Large Taxpayers Service; all those identified as excise taxpayers by the Excise Taxpayers Service; top taxpayers of the preceding year; taxpayers identified/ considered as potential top taxpayers by the CIR, DCIRs, ACIRs and/or RDOs; executives/owners of top corporations in the Philippines; prominent/high-profile individuals; and government officials. The Commissioner shall set the threshold (based on tax due) for the nationwide top taxpayers lists and these shall be released not later than January 30 of each year. All Revenue District Offices, Revenue Data Centers, Large Taxpayers Service and the Excise Taxpayers Service shall maintain their respective top taxpayers lists.

REVENUE MEMORANDUM ORDER NO. 8-2000 issued March 22, 2000 amends some provisions of Revenue Memorandum Order No. 84-99 relative to the Bureau's Work Planning and Accomplishment Reporting Process. The Accomplishment Report relative to the Work Plan of Activities for the year 2000 shall be prepared and submitted quarterly per Program applicable to an office.

REVENUE MEMORANDUM ORDER NO. 9-2000 issued March 29, 2000 prescribes the conditions for the automatic zero-rating of sales of goods, properties and services made by VAT-registered suppliers to BOI-registered manufacturers-exporters with 100% export sales, to wit: 1) the supplier must be VAT-registered; 2) the BOI-registered buyer must likewise be VAT-registered; 3) the buyer must be a BOI-registered manufacturer/producer whose products are 100% exported as certified by the BOI; 4) the BOI-registered buyer shall furnish each of its suppliers with a copy of the BOI Certification; and 5) the VAT-registered supplier shall issue for each sale to BOI-registered manufacturer/exporters a duly-registered VAT invoice with the words "zero-rated" stamped thereon.

REVENUE MEMORANDUM ORDER NO. 10-2000 issued April 26, 2000 revises RMO No. 59-99 relative to the policies and procedures on the maintenance of various Integrated Tax System (ITS) Codes Tables. Changes in the Codes Table resulting from legislative and management directives or policies shall be set forth in an RMO by the Process Owners, in coordination with other offices concerned or affected by said management directives. Changes in the Codes Table that do not need issuance of an RMO shall be effected in the ITS Codes Table following the standard procedures. Available Online Maintenance Facility shall be used by the maintaining/implementing office, as specified on the ITS Codes Table Reference Guide. All requests for Codes Table updates using Form 0039 shall be coursed through the Help Desk of Information Systems Operations Service. Process Owner, whose system interfaces with other application systems, shall ensure that any changes in his system that have an effect on other system are addressed properly and simultaneously.

REVENUE MEMORANDUM ORDER NO. 11-2000 issued May 2, 2000 prescribes the policies and procedures on the resolution of multiple and identical Taxpayer Identification Numbers (Tins) of taxpayers belonging to the same or different Revenue District Offices (RDOs). All computerized RDOs shall be responsible for the required clean-up activity of multiple and identical Tins in the registration database. All non-computerized RDOs shall coordinate with the Systems Operations Division (SOD), Information Systems Operations Service (ISOS) for the cleanup activity of multiple and identical Tins of taxpayers under their jurisdiction. SOD, ISOS shall provide a list of multiple and identical Tins to the RDOs, including recommendations as to the TIN to be retained, for multiple TIN; and the rightful owner of the TIN for identical TIN; and the issuance of new TIN, whenever applicable. RDOs shall confirm all identical Tins for deactivation to SOD, ISOS. All RDOs shall resolve all multiple/identical Tins without transactions within five (5) working days from receipt of the list of multiple/identical Tins All multiple/identical Tins with transactions shall be resolved by the old RDO within twenty (20) working days from receipt of the final evaluation of SOD. All RDOs, whether computerized or not, shall ensure that all taxpayer liabilities/cases are settled/closed in the records of the old Tins and transferred to the new/retained Tins before the deactivation/cancellation of multiple/identical Tins is performed.

REVENUE MEMORANDUM ORDER NO. 12-2000 issued April 27, 2000 prescribes the policies and procedures in the conduct of the written qualifying examinations for Group Supervisors (Assessment and Enforcement) who may be assigned to the Large Taxpayers Service, the Excise Taxpayers Service or the Enforcement Service. Said examinations shall cover Taxation (70%) and Management Theories and Practices (30%). Qualified to take the written qualifying examinations are: a) incumbent Section Chiefs/Group Supervisors performing assessment or enforcement functions, holding positions not lower than Revenue Officer III (Assessment), Attorney III, Intelligence Officer III, and Special Investigator III and b) personnel holding Revenue Officer IV (Assessment) items who are not presently performing assessment functions. Only qualified revenue personnel who have no administrative and/or criminal case(s) filed with the BIR Internal Security Division, the Civil Service Commission, or the Sandiganbayan, shall be allowed to take the qualifying examinations. The examinations shall be held on May 15, 2000 from 8:00 AM to 5:00 PM at the Philippine Mental Health Association in 18 East Avenue, Quezon City.

REVENUE MEMORANDUM ORDER NO. 13-2000 issued May 2, 2000 prescribes the use of the Business Capability Release Design Packets and Building an ITS-Ready Organization Manual as the main reference materials relative to the rollout of the different business capabilities and implementation of ITS. The Business Capability Release Design Packets contain the release approach, release containment and release implementation of the different business capabilities at target rollout sites. The Building an ITS-Ready Organization Manual, on the other hand, contains the guidelines and procedures in ensuring the successful implementation of ITS in identified BIR organization units. These reference materials shall be updated by the Information Planning and Quality Service - Rollout Assistance Unit (IPQS-RAU) when necessary, in coordination with the System Owners.

