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Date Filed: 06 October 2015
I. OBJECTIVES

In compliance with the provisions of Revenue Memorandum  Circular (RMC) Nos. 30- 2015 and 36-2015  relative  to the conversion  of Provisional  Permit to Use (PTU) to Final PTU and the one-time submission of inventory list of all Point- of-Sale (POS)/Cash Register Machine (CRM)/Special Purpose Machine (SPM) and/or other similar machines  generating  invoices/receipts,  this Order is issued to:

1.     Prescribe  uniform  guidelines  and  procedures  in  handling  data/information generated through the data matching process; and

2.     Define roles and responsibilities  of all concerned offices for a more effective monitoring and implementation hereof.

II. GUIDELINES AND PROCEDURES

1.     The  Client  Support  Section  (CSS)  (or  its  equivalent  section)  of  the Revenue District Office (RDO)/Large Taxpayers Assistance Division (LTAD)/Excise  LT  Regulatory  Division  (ELTRD)/Large  Taxpayers Division (LTD) – (Makati/Cebu) shall:

A.   Receive the one-time Inventory List of all POS/CRM/SPM  and any other similar machines generating  receipts/invoices  pursuant to RMC No. 36- 2015 on or before July 31, 2015;

B.   Check completeness of the required documents, as follows:

i.     Hardcopy and softcopy (DVD-R) of the inventory list and labeled in accordance  with  the  format  prescribed  per  Annex  “A”  and  “B”  of RMC No. 36- 2015; and

ii.     Notarized Sworn Declaration duly signed by the taxpayer or his/her authorized representative (Annex “C” of RMC No. 36-2015);

C.  Pre-validate the inventory list data by checking if the submitted file is corrupted,  or  if  data  is  complete  (e.g.,  unfilled  columns,  erroneous entries, etc.);

D.  Upload  the pre-validated  list to the BIR  data  warehouse  on or before October 30, 2015, which will then be retrieved by BID for matching and reconciliation with BIR database;

E.   Receive   and   validate   all  the   matching   results   from   the   Business Intelligence Division (BID) and subsequently initiate the validation procedures within ten (10) days from the receipt thereof;

F.   Validate  all  machines  of  each  taxpayer  as  identified  on  the  List  of Matched CRM/POS and Compliance on e-Sales Report (Annex “C”) to determine  compliance  with the submission  of monthly sales report thru the Electronic  Sales  (eSales)  Reporting  System  pursuant  to RMO  No. 12-2012 in relation to RR No. 5-2005.

Subsequently, forward the validated list to the Assessment Section (RDO/LTDO/concerned  LT-Audit Division) for the imposition of corresponding penalties.

A penalty of One Thousand Pesos (P1,000) for each month of non- submission  of eSales report per machine  shall be imposed,  in case of failure  to comply  with the monthly  eSales  requirements  in accordance with the provisions  on compromise  penalties  under Section  250 of the NIRC of 1997, as amended, and further reiterated on Revenue Memorandum  Order  No. 7-2015.  However,  payment  of penalties  shall not relieve the taxpayer from the submission of the prescribed Inventory List pursuant to RMC No. 36-2015.

Further,  receive  the approved  Letter Notice of Non-compliance  (Annex “A-1” and/or “A-2”) from the Assessment Section (RDO/LTDO/concerned LT-Audit Division);

G.  Verify if the taxpayer complied with the declaration of Z-reading based on the   submitted   taxpayer’s   inventory   list.   Otherwise,   the   appropriate penalty  for  noncompliance   with  the  reporting  requirements   must  be imposed based on existing revenue issuances. However, payment of penalties  shall  not  relieve  the  taxpayer  from  the  submission  of  the prescribed Inventory List pursuant to RMC No. 36-2015.

