REPUBLIC OF THE PHILIPPINES DEPARMENT OF FINANCE BUREAU OF INTERNAL REVENUE JOINT OPERATION MEMORANDUM NO, _94- 2020 TO + The Regional Directors ‘The Revenue District Officers ‘The Chiefs, Regional Assessment Division ‘The Chiefs, Regional Investigation Division ‘The Chiefs, Regional Collection Division SUBJECT: ISSUES IN THE IMPLEMENTATION OF JOINT OPERATIONS MEMORANDUM NO. 01-2019 DATED JUNE 3, 2019 CONCERNING ASSESSMENTS PURSUANT TO ISSUED LETTER NOTICES AND (OTHER CONCERNS DATE October 28, 2020 anneal ‘This refers to Paragraph 3 of the Joint Operations Memorandum (JOM) No. 01-2019 dated June 3, 2019, concerning assessments pursuant to issued Letter Noties (LN), as well as other issues and concerns relating to LNs. Paragraph 3 refers to assessments covered by LNS which are dated January 2010 and ‘onwards, and provides that; If the discrepancy is 30% or less, the concerned office shall recommend for the issuance of Authority to Cancel Assessment (ATCA) since the assessment is no longer within the three (3) year period to asses; o, If the discrepancy exceeds thirty percent (30%) and the 10-year prescriptive Period to assess has not yet prescribed!, based on the date of the LN as the reckoning date, the LN shall be referred for issuance of electronic Letter of| ‘Authority (€LA) to the Regional Investigation Division (RID) of the Revenue ‘Region that has jurisdiction over the Revenue District Office (RDO) where the taxpayer is registered; or In the course of the implementation of JOM No. 1-2019, the following concems and issues were encountered by the Regional investigation Division (RID): * Se. 22(0) ofthe Nation2 MO Wo, 27-2010 SERRATE VERO REVENGE ‘Given that the said Paragraph applies to LNs issued on January 2010 and beyond, a considerable number of LN dockets that have been pending for years were suddenly forwarded tothe RID. Initial investigations conducted in preparation for the request for a Letter of Authority under the RATE Program? shows that several taxpayers who are the subjects of the LNs are already non-operationel and/or cannot be located at their respective registered addresses. Should an LA under the RATE Program be issued, the LA and the corresponding assessment notices cannot be served onthe taxpayer Similarly, some customers and/or suppliers ofthe subject taxpayers are already non- ‘operational, Thus, even if criminal case under a RATE program i filed, it may be rendered futile by the absence of witnesses who can testify to the alleged sales/purchases in the LN, Several LNs were already approaching their ten (10) — year prescription period when they were forwarded to the RID. Thus, the RID was not afforded sufficient time to conduct a thorough investigation that could lead to the issuance of a Final ‘Assessment Notice (FAN) before prescription goes into effect. . There are likewise LNs for which corresponding LAs were issued (LN+LA). However, no FAN was issued for these LAs within the three (3) ~ year prescriptive period. After remaining pending in the RDOs for years, these LN4LA cases were forwarded tothe RID barely a year before prescription is due to set in, . In other instances, there are LN¥LA cases wherein a FAN / Formal Letter of Demand (FLD) was already issued by the Assessment Division. Should the case be forwarded to the RID for a request for an LA under the RATE program, the RID will be required to repeat the assessment process fom the tart, Once the RID is issued an LA, it cannot simply adopt the findings of the RDO ‘because such action would not constitute personal knowledge on the part of the RID, for the purpose of filing the necessary criminal complaint under the RATE. program. Under present regulations, the RID will therefore have to repeat the entire assessment process, whereas the RDO which was initially issued the LA already has sufficient data to issue an Assessment Notice and file the appropriate criminal charges. Allowing the RDO to continue their investigation ~ even in fraud cases, subject to the Regional Director's approval ~ would be in the interest of efficient and timely tax collection efforts. This would also encourage examiners in the RDO to steadfastly recommend the issuance of Assessment Notices within the three (3) - year period and discourage them from belatedly endorsing their dockets to the RID Just afew months before the ten (10) ~ year prescription sets in, . Examiners in the RDOs are often transferred. In fraud cases where the examiners named in the LA have already been transferred to another district and the three (3) ~ year period has already lapsed, the Regional Director is curently unable to issue Page2‘anew LA to the new examiners for continuance of assessment, even if the 10-year period has not yet lapsed, In view of the foregoing and inthe interest of prompt, effective and efficient collection ‘of taxes, the following regulations/guidelines shall be implemented: 1. The RID, subject to approval ofthe Regional Director, shall be authorized to close «particular LN docket on the following grounds: 1. That the taxpayer cannot longer be located; '. That the customers/suppliers can no longer be located; ©. The verified sales/purchase of the remaining customers/suppliers constitutes less than or equal to thirty percent (30%) under-declaration of sales or over= declaration of purchases, andthe three (3) - year prescriptive period has already commenced; and, 44. ThataRer evaluation ofthe docket, there is no prima facie evidence of fraud and the 3-year prescription has already set-in. 2. The RDO, Assessment Division and the Regional Director, shal be allowed to issue an NIC/PAN/FAN/FLD/FDDA even beyond the three (3) — year prescriptive period, in cases where there is prima-facie evidence of fraud. 3. The Regional Director shall be allowed to issue a new LA to the concerned RDOs for cases where there is with prima facie evidence of fraud, where the previous ‘examiners have already been transferred but the ten (10) — year prescriptive period hhas not yet commenced, 4. The RID shall determine the administrative liability, if any, of the Revenue Offcer/s previously assigned to each Letter Notice/s, For your information and compliance. Approved by: _/meoahtten , CAESAR R. DULAY Commissioner of Internal Revenue % 038561 Pages