REVENUE MEMORANDUM ORDER NO. 14-2000 issued May 2, 2000 prescribes the policies and guidelines for the implementation of the ITS Coaching Program. At least one (1) ITS Coach shall be designated by the head of office for each section within a particular office. ITS Coaching shall be delivered on-site and facilitated by ITS Coaches based at the office concerned. It shall be provided only when deemed necessary by the head of office, or upon specific request by a prospective trainee. Any trainee shall have the option of using ITS Coaching as a substitute for participation in a formal instructor-led training course. However, a trainee shall be required to take the Proficiency Assessment examination administered by the Training Delivery Division. Any trainee who fails to obtain a satisfactory rating in the Proficiency Assessment examination shall be required to attend the pertinent instructor-led training course during the next available schedule.

REVENUE MEMORANDUM ORDER NO. 15-2000 issued May 5, 2000 creates, drops and renames the Alphanumeric Tax Codes (ATCs) of revenue sources for proper classification of taxes. The following ATCs are created: 1) Philippine Amusement and Gaming Corporation (PAGCOR) - 0T010; 2) PEZA Free Port Zones (ECOZONES) - 0T011; 3) Others covered by special laws - 0T012. The following ATCs are dropped: 1) capital gains realized from sale, exchange or disposition of real property (a) by individual - W1420 (b) by corporation - WC420; 2) tax on other franchises - PT080; 3) tax on winnings - PT190; 4) deficiency taxes due to VAT refinement - RS100. The following ATCs are renamed: 1) withholding of other percentage taxes (a) by government withholding agents - WB191 and (b) private withholding agents - WB192.

REVENUE MEMORANDUM ORDER NO. 16-2000 issued May 12, 2000 prescribes the policies and procedures for the processing and monitoring of withholding tax payments from National Government Agencies (NGAs). The BIR, through the Authorized Agent Banks (AABs), shall no longer accept the Modified Disbursement System check and Authority to Debit the Account of the Agency in the remittance of all taxes withheld by the NGAs, except for withholding taxes due from transactions of government agencies funded from the Working/Imprest Fund and Revolving Fund. Instead, the Revenue Accounting Division (RAD) and the Finance Division (FD) of the concerned Regional Office (RO) shall recognize the remittance of current and prior years' taxes withheld by the NGAs as collections, upon the receipt of the Tax Remittance Advice (TRA) issued by the Department of Budget and Management (DBM). All TRAs issued by the DBM shall be taken up as collection by RAD and the FD of the concerned RO. RDOs should likewise monitor that the NGAs under their respective jurisdiction will file their Withholding Tax Returns on or before the 25th of the month, together with copies of the request and Summary of Taxes Withheld duly received by the DBM. They are also required to submit to the Withholding Tax Division a report on the list of NGAs who have complied or who have not complied with the filing requirements of the BIR.

REVENUE MEMORANDUM ORDER NO. 17-2000 issued June 14, 2000 prescribes the policies and procedures in the conduct of the mandatory written qualifying examinations for Revenue District Officers (RDOs), Assistant Revenue District Officers (ARDOs), Chiefs and Assistant Chiefs of the Regional Assessment Divisions and Special Investigation Divisions and of selected divisions in the National Office, including Revenue Officers and Group Supervisors (Assessment and Enforcement) who were not able to take or pass the previously held qualifying examinations. The examinations will be conducted in two (2) parts. Part I will be taken by all the examinees and will cover the provisions of the National Internal Revenue Code, Revenue Regulations, Revenue Memorandum Orders and audit report procedures and techniques. Part II will be an essay dwelling on the review of audit cases, management theories and practices and ITS overview (for RDOs, ARDOs, Division Chiefs and Asst. Division Chiefs); report making and case analysis (for Revenue Officers I, II, and III); and report making, review of audit cases and management theories and practices (for Group Supervisors). Written qualifying examinations for the Excise and Collection Groups will be held before the end of August 2000.

REVENUE MEMORANDUM ORDER NO. 18-2000 issued June 19, 2000 prescribes the policies and procedures in the conduct of audit of large taxpayers for CY 2000. The Audit Program shall cover the income, value-added, percentage, withholding and other taxes or a particular tax liability of large taxpayers for taxable years 1998 and 1999 and uninvestigated prior years. Taxable years 1998 and 1999 shall include all corporations with fiscal years ending on or before June 30, 1999 and on or before June 30, 2000, respectively. The Chief, Large Taxpayers Assessment Division, shall draw a list of taxpayers selected for audit which shall be submitted to the Assistant Commissioner (ACIR), Large Taxpayers Service, for pre-approval. Final approval of the list shall be done by the Commissioner of Internal Revenue, including the issuance and approval of all Letters of Authority (LAs). All Tax Verification Notices (TVNs), on the other hand, shall be issued and approved by the ACIR, Large Taxpayers Service, unless otherwise delegated in writing to the Chief, Large Taxpayers Assessment Division. A Revenue Officer/Group Supervisor shall not audit/investigate the same taxpayer for two (2) consecutive years/periods.