Subsequently, forward the validated list to the Assessment Section (RDO/LTD-Makati  & Cebu) and to the concerned LT Audit Divisions (for LTAD & ELTRD) for immediate conduct of determining the Z-reading of the POS/CRM and other similar machines/sales receipting software;

H.  Execute the following procedures upon determination that the taxpayer’s inventory list DOES NOT MATCH with the list generated from the BIR database:

a.     Accomplish the applicable validation report depending on the type of machine: Validation Report on Unmatched POS/CRM (Annex “F-1”) and/or Validation Report on Unmatched SPM (Annex “F-2”), which delineates the analysis and detailed result of BIR validation including the amount of penalties imposed for each violation.

b.     Determine if the taxpayer has a pending application for registration of machine/s, in case machine was specified on the taxpayer’s Inventory List but NOT EXISTING on the list of POS/CRM/SPM generated from the BIR database (e.g. machine is unregistered,  or was not uploaded in the database during migration, etc.). Otherwise, require the taxpayer to register online and impose the appropriate penalties/sanctions for non-registration;

c.     Verify if the taxpayer  has a pending  application  for cancellation  of machine/s  by  requiring  the  submission   of  a  written  justification and/or proof of cancellation*,  in case machine  was not included  in the taxpayer’s  inventory list but EXISTING  from the BIR-generated list  of POS/CRM/SPM  (e.g.,  machine  was  cancelled  without  prior notice to BIR). Ohterwise, impose appropriate penalties/sanction as prescribed under RMO No. 9- 2006 in relation to RMO No. 7-2015.

*Note: The proof of cancellation is any of the following:

1.  Approved Certificate of Cancellation from the BIR; and/or

2.  Letter   Application   of   Cancellation   (for   pending   cancellation applications) and other follow-up letters related thereto;

d.     Consider discrepancies, among others, to wit:

1.  Permit No.;

2.  Permit Type;

3.  PTU with several machines;

4.  Multiple Machines under one (1) PTU;

5.  Active machines with Provisional PTUs; and

6.  Others, per Annex “A” of RMC No. 36-2015;

I.     Revoke all machines with Provisional  Permit to Use (PTU), which were not converted to Final PTU until July 31, 2015 in accordance with RMC No.  30-2015  following  the  revocation  guidelines  provided  under  RMO No. 10-2005;

J.   Validate the Discrepancy Report (Annex “E”) submitted by the BID and forward the same to the Assessment Section (RDO/LTD-Makati  & Cebu) and to the concerned LT Audit Divisions (for LTAD & ELTRD) for further investigation/enforcement actions; and

K.   Determine the level of taxpayers’ compliance with the submission of the Inventory List pursuant to RMC No. 36-2015. Those taxpayers unable to submit within the prescribed  deadline shall be immediately  notified and be subjected automatic revocation of the taxpayer’s PTU and immediate post-evaluation of the CRM/POS/SPM, if warranted.

2.     The Assessment  Section (RDO/LTD-Makati/Cebu  and Large Taxpayers Service Audit Divisions) shall:

A.   Receive   from   the   CSS   (or  its  equivalent   section)   of  RDO/   LTD- Makati/Cebu and LTAD & ELTRD (Large Taxpayers Audit Divisions) the following documents:

i.     Validated list of taxpayers who violated the required monthly eSales report and impose the appropriate penalties and compliance on the submission of the prescribed Inventory List pursuant to RMC No. 36- 2015, by accomplishing Letter Notice of Compliance (Annex “A-1” and/or “A-2”), which will be indorsed to the CSS (or its equivalent) upon approval of the Head of Office (RDO/Chief);

ii.     Validated  list  of  taxpayers   without  Z-reading   declaration   in  the submitted  inventory  list  for  the  immediate  conduct  of  Z-reading and/or post-evaluation procedures; and

iii.     Validated  Discrepancy  Report  (Annex  “E”) for further  investigation and/or enforcement actions.

