Dulay stops tax audits, repeals Henares rules on first day at BIR

New Bureau of Internal Revenue (BIR) chief Caesar R. Dulay has repealed all of the new rules that his predecessor Kim S. Jacinto-Henares issued last month as well as suspended ongoing audits on taxpayers.

On Friday, his first day as commissioner of the BIR, Dulay issued Revenue Memorandum Circular No. 69-2016, under which “the effectivity of all revenue issuances issued within the period covering June 1-30, 2016, is hereby suspended until further notice.”

Dulay said the suspension of the implementation of the rules issued during the month of June, which tax managers allege as “midnightissuances” of the feisty Henares, takes effect immediately.

Among the controversial issuances issued by Henares last month include Revenue Memorandum Order (RMO) No. 24-2016 issued on June 8, which mandated possible audit or investigation of parties in transactions involving the assignment, sale or transfer of properties.

According to the Tax Management Association of the Philippines (TMAP), RMO 24-2016 “promotes corruption” as it “gives the BIR examiners wide latitude of discretion in determining what would constitute necessary documents to be submitted, and determine capacity to acquire.”

TMAP had also lamented that the RMO presumes taxpayers to have committed fraud, as well as was unreasonable, unfair and unjust to taxpayers.

To address this concern, Dulay also on Friday issued RMO 38-2016, which revoked RMO 24-2016 and a subsequent amendment under RMO 25-2016.

“After careful evaluation of the guidelines and procedure relative to the investigation of parties in transactions involving the transfer/assignment/sale of properties, RMOs 24-2016 and 25-2016 are hereby recalled pursuant to the power of the Commissioner under Sections 4 and 7 of the National Internal Revenue Code of 1997, as amended,” Dulay said.

In this regard, Dulay said all transactions earlier affected by RMOs 24-2016 and 25-2016 would no longer have to be subjected to those rules.

Also, Dulay recalled letters of authority, the official document that empowers revenue officers to examine and scrutinize taxpayers’ books in order to determine their correct tax liabilities.

In Revenue Memorandum Circular No. 70-2016 issued also on Friday, Dulay said “all field audit and other field operations of the BIR relative to examinations and verifications of taxpayers’ books of accounts, records and other transactions are hereby ordered suspended until further notice.”

“As such, no field audit, field operations, or any form of business visitation in execution of letters of authority/audit notices, letter notices, or mission orders should be conducted,” Dulay said.

Also, “no written orders to audit and/or investigate taxpayers’ internal revenue tax liabilities shall be issued and/or served except in the following cases: investigation of cases prescribing on or before Oct. 31, 2016; processing and verification of estate tax returns, donor’s tax returns, capital gains tax returns and withholding tax returns on the sale of real properties or shares of stocks together with the documentary stamp tax returns related thereto; examination and/or verification of internal revenue tax liabilities of taxpayers retiring from business; audit of national government agencies, local government units and government-owned and controlled corporations including subsidiaries and affiliates; and other matters/concerns where deadlines have been imposed or under the orders of the Commissioner of Internal Revenue,” Dulay said.

“However, service of assessment notices, warrants and seizure notices should still be effected. Also, taxpayers may voluntarily pay their known deficiency taxes without the need to secure authority from concerned revenue officials,” the BIR chief added.

The new BIR commissioner hence also ordered an inventory of all outstanding letters of authority, audit notices and letter notices as of June 30, which he said must be submitted to him before the July 16 deadline./rga