REVENUE MEMORANDUM ORDER NO. 19-2000 issued June 19, 2000 prescribes the Short-Term Audit Program for Revenue District Offices. This Program shall cover the following tax returns of individual and corporate taxpayers for any of the month/quarter in year 2000: a) Monthly Remittance Returns of Income Taxes Withheld; b) Quarterly Value-Added Tax Returns; c) Quarterly Percentage Tax Returns; and d) Documentary Stamp Tax Returns. Selection of said returns for audit shall be based on the following order of priority: 1) tax cases for audit based on policy direction of the Commissioner; 2) taxpayers with third party information which resulted to substantial reduction in tax payments; and 3) taxpayers with low tax compliance. Taxpayers under the jurisdiction of the Large Taxpayers Service and Excise Taxpayers Service are not covered by the Order. Only the Revenue District Offices are authorized to conduct a short-term audit. In no case shall the Assessment Division and Special Investigation Division in the Regional Offices be allowed to perform a short-term audit of tax returns. All Letters of Authority (LAs)/Audit Notices (ANs) shall be issued and approved by the Regional Director. However, no Las/ANs shall be issued by the Regional Director without prior written approval of the ACIR, Assessment Service. Only Revenue Officers-Assessment Group shall be authorized to conduct audit and investigation of tax cases, whether in a principal or assisting capacity. The same Revenue Officer and/or Group Supervisor shall not be assigned to audit/investigate the same taxpayer during the year except when this is not possible due to limited number of Group Supervisor/Revenue Officer in the RDO.

REVENUE MEMORANDUM ORDER NO. 20-2000 issued August 1, 2000 prescribes the policies and raffle mechanics in the conduct of the 2000 raffle promo "Humingi ng Resibo, Milyun-Milyon Pa Rin Ang Panalo". The raffle of sales invoices and receipts will be conducted as follows: a) nineteen (19) Regional raffles on November 17 or 18, 2000 to cover cities and municipalities within the jurisdiction of Revenue Regional Offices; b) four (4) Area raffles from November 24 to December 6, 2000 to cover cities and municipalities within the jurisdiction of the Luzon, Visayas, Mindanao and National Capital Region internal revenue offices; and one (1) National raffle on December 10, 2000 to cover all cities and municipalities nationwide. A total of P 30 Million in cash prizes awaits the winners, of which, P 2 Million, P 1 Million and P 750,000 will be given away in the National Draw to the 1st, 2nd and 3rd prize winners, respectively.

All sales invoices and receipts (including cash register tapes) issued by business establishments from July 1 to December 10, 2000, regardless of amount, will qualify as entries for the raffle promo, provided that the business name and address, Taxpayer Identification Number (TIN) and date of issuance appear on the invoice/receipt/tape. The name of printer (BIR permit number), with the inclusive serial number of the booklets, must also appear in the sales invoices/receipts in order to qualify as entries.

A person is qualified to win one prize separately in any of the draws and shall be entitled to all such prizes. However, if a person wins more than once in the same draw, he shall be entitled to receive only the higher prize. Receipts not drawn during the Regional draws will still be included as entries in the Area and National draws. In cases wherein the winning receipts/invoices are spurious, the winner will still be entitled to the prize. However, the establishment that issued such receipt/invoice shall be subject to investigation. A participant who has falsified the winning invoice or receipt shall not be entitled to the prize.

REVENUE MEMORANDUM ORDER NO. 21-2000 issued August 3, 2000 prescribes the policies and procedures in the processing and approval of taxpayer's Application for Permit to Adopt Computerized Accounting System (CAS) and its components. The components of a CAS covered by the Order are: 1) general journal, general ledger, and other subsidiary records; 2) sales, purchases, accounts receivable, accounts payable, inventory, payroll, ledgers and other accounting records; 3) generation of official accounting documents such as official receipts (OR), sales and cash invoices, cash vouchers, journal vouchers, billing statements, sales tickets, etc.; and 4) generation of reports as required by the BIR.

A Computerized System Evaluation Team (CSET) shall be created for the National Office and Regional Office to conduct appropriate evaluation and recommend approval of the taxpayers' application to adopt CAS or its components. Evaluation shall be undertaken and completed within 30 days from receipt of the application and complete documentary requirements. Request for the approval of CAS shall be open to all taxpayers, whether classified as regular or large taxpayer. Taxpayer requesting approval for a Computerized Book of Accounts with computer-generated accounting records, whether the accounting system to be used is off-the-shelf or customized, need not apply for an authority to print (ATP) invoices and receipts. However, taxpayer requesting approval for a Computerized Book of Accounts without computer-generated accounting records shall need an ATP for their official receipts, invoices and the like.

The permit to adopt CAS shall be deemed revoked whenever there are changes or modifications introduced into the approved CAS, or upon full consumption of the pre-approved range of serial numbers for the computer-generated official receipt or sales/cash invoice. Any such changes or modifications shall require a new permit. On the other hand, computer-generated accounting records with no pre-approved range of number of invoices and receipts prior to actual generation shall be reported to the Chief, Large Taxpayers Assistance Division, or the Chief, Excise Taxpayers Assistance Division or Revenue District Officer for proper recording and notation of the range of numbers of official receipts and invoices which have been consumed, as well as the range of numbers which have been cancelled during the immediately preceding taxable year within 30 days from the close of such taxable year. With the favorable recommendation of the CSET, the approval and signing of the permit to adopt CAS shall be the responsibility of the Assistant Commissioner of the Large Taxpayers Service or Excise Taxpayers Service for large taxpayers, and the Revenue District Officers for regular taxpayers.

REVENUE MEMORANDUM ORDER NO. 22-2000 issued August 3, 2000 prescribes the policies, guidelines and procedures for the stop-filer capability rollout for computerized Revenue District Offices (RDOs). The rollout shall be implemented in two-phase approach: 1) soft launch phase which aims to cleanup registration records of identified stop-filer for a period of one (1) month; and 2) the hard launch phase which will focus on normal stop-filer processing wherein stop-filer cases will be created and assigned to seizure agents/examiners for monitoring and proper action. The types of taxes covered by the rollout are the following: Income Tax, Percentage Tax, Value-added Tax, Withholding Tax on Banks, Withholding Tax on Compensation, Tax Withheld on Government Money Payments, Expanded Withholding Tax and Withholding Tax on Fringe Benefits.