3.     The Business Intelligence Division (BID) shall:

A.   Retrieve the pre-validated Inventory List uploaded by RDO/concerned LT offices from the BIR data warehouse for matching with BIR database;

B. Generate reports on Inventory List of POS/CRM/SPM and/or other invoice/receipt  generating  machines  from BIR database  as of June 30, 2015;

C.  Generate reports on the required submission of monthly sales report via Electronic Sales (eSales) Reporting System for Taxable Year 2014 and for the period January to June, 2015. In the event that there are several submissions  of eSales report for a particular month/s (amended report), the last amended report submitted shall be considered;

D.  Match and reconcile the pre-validated Inventory List received from RDCs with the BIR extracted list. Results of data matching shall be reported in the format prescribed under the following Annexes:

i.     List of Matching Results (POS/CRM/SPM)  ( Annexes “B-1” & “B-2“)
– this report will contain the complete result of the matching done between the BIR Inventory database and the taxpayer’s submitted Inventory  List  (matched/unmatched)  on  all POS/CRM/SPM  and/or other invoice/receipt generating machines;

ii.     List of Matched POS/CRM/SPM (Annex “C”) – this report will contain the  list  of  all  matched   POS/CRM/SPM   and  the  corresponding monthly   eSales   as   reported   in   the   Electronic   Sales   (eSales) Reporting System for Taxable Year 2014 and for the period January to June, 2015;

iii.     List  of  Unmatched  POS/CRM/SPM  (Annex  “D”)  –  this  report  will contain  the  list  of  all  unmatched  POS/CRM/SPM  and  the corresponding monthly eSales as reported in the Electronic Sales (eSales) Reporting System for Taxable Year 2014 and for the period January to June, 2015; and

iv.   Discrepancy   Report  –  BIR  eSales  Report  versus  Taxpayer   Z- Reading  (Annex  “E”)  –  this  report  will  contain  the  discrepancy resulting  from  matching  the  eSales  as  reported  in  the  Electronic Sales (eSales) Reporting System with the ZReading as declared by the taxpayer in the submitted Inventory List for Taxable Year 2014 and for the period January to June, 2015.

E.   Release   in  soft  copy   (DVD-R   format)   of  the  matching   results   as contained in the reports specified in Section II (4)(D)(i-iv) above per Taxpayer, to RDOs/LTAD/ELTRD/LTDMakati/Cebu.

F.   Provide Summary Report on the Validation of Taxpayer’s Inventory List versus the BIRGenerated Report on CRM/POS/SPM (Annex “G”) to Regional Director/Assistant Commissioner–Large Taxpayers Service, Deputy Commissioner-Information Systems Group and Deputy Commissioner-Operations Group.

Service shall:

A.   Provide strategic directions to ensure taxpayer compliance based on the results  of matching  and  statistical  summary  report  received  from  BID; and

B.   Ensure   strict  enforcement   of  applicable   internal   revenue   laws  and regulations   relative   to   taxpayer   compliance   on   the   registration   of CRM/POS/SPM and submission of monthly eSales report.

III. PENALTIES

Ensure that the concerned non-compliant taxpayers shall be subject to the following penalties/sanctions:

A.   Automatic revocation of the taxpayer’s Permit to Use (PTU) POS/CRM/SPM and/or other invoice/receipt generating machines;

B.   Immediate post-evaluation procedures pursuant to RMC No. 19-2009;

C.  Imposition of penalties provided under Section 250 of the National Internal Revenue Code (NIRC) of 1997, as amended, which states that in “the case of each failure to file an information return, statement or list …… on the date prescribed  there, unless it is shown that such failure is due to reasonable cause  and  not  to  willful  neglect  …..  “  P1,000  for  each  failure,  as  also prescribed  under  Revenue  Memorandum  Order  (RMO)  No.  7-2015. However,  “willful  failure”  implies  fraud  which  cannot  be  compromised  as stated in the same RMO; and

D.   Inclusion the priority audit program of the concerned investigating  Revenue office.

The payment of the appropriate  penalty shall not relieve the taxpayer from the submission of the prescribed Inventory List per RMC No. 36-2015. The BIR shall enforce appropriate measures in order to ensure that the taxpayer shall fully comply with the provisions of the issued revenue issuances.

IV. EFFECTIVITY

This Order takes effect immediately.