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DIGEST OF REVENUE ISSUANCES

For the Month of February 2010

1. REVENUE REGULATIONS NO. 2-2010 issued on February 24, 2010 amends Sections 6
and 7 of Revenue Regulations No. 16-2008 with respect to the determination of the
Optional Standard Deduction (OSD) of General Professional Partnerships (GPPs) and
the partners thereof, as well as the manner and period for making the election to claim
OSD in the Income Tax Returns.
The GPP is not a taxable entity for Income Tax purposes since it is only acting as
a pass-through entity where its income is ultimately taxed to the partners comprising it.
In computing taxable income defined under Section 31 of the National Internal
Revenue Code (NIRC), all expenses which are ordinary and necessary, incurred or paid
for the practice of profession, are allowed as deductions. Since the taxable income is in
the hands of the partner, as a rule apart from the expenses claimed by the GPP in
determining its net income, the individual partner can still claim deductions incurred or
paid by him that contributed to the earning of the income taxable to him. The following
rules shall govern the claim of the partners of deductions from their share in the net
income of the partnership:
a. If the GPP availed of the itemized deduction in computing its net income, the
partners may still claim itemized deductions from said share, provided, that, in
claiming itemized deductions, the partner is precluded from claiming the same
expenses already claimed by the GPP. In fine, if the GPP claimed itemized
deductions the partners comprising it can only claim itemized deductions which
are in the nature of ordinary and necessary expenses for the practice of
profession which were not claimed by the GPP in computing its net income or
distributable net income during the year.
Hence, if the GPP availed of itemized deductions, the partners are not
allowed to claim the OSD from their share in the net income because the OSD
is a proxy for all the items of deductions allowed in arriving at taxable income.
b. If the GPP avails of OSD in computing its net income, the partners comprising it
can no longer claim further deduction from their share in the said net income for
the following reasons:
i. The partners distributive share in the GPP is treated as his gross
income not his gross sales/receipts and the 40% OSD allowed to
individuals is specifically mandated to be deducted not from his gross
income but from his gross sales/ receipts; and
ii. The OSD being in lieu of the itemized deductions allowed in
computing taxable income as defined under Section 31 of the NIRC,
it will answer for both the items of deduction allowed to the GPP and
its partners.
c. Since one-layer of Income Tax is imposed on the income of the GPP and the
individual partners where the law had placed the statutory incidence of the tax
in the hands of the latter, the type of deduction chosen by the GPP must be the
same type of deduction that can be availed of by the partners. Accordingly, if
the GPP claims itemized deductions, all items of deduction allowed under
Section 34 of the NIRC can be claimed both at the level of the GPP and at the
level of the partner in order to determine the taxable income. On the other
hand, should the GPP opt to claim the OSD, the individual partners are
deemed to have availed also of the OSD because the OSD is in lieu of the
itemized deductions that can be claimed in computing taxable income.
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d. If the partner also derives other gross income from trade, business or practice
of profession apart and distinct from his share in the net income of the GPP,
the deduction that he can claim from his other gross income would follow the
same deduction availed of from his partnership income as explained in the
foregoing rules. Provided, however, that if the GPP opts for the OSD, the
individual partner may still claim 40% of its gross income from trade, business
or practice of profession but not to include his share from the net income of the
GPP.
A taxpayer who elected to avail of the OSD not exceeding 40% of gross sales or
gross receipts, in case of an individual taxable under Sections 24(A) and 25(A)(1) of the
NIRC, or 40% of gross income, in case of a corporation subject to tax under Section
27(A) or 28(A)(1) of the NIRC shall signify in his/its return such intention, otherwise he/it
shall be considered as having availed himself of the itemized deductions allowed under
Section 34 of the NIRC. Once the election to avail of the OSD or itemized deduction is
signified in the return, it shall be irrevocable for the taxable year for which the return is
made.
The election to claim either the OSD or the itemized deduction for the taxable year
must be signified by checking the appropriate box in the Income Tax Return filed for the
first quarter of the taxable year adopted by the taxpayer. Once the election is made, the
same type of deduction must be consistently applied for all the succeeding quarterly
returns and in the final Income Tax Return for the taxable year. Any taxpayer who is
required but fails to file the quarterly Income Tax Return for the first quarter shall be
considered as having availed of the itemized deductions option for the taxable year.
An individual taxpayer who is entitled to and claimed the OSD shall not be required
to submit with his tax return such financial statements otherwise required under the NIRC.
Provided, that, except when the Commissioner otherwise permits, the said individual shall
keep such records pertaining to his gross sales or gross receipts. In the case of a
corporation, however, said corporation is still required to submit its financial statements
when it files its annual Income Tax Return and to keep such records pertaining to its
gross income as herein defined.