Each RDO shall undergo the soft launch phase for one month, followed by a two-month hard launch phase. Identification of the stop-filer cases will only be conducted for due dates covering the one-month period prior to the rollout date. All open, unassigned stop filer cases prior to soft launch will be closed. Corresponding reminder letters will be purged.

Each seizure agent is expected to be assigned a minimum of 50 stop-filer cases and close a minimum of 25 stop-filer cases every month. Each identified Revenue Officer (Assessment) is expected to be assigned a minimum of 25 stop-filer cases and close a minimum of 13 stop-filer cases every month.

REVENUE MEMORANDUM ORDER NO. 23-2000 issued August 3, 2000 prescribes the reports required to be submitted to the Taxpayer Service Programs and Monitoring Division

REVENUE MEMORANDUM ORDER NO. 24-2000 issued August 4, 2000 prescribes the Year 2000 Audit Program for Revenue District Offices. The Program covers the investigation of 1998 and 1999 internal revenue tax returns by Revenue District Offices (RDOs), including income tax returns of fiscal-period taxpayers whose taxable years ended any day from July 1, 1998 to June 30, 2000. Except for cases involving claims for tax credit/refund, sales/transfers of properties and requests for tax clearance of taxpayers due to retirement of business which have to be acted upon immediately, tax returns for 1997 may be audited/verified subject to prior approval of the Assistant Commissioner, Assessment Service (ACIR, AS).

The issuance of Letters of Authority (LAs) will be based on the selection criteria specified in the Order. Specifically, mandatory audit will cover the following cases: 1) estate/donor's tax returns; 2) taxpayers retiring from business; 3) claims for income tax credit/refund; 4) transfer of property in exchange for shares of stocks and other sale, transfer or exchange of shares of stocks not listed in the stock market; 5) government withholding agents; and 6) taxpayers selected for tax audit based on third party information referred by the Assessment Service.

If the foregoing mandatory audits do not provide sufficient workload for the RDO, the Revenue District Officer may select the following top priority taxpayers for audit: 1) taxpayers in the district who filed break-even returns or with returns showing net loss for at least two (2) consecutive years; 2) top 100 taxpayers in the district in terms of gross sales/receipts where there is no VAT or percentage tax payment for the current year and the immediately preceding year; 3) taxpayers with substantial reduction in gross sales/receipts/tax payments and/or substantial increase in costs of sales and expenses; 4) taxpayers with substantial tax deficiency resulting from short-audit of their tax liabilities; and 5) taxpayers belonging to the top two industries within the respective area of jurisdiction of the RDO with the lowest percentage of tax compliance.

The Assessment Service shall match the lists of taxpayers submitted by the RDOs with the lists of taxpayers to be investigated by the audit divisions in the National Office prior to approval to preclude multiple issuance of LAs to the same taxpayer for the same taxable year. Cases to be covered by LAs shall be classified according to gross assets or gross sales/receipts, whichever is higher, as of December 31, 1997, December 31, 1998 and December 31, 1999 using the categories specified in the Order. All LAs shall be issued and approved by the Regional Director. However, no LAs for the investigation of taxpayers falling under the priority target taxpayers shall be issued by the Regional Director without prior written approval of the ACIR, AS. The policy on the simultaneous investigation of all liabilities of the taxpayer shall be followed. The practice of issuing mission orders, correspondence letters, or any other similar orders for the purpose of audit examination and assessment of internal revenue taxes under this Order is strictly prohibited.

Only Revenue Officers-Assessment Group shall be authorized to conduct audit and investigation of tax cases, whether in a principal or assisting capacity. The initial workload for every Revenue Officer will be a minimum of twenty (20) cases and maximum of thirty (30) cases. No new tax case shall be assigned to a Revenue Officer until he has completed the audit and has reported the following cases pending with him within one (1) month from the effectivity of this Order: a) prescribing cases/dockets; b) cases for re-investigation; c) cases involving claims for tax refund/credit assigned before April 30, 2000; d) third party information cases; e) cases of retiring taxpayers assigned before April 30, 2000; and f) cases held for more than twelve (12) months.

REVENUE MEMORANDUM ORDER NO. 25-2000 issued August 4, 2000 creates a Task Force to gather information and statistical data on certain industries for use of the Congressional Subcommittee Hearing on Ways and Means in aid of Legislation. The Project will cover companies falling under the following industries: a) telecommunications; b) pre-paid card providers; c) manufacturer of semi-conductor devices and other electronic components; d) banks, financing and pre-need companies; and e) airlines and shipping. The Task Force shall request from the LT Document Processing and Quality Control Division and the corresponding Revenue District Offices all the relevant tax data or copies of the tax information returns of the identified companies for taxable year 1999.

The analysis and evaluation of information will cover the following areas: a) gross profit ratio of each company and the standard gross profit ratio for the particular industry; b) compliance to applicable tax laws of each company and of the industry as a whole; c) industry issues; and d) possible areas with tax potential.

REVENUE MEMORANDUM ORDER NO. 26-2000 issued August 4, 2000 prescribes the policies and procedures in the conduct of the written qualifying examinations for Revenue Officers (Assessment and Enforcement) who will be assigned in the Makati Large Taxpayers District Office. The examinations will be conducted in two (2) parts. Part I (70%) will cover the provisions of the National Internal Revenue Code (NIRC), Revenue Regulations, audit guidelines, procedures and techniques. Part II (30%) will be an essay dwelling on the review of audit cases and management theories and practices (for Group Supervisors); and report-making and case studies (for Revenue Officers I to III). All personnel holding Revenue Officer I, II, III and IV (Assessment) items shall be eligible to take the qualifying examinations, on a voluntary basis. The examinations will be held on September 3, 2000 from 8:00 A.M. to 5:00 P.M. All examinees who will pass said qualifying examinations will no longer be required to take the written qualifying examinations scheduled in October 2000.

