ACCEPTING APPLICATIONS

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Lascona Land Co., Inc v. CIR; GR#171251, March 5, 2012

“Taxes are the lifeblood of the government and so should be collected
without unnecessary hindrance. On the other hand, such collection
should be made in accordance with law as any arbitrariness will negate
the very reason for government itself. It is therefore necessary to
reconcile the apparently conflicting interests of the authorities and the
taxpayers so that the real purpose of taxation, which is the promotion of
the common good, may be achieved, Thus, even as we concede the
inevitability and indispensability of taxation, it is a requirement in all
democratic regimes that it be exercised reasonably and in accordance
with the prescribed procedure. -

RMO 53-2010.
“Should there be any adverse findings against the tax case of a taxpayer in
the course of an audit investigation or other forms of inquiry, such
findings should be discussed in an equitable manner and resolved in
accordance with prescribed procedures. The importance of courtesy
and respect; and the observance of the prescribed guidelines and
procedures in the conduct of tax audit and examination, as well as tax
mapping operations and similar activities, must be strictly upheld, in
order to foster and maintain cordial relationships with Attorneys and
Accountants of taxpayers. It is likewise to apprise the taxpayers of their
rights embodied in the Taxpayer’s Bill of Rights and Obligations, which
is posted on the BIR Official Website.”

RAMO 1-2000
“In conducting the examination of a taxpayer’s returns and records, the
revenue officers and officials’ responsibility is twofold: TO THE
TAXPAYER AND TO THE PHILIPPINE GOVERNMENT and their
mission is to enforce internal revenue laws with IMPARTIALITY,
CONSISTENCY, COLLECT THE CORRECT AMOUNT OF TAXES AT
THE LEAST COST TO THE GOVERNMENT AND LEAST
INCONVENIENCE TO THE TAXPAYER AND SERVE THE PUBLIC
HONESTLY AND EFFICIENTLY IN A MANNER THAT WILL ELICIT
THE HIGHEST LEVER OF CONFIDENCE IN THE BUREAU OF
INTERNAL REVENUE. 


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NICE TO REMEMBER.
1. “Commencement of Business” – in the case of pursuit of
business or practice of profession, it shall be reckoned from
the day when the first sale transaction occurred or within thirty
(30) calendar days from the issuance of Mayor’s Permit/
Professional Tax Receipt (PTR) by LGU, or Certificate of
Registration issued by the Securities and Exchange
Commission (SEC), whichever comes earlier.
2. “Updates” – shall mean the process by which the information
previously supplied during the Primary Registration process
are changed or modified (e.g. surname, address within same
district office, exemption status and qualified dependents, etc)
either upon the taxpayer’s or BIR’s initiative. It shall include
end dating the registered tax types of a business of an
individual on the occasion of such individual’s cancellation of
his or her business registration or during temporary non-
operations (e.g. labor disputes, business reverses, etc.).
3. “Stop Filer cases” – shall refer to system created cases when a
taxpayer fails to file a return for a required tax type for a
taxable period (e. i. Income Tax, VAT, Percentage Tax, etc.,)
which is required to be filed regularly (monthly, quarterly,
annually).
4. “End dating” – shall, for purposes of preventing the creation of
stop filer cases, refer to the process of indicating in the system
the end of the taxable period or date of the last return period
for a particular registered form type/tax type for which a return
is required to be filed.
5. “Tagging” – shall mean the process by which the business
registration information of a taxpayer is tagged as “Inactive”
but nonetheless remains part of the BIR’s registration
database.
6. “Inactive” - shall refer to the status of the business of any of the
following:
a. A non-individual taxpayer that has notified the BIR district office
of the temporary cessation of its business operations;
b. A taxpayer that has stopped filing all its tax returns for the last
two (2) years, which requires issuance of a notice of
investigation;
c. A newly registered taxpayer who fails to file the required tax
returns/declarations due for the applicable initial quarter;
d. A taxpayer that may be identified as such by the CIR in a
separate revenue issuance.

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START OF THE PROBLEM.

Every person subject to any internal revenue tax to be filed/paid
periodically shall complete his registration with the BIR on or before
the commencement of business. A person shall be considered to
have violated this provision when he/it proceeded to this stage after
the lapse of thirty (30) calendar days from the issuance of Mayor’s
Permit/PTR by the concerned LGU, or COR issued by the SEC or
the date of his first sales transaction prior to his registration. 


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AFFECTED BIR FORMS.

Every person, who is required to register with the BIR, shall register
each type of internal revenue tax for which he is obligated to file a
return or pay taxes due thereon.
Generally, registration of tax types by a business entity consists of but
not limited to the following internal revenue taxes/fees:
1. Income tax;
2. VAT;
3. Percentage tax;
4. Withholding tax on compensation;
5. Creditable withholding tax at source on certain income payments;
6. Final withholding tax on certain income payments;
7. Documentary Stamp Tax;
8. Excise tax; and
9. Annual Registration Fee.
In order to avoid the generation of invalid “stop-filer” cases in the BIR’s
database, only those tax types which the taxpayer is expected to
regularly/periodically file the return and/or pay the tax shall be
registered.


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WHEN AN UPDATE IS REQUIRED.