2. REVENUE REGULATIONS NO. 3-2010 issued on February 26, 2010 provides the
rationale and guidelines for the submission of the Statement of Management
Responsibility that shall accompany the financial statements that shall be submitted with
the annual Income Tax Return.
All taxpayers required to file Annual Income Tax Return under the National Internal
Revenue Code, as amended, shall be required to submit a Statement of Managements
Responsibility, as follows:

STATEMENT OF MANAGEMENTS RESPONSIBIILITY FOR ANNUAL
INCOME TAX RETURN

The Management of (name of taxpayer) is responsible for all information and
representations contained in the Annual Income Tax Return for the year ended
(date). Management is likewise responsible for all information and
representations contained in the financial statements accompanying the (Annual
Income Tax Return or Annual Information Return) covering the same reporting
period. Furthermore, the Management is responsible for all information and
representations contained in all the other tax returns filed for the reporting period,
including, but not limited, to the value added tax and/or percentage tax returns,
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withholding tax returns, documentary stamp tax returns, and any and all other tax
returns.

In this regard, the Management affirms that the attached audited financial
statements for the year ended (date) and the accompanying Annual Income Tax
Return are in accordance with the books and records of (name of taxpayer),
complete and correct in all material respects. Management likewise affirms that:
a. the Annual Income Tax Return has been prepared in accordance with the
provisions of the National Internal Revenue Code, as amended, and
pertinent tax regulations and other issuances of the Department of
Finance and the Bureau of Internal Revenue;
b. any disparity of figures in the submitted reports arising from the
preparation of financial statements pursuant to financial accounting
standards and the preparation of the Income Tax Return pursuant to tax
accounting rules has been reported as reconciling items and maintained in
the companys books and records in accordance with the requirements of
Revenue Regulations No. 8-2007 and other relevant issuances;
c. the (name of taxpayer) has filed all applicable tax returns, reports and
statements required to be filed under Philippine tax laws for the reporting
period, and all taxes and other impositions shown thereon to be due and
payable have been paid for the reporting period, except those contested in
good faith.

Signature: _______________________
(Name of the Individual Taxpayer/President/Managing Partner)

Signature: _______________________
(Name of the Chief Executive Officer or its equivalent)

Signature: _______________________
(Name of the Chief Financial Officer or its equivalent)

In the case of a foreign corporation with branch office in the Philippines, the above
Statement shall be signed by its local manager who is in charge of its operations.