REVENUE MEMORANDUM ORDER NO. 27-2000 issued August 7, 2000 defines the new composition of the Committee on Disposal of Specialized Accountable Forms in the National Office. The Chairman of the Committee is the Assistant Commissioner, Financial and Administrative Service or his duly authorized representative. Members of the Committee are composed of the Chiefs of the Accountable Forms Division and Accounting Division or Revenue Accounting Division or their duly authorized representatives. One (1) representative from the Inspection Division and the Bureau's Resident COA Auditor or his duly authorized representative, will act as witnesses.

REVENUE MEMORANDUM ORDER NO. 28-2000 issued August 17, 2000 creates new Alphanumeric Tax Codes (ATCs) of revenue sources for proper classification of taxes. The following ATCs are created to cover taxes paid by stock, real estate, commercial, customs and immigration brokers: (1) other percentage tax - PT210; and (2) withholding tax on business - WB210. The aforementioned ATCs shall apply effective January 1, 2000. Beginning January 1, 2001, said ATCs shall be dropped and replaced by the following ATCs: (1) Value-added Tax - VB210; and (2) withholding of creditable VAT - WV210.

REVENUE MEMORANDUM ORDER NO. 29-2000 issued August 17, 2000 prescribes the policies and guidelines on the use and maintenance of the BIR E-mail and Internet browsing facilities. Except for BIR Management, the issuance of Internet accounts to users other than the officials specified in the Order shall be allowed only upon approval by the Deputy Commissioner of the Information System Group.

Users are encouraged to open/read mail daily. Dormant or inactive accounts for one (1) month shall be automatically deleted. Users availing leave of absence for one (1) month or more should notify in writing the Systems Support Division in order for their accounts not to be deleted.

The E-mail facility should be used for the purpose for which they are authorized (i.e. transmission of official documents etc.) and for enhancing communication for activities that serve the interest of the Bureau. As such, sending of chain letters and other inappropriate materials is not allowed. Accessing of pornographic web sites and downloading pornographic materials using the BIR Internet facility is also strictly prohibited. Moreover, transmission and/or retrieval of any material/document/information in violation of any of the existing policies of the Bureau and the Philippine Government is likewise strictly prohibited. Inappropriate/unauthorized use of the E-mail/Internet browsing facility may result in the revocation of issued account, plus the imposition of appropriate administrative sanction depending on the severity of the violation committed.

REVENUE MEMORANDUM ORDER NO. 30-2000 issued August 17, 2000 prescribes the year 2000 Audit Program for Excise Taxpayers. The Audit Program covers investigation of 1999, 1998 and unverified prior years internal revenue tax returns, including returns of fiscal-period taxpayers whose taxable years ended any day from June 1, 1999 to July 31, 2000 for taxpayers whose business are primarily engaged in the manufacture, production, importation and distribution of articles subject to excise tax. The issuance and approval of all Letters of Authority (LAs) pursuant to the Audit Program shall be done by the Commissioner of Internal Revenue and shall be based on the selection criteria specified in the Order. Mandatory audit of the following excise taxpayers will be conducted: 1) taxpayers retiring from business regardless of amount of gross assets, sales or receipts; 2) taxpayers requesting for merger/consolidation/split-up and other types of corporate reorganization; 3) claims for tax credit/refund of internal revenue taxes (except excise tax) of excise taxpayers; 4) excise taxpayers selected for audit based on third-party information; and 5) prescribing tax cases.

Moreover, the Assistant Commissioner for Excise Taxpayers Service (ACIR, ETS) shall conduct a short audit on the following cases: 1) inconsistencies of sales and purchases declared in VAT return against third party information; 2) taxpayers with substantial reduction in gross sales/receipts/tax payments and/or substantial increase in costs of sales and expenses; 3) inconsistency between VAT payment vis-à-vis excise tax payment; 4) VAT input is greater than VAT output for at least two (2) consecutive quarters; 5) unverified taxpayer's declaration of substantial increase in gross sale or revenue as per their own press release or publication; and 6) reported violations of the provisions of excise tax laws, rules and revenue regulations pertaining to production/removal of excisable articles.

For regular audit, selection of excise taxpayers will be based on the following order of priorities: 1) filing of break-even returns or returns showing net loss for at least two (2) consecutive years; 2) excise taxpayers with asset growth but reported net loss; 3) excise taxpayers with history of low/non-compliance; 4) multinational-corporate excise taxpayers; and 5) other selected excise taxpayers.

Non-LA cases shall be covered by Tax Verification Notices (TVNs) or Memoranda, which shall be issued and approved by the ACIR, ETS, unless otherwise delegated in writing to the Chief, Excise Taxpayers Operations Division.

A Revenue Officer/Group Supervisor shall not audit/investigate the same taxpayer for two (2) consecutive years/periods. Revenue Officers shall conduct the audit within one hundred twenty (120) days from the date of issuance of LA and submit their corresponding report of investigation. If the final report is not completed within the 120-day period, the Revenue Officers shall submit a progress report and shall request for the revalidation of said LA. For short audits, the investigation and submission of reports shall be completed within sixty (60) days from the date of issuance of LA.

REVENUE MEMORANDUM ORDER NO. 31-2000 issued August 17, 2000 prescribes the revised office codes for all BIR offices and the guidelines for its proper use. All internal revenue documents/official papers must indicate the office codes of the preparing/originating office. The office codes must be placed at the lower left hand corner (after the signature line) of the document/official paper. In addition, the initials of the personnel who prepared the document/official paper must be indicated below the office code.