Every taxpayer shall update the BIR for any changes in his registration
information, including cancellation or change in any tax types
In case a taxpayer fails to update his tax types prior to filing/payment
of a tax return, the duly authorised BIR personnel must register the
corresponding tax type for the Tax Return to be filed/paid except for
VAT and/or percentage taxes which must be applied for by the
taxpayer. The BIR personnel initiating the update in behalf of the
taxpayer must inform him of such update, in writing, to give due
notice on his obligation to subsequently file the return on a regular
basis on or before the prescribed deadline for filing.



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FROM ACTIVE TO INACTIVE.

Every registered taxpayer who failed to file any tax return for two (2)
consecutive years or more shall be tagged as “Inactive”.
Downside as of the date of tagging/end-dating:
1. Cancellation of all CRM/POS Permits issued
2. Invalidation of all unused Official Receipts/Invoices, or which a
valid ATP has been previously granted
3. Issuance of Letter of Authority for the conduct of audit
4. Issuance of Mission Order for the conduct of surveillance and/or
stocktaking/inventory taking
5. Closure of business operations
6. Filing of appropriate criminal/civil charges before a court
7. Extension of prescription to assess a tax extends


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SOURCES OF THE PROBLEM.

1. Erroneous registration of taxpayers’ tax types
2. Suspension in the Collection and Bank Reconciliation System
(CBR)
a. Invalid TIN
b. Invalid form type
c. Invalid tax type
d. Invalid return period
3. Suspension in the Returns Processing System (RPS)
a. Non-encoding
b. Unclean registration database.




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STOP THE COUGHING.

Every registered taxpayer, who received a Reminder Letter from the
BIR, must response within 5 days upon receipt thereof. His must
contain all relevant information that will stop the accumulation of
more open cases. For this purpose and at his option, a taxpayer may
file no-operation returns for the current month/quarter/year.
Ask for the notice prepared by the BIR incorporating additional tax
returns to be filed by a taxpayer.



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REDUCE THE VOLUME TO PAY LESS PENALTIES.

Every registered taxpayer, who failed to file any tax return for more
than two (2) years and is now being required to pay compromise
penalties for all taxable years concerned, may
(a) Submit the alleged unfiled/unpaid BIR Forms which in reality, they
were already filed
(b) Prepare and file the real unfiled-tax-returns
(c) Invoke that the maximum compromise penalties shall not exceed
two (2) consecutive years or twenty five thousand (25,000) pesos
per year pursuant to Section 250, Tax Code
(d) File an Application for Compromise Settlement pursuant to Section
204, Tax Code
Ask for the notice prepared by the BIR incorporating additional tax
returns to be filed by a taxpayer.


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(Sample Only)

OFFER OF COMPROMISE1

Date: _____________

The Regional Director/Assistant Commissioner

Name of Office: _______________________

Dear Sir:

The undersigned representing (Name of Taxpayer) hereby acknowledge the

apprehension made by the Revenue Officer/s under Apprehension Slip No. (Place the
number) dated (Place the date) for (State the violation/infraction)and since it was a
(first) offense, I hereby offer to pay a compromise penalty amounting to(Place the
amount in number, Philippine pesos) Pesos: (Place the amount in words).

Sign
(Print name true and complete name)
TIN (Place the number)

Accepted:

_________________
Regional Director/ACIR/CIR


1 Annex B, RMO 19-2007

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It is well-settled that compromise penalties are amounts collected by the Bureau of

Internal Revenue in lieu of criminal prosecution for violations committed by taxpayers,
the payment of which is based on a compromise agreement validly entered into
between the taxpayer and Commissioner of Internal Revenue (Collector of Internal
Revenue vs. UST, 104 Phil. 1 062). A compromise implies mutual agreement. Absent
any showing that petitioner consented to the compromise penalty, its imposition
should not be allowed. As already established, the imposition of the same without the
conformity of the taxpayer is illegal and unauthorized (Commissioner of Internal
Revenue vs. Lianga Bay Logging Co., Inc., 193 SCRA 92- 93). Since conviction for 

failure to register books of accounts, failure to keep/preserve records, and failure to
make/file returns or supply information are wanting in the instant case, and since there
is no showing that petitioner voluntarily entered into a compromise agreement with
respondent, the compromise penalty of P25,000.00 is hereby ordered cancelled. (CTA
Case No. 7363 dated June 9, 2010)

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CLOSE AND SOLVE THE PROBLEM PERMANENTLY.

Every registered taxpayer, who was tagged as a ‘stop-filer’ and is no
longer interested to continue his business operations, must
permanently terminate his registration with the BIR. For this purpose,
he must submit the following …
(a) Notarised Affidavit of No Operations
(b) Certificate from the Barangay Officials attesting non-operations/
cessation of business activities
(c) Certificate from the Business Permit and Licensing Office attesting
the closure of business operations
(d) BIR Form No. 2303
(e) BIR Form No. 1901 for individual and 1903 for non individual
(f) all unused official receipts and sales invoice in which a valid ATP
has been previously granted
(g) registered books of accounts
Ask for the notice prepared by the BIR incorporating additional tax
returns to be filed by a taxpayer.

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