3. REVENUE REGULATIONS NO. 4-2010 issued on February 26, 2010 amends Revenue
Regulations No. 11-2006 relative to the accreditation of tax practitioners/agents as a
prerequisite to their practice or representation before the Bureau of Internal Revenue.
The Revenue National Accreditation Board (RNAB) shall have original and
exclusive authority to accept applications for accreditation of tax agents and practitioners
(TAPs) belonging to General Professional Partnerships (GPPs) or incorporated entities
engaged in accounting and tax consultancy, provided that the number of practicing TAPs
belonging to said GPP or incorporated entity shall exceed ten (10). The Revenue
Regional Accreditation Board (RRAB), on the other hand, shall have original and
exclusive authority to accept applications for accreditation of individual TAPs and those
belonging to GPPs or incorporated entities engaged in accounting and tax consultancy,
provided that the number of practicing TAPs belonging to such GPP or incorporated entity
does not exceed ten (10).
It shall be the duty of the Accreditation Boards to act upon all applications to
practice before the Bureau of Internal Revenue, to institute and provide for the conduct of
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accreditation, suspension or dis-accreditation proceedings and to perform such other
duties as are necessary or appropriate to carry out their functions as prescribed by the
Secretary of Finance, provided that any action or decision of the RRAB and RNAB shall
be final and appealable only to the Commissioner.
Individual applicants, GPPs and partners of GPPs who were already accredited
with the Board of Accountancy (BOA) and Security and Exchange Commission (SEC)
shall similarly be required to undergo the various processes for accreditation under these
Regulations and shall no longer be automatically accredited and issued a BIR Certificate
of Accreditation. For Individual Tax Agents, as an additional minimum qualification,
applicants must have completed the minimum number of hours of continuing professional
education (CPE) from BIR-accredited CPE providers for each year he practices with the
BIR.
The duly accomplished accreditation application form shall be submitted, together
with all documentary requirements, with the RRAB or RNAB of the place where the
individual applicant or general professional partnership has his/its principal residence or
place of business, whichever is applicable. Individual applicants shall submit, together
with their duly accomplished application forms, the following additional documents:
a. Proof of special competence in tax matters or tax practice, to wit:
i. Certificate of Employment, i.e. meaningful experience in tax related work;
ii. Written certification of CPE units from BIR-accredited CPE providers, with
complete details on the course, dates and number of CPE hours taken by
the TAP. For this purpose, the BIR shall prescribe the guidelines for the
accreditation of and conduct of training by the CPE providers;
Pending the issuance of the guidelines by the BIR for the
accreditation of CPE providers, the applicant shall only comply with the
requirements prescribed in (a) to (c) and (d.1) of Section 5 of RR No. 11-
2006.
b. A written undertaking under oath to preserve working papers within the period
prescribed under Section 235 of the NIRC of 1997, as amended, and making
them available to the Bureaus authorized representative/s when required or
directed to do so.
For Partners, Directors, Officers or duly authorized representatives of General
Professional Partnerships duly registered with the SEC, in addition to the documentary
requirements prescribed, the following additional requirements shall be submitted:
a. Certification from the BOA if the said Partner, Director, Officer or duly
authorized representative is a CPA; and
b. A written undertaking under oath by the managing partner/director that the
firm/entity shall fully cooperate with the Bureau by preserving its working
papers within the period prescribed under Section 235 of the NIRC of 1997, as
amended, and making them available to the Bureaus authorized
representative/s when required or directed to do so.
Each applicant shall pay a non-refundable fee of P 1,000.00 upon filing of
application for accreditation. If the applicant is a general professional partnership, the fee
shall be paid for each partner/s and any other authorized representative/s thereof. In the
case of incorporated entities engaged in the accounting and tax consultancy services, the
fee shall be paid by each of the applicant officer/s or designated representative/s thereof.
All accredited TAPs shall submit to the RRAB/RNAB on or before the last day of
payment of annual registration fee the following documents:
a. A list of the engagements dealing with any of the BIR Offices for the prior year;
and
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b. A list of the CPE hours earned by the accredited tax agents/practitioners for the
previous year.
The RRAB shall process the application/s and issue the certificate/s of
accreditation of individuals, GPPs and incorporated entities with TAPs of 10 or less
persons, while the RNAB shall process the application/s and approve the certificate/s of
accreditation for individuals, GPPs and incorporated entities with TAPs of 11 or more
persons. In cases where the individuals, GPPs and incorporated entities had previously
accredited 10 or less TAPs and shall subsequently apply for accreditation of additional
TAPs exceeding the 10 person threshold, said application shall be filed with the RNAB,
which shall process the application/s and issue the certification/s of accreditation.
The RRAB and RNAB shall act upon all applications for accreditation by verifying
the qualifications of an applicant, and the completeness of the required documentation. If
an application is determined to be complete, and the applicant's qualifications are found
to be in conformity with the provisions of Section 4 of these Regulations, the application
shall be stamped "RECEIVED" bearing the date the completed application was received
by the RRAB/RNAB.
In all cases, the RRAB/RNAB shall have the exclusive authority to
approve/disapprove applications for accreditation falling within their respective
jurisdiction, which shall be acted upon within 30 days from receipt of the complete
application.
Applicants whose applications for accreditation have been approved by the
RRAB/RNAB shall be issued a Certificate of Accreditation signed by their respective
Chairman. Such Certificate shall be valid for a period of 3 years from the date of issue,
unless sooner revoked for cause. For purposes of easy identification, the Commissioner
of Internal Revenue shall issue an identification card to each accredited tax agent or
practitioner.
Application for accreditation which has been disapproved by the RRAB/RNAB may
be appealed to the Commissioner. An adverse decision by the Commissioner may be
appealed to the Secretary of Finance, who shall rule on the appeal within 60 days from
receipt of such appeal. Failure of the Secretary of Finance to rule on the appeal within the
prescribed period shall be deemed as approval of the application for accreditation of the
appellant.
The resignation, retirement, death or incapacity of any partner of a general
professional partnership who has been accredited by the RNAB/RNAB shall not result in
the cancellation of the partnership's accreditation but only that of the concerned partner's
accreditation. The partnership, however, must notify the RNAB, or the RRAB having
jurisdiction over the partnership's principal place of business, of such occurrence and
shall surrender to the RNAB/RRAB the concerned partner's Certificate of Registration or
Identification Card for cancellation.
The following are additional grounds for suspension, cancellation or revocation of
accreditation:
a. "Reckless conduct" which is a highly unreasonable omission or
misrepresentation involving an extreme departure from the standards of
ordinary care that a practitioner should observe under the circumstances
arising from non-compliance by the taxpayer-client with existing provisions of
the Tax Code, its rules and regulations, including financial accounting
standards and tax accounting rules. Reckless conduct on the part of the tax
agent/practitioner shall be presumed when there is substantial underdeclaration
of client-taxpayers taxable sales, receipts or income, or a substantial
overstatement of its deductions as defined under Section 248 of the Tax Code,
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as amended, and such discrepancy is discovered by the Bureau in the conduct
of its enforcement activities. A pattern of conduct is a factor that will be taken
into account in determining whether a practitioner acted knowingly, recklessly,
or through gross incompetence;
b. Failure to comply with the completion of the CPE; and
c. Consistent failure to indicate the BIR accreditation number in the documents
filed with the BIR.
A petition for Disaccreditation/Suspension of an Accredited Tax Agent may be filed
with the RRAB or RNAB having jurisdiction over the residence or principal place of
business of the accredited tax agent against whom the Petition is being filed. Petitions
found to have been filed by fictitious persons or organizations, upon verification by the
RRAB or RNAB concerned, shall be dismissed for lack of factual or legal bases.
The RRAB or RNAB with whom a Petition for Disaccreditation/Suspension was
filed shall conduct hearing(s) on such Petition, to allow both the Petitioner and the
Accredited Tax Agent concerned to present their side of the case. In the conduct of
hearings, a quorum is sufficient to convene the RRAB or RNAB. Upon termination of the
hearing, the RRAB or RNAB shall decide by a majority vote of the members present and
voting, whether to grant or deny the Petition.
In cases of disaccreditation or suspension, the RRAB or RNAB shall issue to the
Tax Agent concerned a Notice of Disaccreditation/Suspension signed by its Chairman. A
copy of such Notice shall be sent to the Petitioner. In the event that a Petition for
Disaccreditation/Suspension is denied, the RRAB or RNAB shall inform both parties of
such decision, in an official communication signed by its Chairman.
Only those Tax Agents/Practitioners, Partners or Officers of General Professional
Partnerships, or Officers or Directors of corporate entities engaged in tax practice who
have been issued Certificate of Accreditation or ID card shall be allowed to represent a
taxpayer or transact business with the Bureau of Internal Revenue in representation of a
taxpayer for the purpose(s) defined in these Regulations.
The BIR can refuse to transact official business with tax practitioners who are not
accredited before it and shall require that certain official statements such as returns,
financial statements, reports, protests, requests for ruling, official correspondence and
other statements, papers or documents filed on behalf of a taxpayer be signed or certified
to by accredited persons, which shall bear the following information below their signature:
a. For individuals (CPAs members of GPPs, and others)
a.1 Taxpayer Identification Number (TIN); and
a.2 Certification of Accreditation Number; Date of Issuance and Date of Expiry
b. For members of the Philippine Bar
a.1 Taxpayer Identification Number (TIN);
a.2 Attorneys Roll Number; and
a.3 Mandatory Continuing Legal Education (MCLE) Compliance Number.
The RNAB shall keep an up-to-date Master List of all suspended/disaccredited Tax
Agents/Practitioners. This Master List shall be posted in the BIR website and/or shall be
published in a newspaper of general circulation in order that this list shall be readily
available for reference by the public.
Within 60 days, prior to the expiration of the accreditation, Tax Agents/
Practitioners may apply for renewal of their accreditation. All accredited TAPs, whether
engaged in individual practice, or belonging to GPPs or incorporated entities engaged in
accounting and tax consultancy, including lawyers engaged in tax practice before the
BIR, shall pay the registration fee of P 500.00 in the Revenue District Office having
jurisdiction over the principal place of business of the individual practitioner, GPP or
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incorporated entity on or before January 31 of each year.
All currently accredited TAPs, whether engaged in individual practice, or belonging
to GPPs or incorporated entities engaged in accounting and tax consultancy, including
lawyers engaged in tax practice before the BIR, shall pay the registration fee of P 500.00
not later than March 15, 2010. TAPs who have previously been accredited but whose
accreditation has since expired, or those TAPs who still have not filed their applications
but have been practicing with the BIR are required to file their application not later than
March 15, 2010.
Any TAP who violates any provision of RR No. 11-2006 or this Regulation shall,
upon conviction for each act or omission, be punished by a fine of P 1,000.00 or suffer
imprisonment of not more than 6 months, or both.