REVENUE MEMORANDUM ORDER NO. 32-2000 issued August 22, 2000 prescribes the guidelines and procedures in the receiving, retrieval, processing and storage of tax returns in the Revenue District and Regional Offices. All "no payment" returns, including returns to be paid on 2nd installment, withholding tax returns covered by Tax Remittance Advice and returns paid through a Tax Debit Memo/Credit Memo shall be filed with and accepted by the concerned RDO where the taxpayer is registered. Revenue District Offices (RDOs) shall not accept no payment returns filed late but instead, these shall be filed with an Authorized Agent Bank (AAB) or Collection Officer/Deputized Municipal Treasurer (for municipalities with no AABs), for payment of necessary penalties.

The original and duplicate copies of returns/documents "with payment" from the AABs shall be picked up by the respective RDOs. The Revenue District Officers shall be responsible for monitoring and facilitating resolution of their return suspense errors. The Bank Document Analysts of the concerned RDO shall attend to the inquiries of AABs regarding the procedural and encoding errors they have committed. The Document Processing Section, on the other hand, shall be responsible for the temporary safekeeping of original returns and updating of document status in the ITS.

REVENUE MEMORANDUM ORDER NO. 33-2000 issued August 22, 2000 establishes the policies and procedures in the processing and issuance of Integrated Tax System (ITS)-generated Assessment Notice arising from return information discrepancy, late filing of tax return or nonpayment/underpayment of tax. The Revenue Data Center (RDC) shall be responsible for the generation and printing of the said Assessment Notices based on tax returns filed under the jurisdiction of ITS Revenue District Offices (RDOs). The Assessment Division (AD) of regional offices shall be given appropriate access to ITS to view the encoded information of taxpayers so they can review and evaluate the correctness of Assessment Notices before these are sent to taxpayers. The Regional Director concerned shall be the approving authority in the issuance of Assessment Notice.

REVENUE MEMORANDUM ORDER NO. 34-2000 issued August 29, 2000 extends the deadline for the filing of the Annual Information Return (BIR Form 1703) covering the taxable year 1999 from April 15 to October 31, 2000.

REVENUE MEMORANDUM ORDER NO. 35-2000 issued August 30, 2000 prescribes the policies and guidelines in classifying Information Technology (IT) equipment as obsolete and/or unserviceable. The Systems Standards and Technology Management Division shall prepare and update (as may be required) the standards/criteria to determine the obsolescence and/or unserviceability of IT equipment and peripherals. Inspection and certification of IT equipment and peripherals as obsolete and/or unserviceable shall be done by the: 1) Head, Computer Operations Network Engineering (CONE) of Revenue Data Centers (RDCs) - for IT equipment and peripherals located in/belonging to the RDC, Revenue Regions and Revenue District Offices; and 2) Chief, Systems Support Division (SSD) - for IT equipment and peripherals located in/belonging to offices within the National Office. The certifications issued by the CONE/SSD on obsolescence and/or unserviceability of IT equipment and peripherals shall be the basis of the Disposal Committee to warrant their disposal.

REVENUE MEMORANDUM ORDER NO. 36-2000 issued August 30, 2000 prescribes an Office Audit Program in the Assessment Division of Regional Offices. The Program shall cover the audit of tax returns of individual and corporate taxpayers, estates and trusts within the Region covering taxable years 1997, 1998 and 1999, in accordance with the order of priority specified in the Order. The Office Audit shall be conducted without field investigation and only by Revenue Officers (Assessment) of the Office Audit Section in the Assessment Division of Regional Offices. However, the Regional Director may request the conduct of office audit in Revenue District Offices which are located very far from the Regional Office, subject to the approval of the Assistant Commissioner, Assessment Service (ACIR, AS).

All office audit cases shall be covered by Office Audit Letters of Authority. The issuance of correspondence letter or any other similar orders for the purpose of audit examination shall be strictly prohibited. The policy on the simultaneous investigation of all tax liabilities of the taxpayer for the same taxable year shall be followed. One Letter of Authority shall be issued for each taxable year under audit, to include all internal revenue tax liabilities of the taxpayers.

The same taxpayer shall not be allowed to be audited for the immediate succeeding taxable year, unless there is a written justification for the conduct thereof and subject to prior approval by the ACIR, AS. The same Revenue Officer/Group Supervisor shall not be allowed to audit the same taxpayer for the immediately succeeding audit period. All reports of office audit shall be subject to final review and approval by the Regional Director.

REVENUE MEMORANDUM ORDER NO. 37-2000 issued September 8, 2000 prescribes the guidelines and procedures in the computation of the share of Local Government Units (LGU) in the 2% Special Privilege Taxes collected by the BIR from Mini-Hydroelectric Power Developers. For internal revenue tax purposes, the 2% Special Privilege Tax shall be based on the gross receipts derived by the mini-hydroelectric power developer from the sale of the electric power and from transactions incident to the generation, transmission and sale of electric power. Said tax is payable to the Commissioner of Internal Revenue or his duly authorized representative on or before the 20th day of the month following the end of each calendar or fiscal quarter.

The Treasurer of the LGU concerned shall be responsible in informing the Chief, Revenue Accounting Division (RAD) of the actual Special Privilege Tax collections paid to the BIR, based on the certifications of the Revenue Collection Officers (RCOs) of the Revenue District Office (RDO) concerned. Evidence of tax payments secured by the LGU Treasurer on the actual Special Privilege Tax paid by the mini-hydroelectric power developer shall be submitted to the Chief, RAD, together with the certification/s from the Revenue District Officer and Chief, Finance Division and the mini-hydroelectric power company. The LGU Treasurer shall inform the BIR, through the RCO of the RDO concerned, of any taxpayer who fails to pay the 2% Special Privilege Tax. All RCOs receiving such information from LGUs shall coordinate with the Chief, Finance Division and the Chief, RAD in enforcing the collection of said tax.