4. REVENUE MEMORANDUM ORDER NO. 9-2010 issued on February 2, 2010 creates the
Speakers Bureau, which shall be comprised of speakers or lecturers from various offices
in the BIR who shall be tasked to assist in the communication and information campaign.
The Assistant Commissioner for Taxpayers Assistance Service (ACIR, TAS) shall
be responsible for matters involving the Speakers Bureau, which shall include the
following:
a. Maintain a list of speakers/lecturers from all offices and provide support to
these speakers through provision of power point presentation materials; list of
issues and points to discuss or present; pointers on how to handle the media;
and other related support.
b. Regularly provide information materials to all members of the Speakers
Bureau. Among others, these shall include press releases (previously issued
and forthcoming), newspaper clippings, Digest of Revenue Issuances
(prepared by the Corporate and Communications Division), Digest of BIR
rulings and court decisions (prepared by the Legal Service), Weekender Briefs
and BIR Monitor, Power Point presentation materials (using a standard
template and to include modified versions of the presentation materials used in
the command conferences), and other materials.
c. Arrange briefings for the members of the Speakers Bureau on such topics as
Effective Public Speaking, How to Handle the Media, Preparing a
Communication Plan, Preparing Effective Power Point Materials, and other
relevant topics.
d. Assign speakers to talk in seminars, public forum, and other events, or to guest
in television programs or radio shows. However, the Regional Directors and
Revenue District Officers can initiate their own communication and information
activities pursuant to the Public Awareness and Assistance Campaign
prescribed in Revenue Memorandum Order No. 4-2010.
e. Cover (audio-visual) the major events of the members of the Speakers Bureau.
All revenue officials holding items of director and above are automatically included
in the Speakers Bureau. Furthermore, all Regional Directors and Revenue District
Officers shall submit not later than February 15, 2010 to the ACIR, TAS the name(s) of
other revenue personnel whom they will recommend to be included in the Speakers
Bureau. Other revenue officials can also submit the names of other personnel who may
be considered for the Speakers Bureau. The ACIR, TAS will evaluate the communication
and public speaking competence of the personnel recommended and notifies the
concerned personnel of their inclusion or non-inclusion in the Speakers Bureau. The list
of members of the Speakers Bureau shall be submitted to the Commissioner of Internal
Revenue not later than February 28, 2010.

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5. REVENUE MEMORANDUM ORDER NO. 10-2010 issued on February 2, 2010
prescribes the policies and guidelines for the monitoring, processing and maintenance of
a database of Estate Tax cases relative to Project Rest in Peace (R.I.P.).
Project R.I.P. is being implemented to tap the large potential of increasing the
number of Estate Tax returns filed and the Estate Taxes collected.
All Revenue District Offices shall conduct a proactive and close monitoring of
potential Estate Tax cases by establishing linkages with and/or accessing or securing the
records of the following:
a. Civil Registers
b. Hospitals
c. Memorial Parks
d. Cemeteries
e. Funeral Parlors
f. Crematoriums
g. Judicial Clerks of courts
h. Obituaries
i. Life Insurance companies and other financial institutions
The Access to Records form/letter prescribed in RMO No. 7-2010 shall be used for
requesting for information from the above mentioned entities. The following information
shall be required:
a. Name of decedent
b. Address of decedent
c. Date of death
d. Status of decedent (i.e., Married, single, with children, etc.)
e. Name of relative(s)/contact person(s)
f. Address of relative(s)/contact person(s)
All information gathered shall be submitted to the Chief, Audit Information, Tax
Exemption and Incentives Division (AITEID) for centralized data warehousing and other
processing procedures.
The Revenue District Officer (RDO) shall send a Notification Letter to the
relative/contact person/residence of the decedent who has been ascertained as a
resident or registered taxpayer of the Revenue District Office. All other cases/information
gathered on the decedents who are NOT residents or registered taxpayers of the
Revenue District Office shall be sent to the Chief, AITEID. The Chief, AITEID shall
ascertain which Revenue District Office has jurisdiction over these cases and transmit the
same to these RDOs.
The Notification Letter shall advise and remind the relative/administrator of the
decedent of the requirements and the due dates for filing of notice of death, the Estate
Tax Return and the payment of the Estate Taxes. If the relative/contact person of the
decedent fails to file the Estate Tax Return and pay the Estate Tax on the due date, the
RDO shall undertake the necessary action to determine the estate tax obligation of the
deceased/decedent and to protect the interest of the BIR.
The National Investigation Division shall be responsible for tracking the obituaries
in the newspapers of general circulation.

6. REVENUE MEMORANDUM ORDER NO. 11-2010 issued on February 2, 2010
prescribes the policies and guidelines on the monitoring, review and determination of the
tax consequences of Big-Ticket Items.
A transaction is considered as a Big-Ticket Item (BTI) based on the following:
a. If the amount involved exceeds P 200,000,000. This threshold amount is
considered on a per single and unrelated event or transaction basis, and shall
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not take into account the summation or the total of several unrelated and
multiple events or transactions.
b. If it involves a request for ruling filed with the BIR where the amount of the
transaction is over P 1,000,000.
The following offices shall be responsible for the monitoring of BTI:
a. Large Taxpayers Service (LTS) Regular
b. LTS Excise
c. Enforcement Service
Said offices must communicate with the concerned taxpayer(s) involved in the BTI
within 5 working days from the date of the aforesaid transaction, or from the date of
discovery of the transaction.
The Assistant Commissioner of the responsible office shall send an Access to
Records letter to the taxpayer. The submission of the requested documents by the
taxpayer within the prescribed deadline must be strictly enforced and failure of the
taxpayer to comply should result in the institution of the available sanctions, including the
issuance of subpoena duces tecum.
For cases of requests for ruling involving transactions with an amount in excess of
P 1,000,000.00, the BIR legal office receiving the copy of the ruling request shall furnish a
copy to the BIR office having jurisdiction over the taxpayer who filed the request for a
ruling. Said BIR office shall request for information on this transaction using the Access
to Record form, and submit a report on the results of the evaluation to the BIR legal office
handling the ruling request not later than 15 working days from receipt of the documents.

7. REVENUE MEMORANDUM ORDER NO. 12-2010 issued on February 2, 2010
prescribes the policies and guidelines relative to the Assistant Chiefs Challenge System
(ACCS).
The ACCS is an optional undertaking for Assistant Regional Directors (ARDs) and
the Assistant Revenue District Officers (ARDOs) and technical assistants who were
previously holding positions of Regional Directors, Revenue District Officers, ARDs and
ARDOs, and holding items of Chief Revenue Officer III and higher.
Under the ACCS, the said officials have the option to conceptualize and manage a
special project that will improve tax collection and administration. The special projects
that can be considered are, among others, the following:
a. Audit of industry or sector that is prevalent in the area of jurisdiction
b. Update of zonal valuation
c. Project R.I.P.
d. Clean up of delinquent accounts
e. Clean up and expansion of taxpayer registration database
f. Public awareness and assistance campaign activities
g. Financial Accounting vs Tax Accounting treatment review
h. Linkages with institutions
i. Garnishment and foreclosure of assets
j. Apprehension of taxpayers on non-issuance of official receipts
For the first phase of this undertaking, the Assistant Chief (AC) who shall opt to
participate shall submit a Project Proposal Form (concurred by the Head of Office) to the
Commissioner of Internal Revenue (CIR) not later than February 5, 2010. Thereafter, the
CIR shall confirm the acceptance of the project proposal and notify the concerned AC not
later than one week from the date of receipt of the form.
The AC is encouraged to submit regular progress reports to the CIR and the Head
of Office on the results of implementation of the project. The final report on the results of
the project shall be submitted to the CIR (copy furnished the Head of Office) not later than
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May 30, 2010. The results of the ACCS project shall be considered in the evaluation of
performance of the AC.