REVENUE MEMORANDUM ORDER NO. 38-2000 issued September 13, 2000 prescribes the guidelines and procedures in the conversion of accounts receivable cases for the Integrated Tax System (ITS). All manually identified potentially collectible accounts receivable (A/R) with complete information, as required by the Conversion Input Form (CIF), shall be converted, with priority to the current accounts. Conversion shall start at least five (5) weeks and end one (1) week prior to the scheduled rollout date of Receivables Capability. All A/R cases with incomplete information shall continue to be resolved and converted to ITS at least one (1) month after the rollout, but will not exceed six (6) months depending on the volume of A/R to be resolved.

The following offices shall be responsible for identifying and segregating A/R for conversion, based on the following group categories: a) Collection Enforcement Division -National Office A/Rs, including Excise Taxpayers Service A/Rs (regardless of amount), with the exception of large taxpayers accounts involving basic tax of P 1 Million and above; b) Collection Division - Regional A/Rs including basic tax of P 100,000.01 to P 999,999.99; c) Revenue District Offices - District A/Rs involving basic tax of P 100,000 and below; and d) Large Taxpayers Service - A/Rs of taxpayers under the jurisdiction of the Large Taxpayers Service, regardless of amount.

REVENUE MEMORANDUM ORDER NO. 39-2000 issued September 13, 2000 prescribes the policies and guidelines on data purification (cleanup activity) of registration, return and payment information of top taxpayers. Policies and guidelines for the generation of the annual top individual and corporate income taxpayers shall be based on the provision of RMO No. 7-2000. The conduct of data purification activity shall be scheduled as follows: 1) Registration Information - once a year (1st day of July of each calendar year); and 2) Return and Payment Information - every time a return and payment is expected. Cleanup activity for the aforementioned ITS application systems shall be limited to the mandatory data specified in the Order. For multiple and identical Taxpayer Identification Numbers, cleanup activity will be covered by the provisions under RMO 11-2000.

REVENUE MEMORANDUM ORDER NO. 40-2000 issued September 25, 2000 prescribes the policies, guidelines and procedures on the processing of Taxpayers' Record Update (TRU) Phase II data for non-computerized Revenue District Offices (RDOs), which have to be completed on or before December 31, 2000. All data contained in the TRU Phase II Application Forms of registered taxpayers, within the jurisdiction of RDO, must be encoded in the TRU Data Entry Program. The Information Systems Operation Service (ISOS) will validate all the data encoded sent by the RDOs through the TRU Validation Program.

The RDO will be responsible in resolving all suspended records resulting after every validation and upload to the Integrated Tax System (ITS) database. The ISOS, on the other hand, will be responsible for the immediate updating of taxpayers' registration information to the ITS database based on the Registration Information Update Form/Update of Exemption of Employers and Employees Information Form (Form 1905/2305) submitted by non-computerized RDOs. The ISOS will also cancel and transfer taxpayer records from non-computerized RDOs to other non-computerized RDOs and from non-computerized RDOs to computerized RDOs.

REVENUE MEMORANDUM ORDER NO. 41-2000 issued September 25, 2000 prescribes the guidelines and procedures in the conversion of accounts receivable cases for the Integrated Tax System (ITS). All manually identified potentially collectible accounts receivable (A/R) with complete information, as required by the Conversion Input Form (CIF), shall be converted, with priority to the current accounts. Conversion shall start at least five (5) weeks and end one (1) week prior to the scheduled rollout date of Receivables Capability. All A/R cases with incomplete information shall continue to be resolved and converted to ITS at least one (1) month after the rollout, but will not exceed (6) months depending on the volume of A/R to be resolved.

The following offices shall be responsible for identifying and segregating A/R for conversion based on the following group categories: a) Collection Enforcement Division-National Office A/Rs, including Excise Taxpayers Service A/Rs (regardless of amount), with the exception of large taxpayers accounts involving basic tax of P 1 Million and above; b) Collection Division - Regional A/Rs including basic tax of P 100,000.01 to P 999,999.99; c) Revenue District Offices - District A/Rs involving basic tax of P 100,000 and below; and d) Large Taxpayers Service - A/Rs of taxpayers under the jurisdiction of the Large Taxpayers Service, regardless of amount.

REVENUE MEMORANDUM ORDER NO. 42-2000 issued September 26, 2000 prescribes the policies and procedures to intensify the collection/settlement of delinquent accounts and disputed assessments through compromise. Cases which may be subject to compromise settlement are the following: 1) delinquent accounts; 2) cases under administrative protest pending in the Regional Offices, Revenue District Offices, Legal Service, Large Taxpayers Service (LTS), Enforcement Service (ES), Excise Taxpayers Service (ETS) and Collection Service; 3) cases disputed before the courts; 4) cases for collection filed in courts; and 5) criminal violations, other than those already filed in court or those involving fraud.

Cases that cannot be the subject of compromise settlement are: 1) withholding tax cases; 2) criminal tax fraud cases; 3) criminal violations already filed in court; 4) cases involving assessments issued after June 30, 2000; and 5) delinquent accounts with duly approved schedule of installment payments.