8. REVENUE MEMORANDUM ORDER NO. 13-2010 issued on February 4, 2010 amends
Revenue Memorandum Order No. 6-2010 relative to the policies and guidelines on
stamping of Income Tax Returns and the audited Financial Statements.
Item No. 2, Section III was amended to read as follows:

2. The attachments to the income tax returns shall also be received in the same
manner as above, but for the attached financial statements the same shall be
stamped received only on the page of the Audit Certificate, the Balance Sheet
and the Income Statement. Accordingly, the other pages of the financial
statements and its attachments need not anymore be stamped received.

9. REVENUE MEMORANDUM ORDER NO. 14-2010 issued on February 4, 2010
prescribes the reportorial requirements for the CY 2010 Public Assistance and
Awareness Campaign (PAAC).
The prescribed reports shall be prepared and submitted in lieu of TAS Report Nos.
001 and 003.

10. REVENUE MEMORANDUM ORDER NO. 15-2010 issued on February 4, 2010
prescribes the policies and guidelines on the handling of court cases.
The Deputy Commissioner for Legal and Inspection and the Assistant
Commissioner for Legal Service (ACIR Legal) shall be responsible for the implementation
of the prescribed policies and guidelines and for the formulation of additional measures
when needed.
The Assistant Commissioner for Inspection Service shall assign a personnel to go
to the courts when there are hearings to check the attendance and time of reporting of the
BIR lawyers and witnesses. A report on this shall be submitted to the ACIR Legal for the
institution of the necessary action on the BIR lawyers and witnesses who have been
reported to be arriving late or have not been attending the hearings.
The Chief of the Prosecution Division, Chief of the Litigation Division and Chief of
Legal Division of the Revenue Regional Office shall regularly check the quality of the
pleadings being submitted by BIR lawyers and the handling of cases in courts. The ACIR
Legal or designated representative shall regularly attend and observe the court hearings
to monitor the quality of trials in court.
The BIR lawyers in the National Office and Revenue Regional Office shall submit a
Summary Report on the Hearing Conducted not later than 3 working days after the
hearing to the ACIR Legal and the Chief, Legal Division of the particular Revenue
Regional Office, respectively. The proof of submission of this report shall be required in
claiming allowances for attending the hearing.
The ACIR Legal shall prepare and circularize a digest of all relevant court
decisions for a particular month not later than 10 working days after the end of each
month.
All adverse court decisions on cases handled by the National Office and the
Revenue Regional Office shall be evaluated by the ACIR Legal and the Chief, Legal
Division of the particular Revenue Regional Office, respectively, for the institution of the
necessary course of action (motion for reconsideration or appeal) following the provisions
of Revenue Memorandum Circular No. 26-01; recommendation of remedial action on
procedures determined to be defective or inappropriate; recommendation of disciplinary
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action for negligence of revenue officers; etc. The recommendations shall be submitted to
the Commissioner of Internal Revenue and Deputy Commissioner for Legal and
Inspection not later than 10 working days after the end of each month.
The following major policies should be observed:
a. Motions for postponement of hearings or extension of time to submit pleadings
or present witnesses shall be kept to a minimum and only for reasonable
instances. The ACIR Legal shall take the necessary action to address
instances when unreasonable cases arise.
b. Recommendations for the action on motions for withdrawal of cases shall be
approved by the Commissioner of Internal Revenue.
c. All remedies should be done for adverse decisions, including filing of motion for
reconsideration, appeal to the Supreme Court, and others. Recommendations
for exception to this policy shall be approved by the Commissioner of Internal
Revenue.

11. REVENUE MEMORANDUM ORDER NO. 16-2010 issued on February 5, 2010
prescribes the policies and guidelines in determining the output Value-Added Tax (VAT)
liabilities of motels and other similar establishments, except hotels, resorts and other
establishments which do not regularly allow short time (less than 24 hours) stay in their
establishments.
Motels and other similar establishments shall submit to the Revenue District Office
(RDO) where they are registered a Sworn Declaration within 10 days from issuance of the
Order, and for each year thereafter on or before January 31 of each year.
The RDO concerned shall evaluate the information provided in the Sworn
Declaration and compute the prescribed revenues per month of an establishment. An
Occupancy Turnover Analysis Report (OTAR), containing a summary of the information
gathered from the Sworn Declarations of all establishments in the District, and their
prescribed revenues per month, shall be prepared by the RDO using the format
prescribed in the Order. This shall be completed not later than the last day of February
each year.
In accomplishing the OTAR, the following must be considered:
a. For peak periods covering the months of January to February, April to June,
and December, the minimum turnover/day of a particular establishment shall be
set at a constant factor of 2.
b. For lean periods covering the other remaining months of the year, the minimum
turnover / day shall be 1.5.
Based on the OTAR for a motel, the concerned RDO shall then notify the motel
operator of the proposed additional output tax to be paid for each month. Upon receipt of
the notification from the RDO, the motel shall have the option of amending its VAT
Returns for the months in question, and pay the corresponding additional output tax
within ten (10) days from receipt of the notice. The amended VAT Return(s) shall take
into account not only the additional gross sales from its room occupancy operations but
shall also cover the gross sales/receipts from the other operations mandated under the
National Internal Revenue Code, as amended.
The RDO having jurisdiction over a motel that opts not to amend its VAT returns
shall recommend to the Regional Director the issuance of a Mission Order for the conduct
of surveillance activities or other appropriate enforcement measures on the concerned
motel in order to determine its true and correct tax liabilities. Surveillance activities or
other appropriate enforcement measures may include the posting of BIR personnel on
the premises of the concerned motel for a period of not less than 10 days to determine
the volume of business transactions entered into by the establishment over a given period
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of time. Should the surveillance activity/enforcement measure disclose the
understatement of taxable gross sales by 30% or more of the motels correct taxable
sales for the taxable quarter, the motel shall be considered subject to the Oplan
Kandado procedures prescribed in Revenue Memorandum Order No. 3-2009.
The imposition of sanctions against a motel under the Oplan Kandado Program,
shall not preclude the BIR from filing the appropriate tax evasion charges under the Run
After Tax Evaders (RATE) Program, if evidence so requires, against the concerned motel
or the responsible officers of the establishment.

12. REVENUE MEMORANDUM CIRCULAR NO. 9-2010 issued on February 4, 2010 notifies
the loss of one original copy of Tax Credit Certificate (TCC), to wit:

TCC No./Serial No. Date of Issue TCC Face Amount TCC Balance
200600000154 April 19, 2007 P40,000,000.00 P8,000,000.00

Said copy was reported missing by Ms. Ivy Eleanor T. Uy, Finance Manager,
Pilmico Animal Nutrition Corporation on October 27, 2009. Consequently, the entire TCC
set bearing the said serial number has been cancelled and all official transactions
involving the use thereof are considered invalid.

13. REVENUE MEMORANDUM CIRCULAR NO. 10-2010 issued on February 4, 2010
prescribes the 2010 Strategy Map of the BIR, consisting of three (3) Priority Areas,
sixteen (16) Programs, one-hundred eight (108) Activities and Projects and ten (10)
Strategies.
The Strategy Map shall govern the priorities and directions of the Bureau for 2010.

14. REVENUE MEMORANDUM CIRCULAR NO. 11-2010 issued on February 8, 2010
circularizes the full text of COMELEC Resolution No. 8737 dated December 29, 2009
enforcing the prohibitions against appointment or hiring of new employees, creating or
filling of new positions, giving any salary increase or transferring or detailing any officer or
employee in the Civil Service and suspension of elective local officials, in connection with
the May 10, 2010 National and Local Elections.

15. REVENUE MEMORANDUM CIRCULAR NO. 12-2010 issued on February 12, 2010
circularizes the full text Joint Rules and Regulations Implementing Articles 60, 61 and 144
of Republic Act (RA) No. 9520, otherwise known as the Philippine Cooperative Code of
2008 in relation to the National Internal Revenue Code, as amended, which was signed
by the Department of Finance, Bureau of Internal Revenue and Cooperative
Development Authority last February 5, 2010.
The following are specified in the Joint Rules and Regulations:
a. Tax exemptions of duly registered Cooperatives which transact business with
members only
b. Taxability/exemption of duly registered Cooperatives which transact business
with members and non-members
c. Taxability of unrelated income of Cooperatives
d. Taxability of Cooperatives to other internal revenue taxes
e. Taxability of members/share holders of Cooperatives
f. Documents to be attached to the letter-application for the issuance of
Certificate of Tax Exemption/Ruling
g. Validity of Certificate of Tax Exemption/Ruling
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h. Application for renewal of Certificate of Tax Exemption/Ruling
i. Examination of books of accounts and other accounting records of the
Cooperatives
j. Compromise settlement of any tax liability unpaid by Cooperatives