All National and Regional Offices are authorized to accept taxpayers' offers of compromise of all outstanding delinquent accounts and disputed assessments as of June 30, 2000, based on the prescribed minimum percentages specified in the Order. For delinquent accounts and disputed assessments of taxpayers registered under the LTS and ETS, the same shall not be compromised for less than 50% of the basic assessed tax. Assessments already issued and sustained by any Court, but has not become final, may be the subject of compromise upon payment of 100% of the basic assessed tax.

The acceptance or approval of a taxpayer's offer of compromise will be based on the following grounds: 1) a reasonable doubt as to the validity of the claim against the taxpayer exists; and 2) the financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.

A taxpayer's offer of compromise shall be subject to the approval of the National Evaluation Board (NEB) if the basic assessed tax exceeds P 1 million or the settlement offered is less than the minimum rates of 40% (for doubtful validity), 10% (for financial incapacity) and 50% (in cases of taxpayers registered under the LTS and ETS) of the basic assessed tax. The Regional Evaluation Board (REB), on the other hand, will evaluate and approve applications for compromise settlement of assessments issued by the respective Regional Offices involving basic assessed taxes of P 500,000.00 or less. For assessments issued by the Regional Offices where the basic assessed tax exceeds P 500,000.00 but not over P 1,000,000.00, or for assessments issued by the National Office where the basic assessed tax does not exceed P 1,000,000.00, the compromise offer shall be approved by the Commissioner of the Internal Revenue.

Cases with Warrants of Distraint and/or Levy and/or Warrants of Garnishment are also covered in the Compromise Settlement Program. Cases with final decision of any court, on the other hand, can only be compromised on the ground of financial incapacity.

The deadline for the filing of the application for compromise settlement is November 15, 2000.

REVENUE MEMORANDUM ORDER NO. 43-2000 issued October 5, 2000 prescribes the policies and guidelines for the establishment of a credible and standardized Performance Evaluation System (PES) for the BIR. The PES provides the standards and guidelines for setting up specific and measurable performance targets, which must be mutually agreed upon by the supervisor and subordinate at the beginning of the appraisal period. The performance of an employee will be evaluated in relation to said performance targets and will be done every six (6) months ending June 30 and December 31 of every year. In the case of temporary, casual, contractual/emergency employees, assessment of their performance will be done 30 days prior to the end of their appointment period.

All seconded/detailed personnel assigned to a Special Project will be rated by their respective project supervisors. In the case of employees who are sent on training/scholarship for more than three (3) months, their performance rating for the last rating period prior to the grant will be considered.

The PES uses a cross-rating scheme to include the rating given by the employee's supervisor and the rating given by peers, subordinates and clients. For this purpose, Subordinate raters and Peer raters will be identified at the start of the rating period.

Only employees with Outstanding and Very Satisfactory performance rating will be considered for promotion. Two (2) successive Unsatisfactory ratings or one (1) Poor rating will be ground for dismissal of an employee from the service.

The Service Chiefs, Regional Directors, Division Chiefs, District Officers, and heads of sections/units will be responsible for the rating of their employees' performance and compliance with the system. A Performance Evaluation Review Committee in the Service and the Regional Offices is created to review the performance standards, targets and final rating of personnel.

REVENUE MEMORANDUM ORDER NO. 44-2000 issued October 23, 2000 prescribes the policies and guidelines on the proper use of the location, department and job codes tables for the Human Resource Management Information System (HRIS) and the Financial Management Information System (FMIS).

The HRIS will provide an integrated human resource system for personnel administration, training management, training delivery and employee welfare. The FMIS, on the other hand, will provide a financial reporting system for budget, accounting and cashiering functions. The codes will serve as primary keys in accessing information within the HRIS and FMIS. Information Technology personnel and functional users from the different divisions under the Human Resource Development Service and Financial and Administrative Service will be given different levels of access to the HRIS and FMIS based on their designation and function. Users granted a read-only access may request for a change of personal information with the Personnel Division.

The location codes will be used to indicate whether a particular office is located at the National Office or under the Revenue Regional Office. The department codes, on the other hand, will be used to indicate the group, service and division to which a section or unit belongs.

REVENUE MEMORANDUM ORDER NO. 45-2000 issued October 23, 2000 prescribes the policies, guidelines and procedures relative to the grant of study leave to BIR personnel. In order to qualify, applicants for study leave must be a permanent BIR employee not more than 60 years of age, and a graduate of Bachelor's degree which requires the passing of Bar or Board Licensure Examinations. For Bachelor's Degree requiring thesis writing or comprehensive examination, the applicant must have completed all the academic requirements for a Master's Degree. The profession or field of study to be pursued must also be relevant to the agency or to the official duties and responsibilities of the applicant.

The applicant must also have rendered at least two (2) years of revenue service with a performance rating of Very Satisfactory for the last two rating periods immediately preceding the application. Likewise, the applicant must have no pending administrative and/or criminal charges, including pending service obligation from previous local or foreign scholarship and training contract.

Qualified BIR personnel may avail of the study leave only once, for a maximum period of six (6) months. Revenue officials and employees who are on study leave will not be considered for promotion during the period of the study leave.

REVENUE MEMORANDUM ORDER NO. 46-2000 issued October 23, 2000 prescribes the audit policies and procedures in the investigation of internal revenue tax liabilities of enterprises registered with the Philippine Export Zone Authority (PEZA) for taxable year 1999. For fiscal period taxpayers, taxable year 1999 will include all corporations with fiscal years ending on or before June 30, 2000.

Taxpayers under the jurisdiction of the Large Taxpayers Service, Excise Taxpayers Service and Enforcement Service will not be included in the Program. Likewise, taxpayers under the regular audit jurisdiction of the concerned Revenue District Offices will not be included in the Program where Letters of Authority/Audit Notice (LA/AN) for the investigation of PEZA-registere