16. REVENUE MEMORANDUM CIRCULAR NO. 13-2010 issued on February 22, 2010
publishes the full text of Administrative Order No. 277 entitled Creating an Independent
Committee to Review, Assess and Evaluate All the Important Smuggling and Tax Evasion
Cases Handled by the Bureau of Internal Revenue and the Bureau of Customs.
The Review Committee on Smuggling and Tax Evasion Cases was created under
the Office of the President, and shall be composed of a retired member of the judiciary
and a representative each from the private sector and the media. The Committee shall
perform the following functions:
a. Review, evaluate and assess all important smuggling and tax evasion cases
handled by the BIR and BoC which resulted in the dismissal, or to a decision,
resolution or judgment which is unfavorable to the government;
b. Determine causes of the dismissal or rendition of unfavorable decision,
resolution or judgment both at the administrative and judicial levels;
c. Conduct an inventory of all pending smuggling and tax evasion cases and
identify priority cases for intensified prosecution or for immediate
disposition/resolution;
d. Upon review and evaluation of the aforementioned cases, formulate
recommendations to further improve the success rate of the BIR and BoC in
the prosecution of smuggling and tax evasion cases; and
e. Discharge such other functions that are necessary to effectively and efficiently
achieve its mandate.
The Committee shall prepare and submit to the President, through the Executive
Secretary, within 90 days from the appointment of at least 3 members, a report containing
its findings and recommendations. Upon submission of its report, the Committee shall
cease to exist unless otherwise directed by the President.

17. REVENUE MEMORANDUM CIRCULAR NO. 14-2010 issued on February 23, 2010
circularizes the full text of Joint Circular No. 2009-1A dated January 12, 2010 signed by
the Department of Budget and Management (DBM), Bureau of Internal Revenue (BIR)
and National Tobacco Administration (NTA), amending the guidelines and procedures on
the release of the share of Local Government Units.
Section 1.4 of DBM-BIR-NTA Joint Circular No. 2009-1 was amended to read:
The COCCTRP issued Resolution No. 21 to provide that the required
minimum annual volume of Burley and Native tobacco production and
acceptances of an LGU shall not be less than 1,000 kilos in order to qualify as
a beneficiary under RA No. 8240.

18. REVENUE MEMORANDUM CIRCULAR NO. 15-2010 issued on February 25, 2010
publishes the full text of Memorandum Circular No. 30, Series of 2009 of the Civil Service
Commission dated October 23, 2009 reminding all government officials/employees
holding non-political offices/positions not to engage directly or indirectly in any partisan
political activity or take part in any election except to vote.
The term election campaign and partisan political activity refers to an act designed
to promote the election or defeat of a particular candidate or candidates to a public office
which shall include:
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a. Forming organizations, associations, clubs, committee or other groups of
persons for the purpose of soliciting votes and/or undertaking any campaign for
or against a candidate;
b. Holding political caucuses, conferences, meetings, rallies, parades or other
similar assembles, for the purpose of soliciting votes and/or undertaking for or
against the election of any candidate for public office;
c. Making speeches announcements or commentaries or holding interviews for or
against the election of any candidate of any public office;
d. Publishing or distributing campaign literature or materials designed to support
or oppose the election of any candidate; or
e. Directly or indirectly soliciting votes, pledges or support for or against a
candidate.
In addition, the following specific acts are likewise considered partisan political
activities and are ground for disciplinary action:
a. Being a delegate to any political convention or member of any political
committee or directorate or an officer of any political club or other similar
political organizations.
b. Making speeches or publications to draw political support in behalf of any
particular party or candidate for public office.
c. Soliciting or receiving contribution for political purposes, either directly or
indirectly.
d. Becoming publicly identified with the success or failure of any candidate or
candidates.
Public officials/employees found guilty of engaging directly or indirectly in partisan
political activities during the election period shall be penalized with dismissal from the
service (for 1
st
offense).

19. REVENUE ADMINISTRATIVE ORDER NO. 2-2010 issued on February 23, 2010
prescribes the splitting of RDO No. 116-Regular Large Taxpayers (RLT) and RDO No.
121-Excise Large Taxpayers (ELT) under the Large Taxpayers Service (LTS), and
redefines their areas of jurisdiction.
The areas of jurisdiction/covered industry of the newly restructured/ established
Revenue District Offices as a result of the division into four (4) of RDO No. 116 RLT
and into two (2) of RDO No. 121 ELT under the LTS shall be as follows:
A. Regular Large Taxpayers
i. RDO No. 116 - Regular Large Taxpayers 1 - shall be composed of
electricity, gas and water, activities auxiliary to financial intermediation,
transport, storage and communications, identified manufacturers of food,
manufactures of wearing apparel, wood, paper, rubber, plastic, other non-
metallic, basic metals, fabricated metal products, machinery equipment and
electrical machinery and identified wholesale/retail trade.
ii. RDO No. 125 - Regular Large Taxpayers 2 - shall be composed of banking
institutions, non-banking financial intermediaries, insurance and pension
funding, identified manufacturers of food and identified wholesale/retail trade.
iii. RDO No. 126 - Regular Large Taxpayers 3 - shall be composed of real
estate, renting of goods and equipment, miscellaneous business activities,
manufacture of chemicals and identified wholesale/retail trade.
iv. RDO No. 127 - Regular Large Taxpayers 4 - shall be composed of
agriculture, fishing, compulsory, education, health and social works, other
community, social, personal and other service activities, publishing, printing,
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reproduction, manufacture of radio, television and communication
equipment/apparatus, manufacture of medical, manufacture of other transport
equipment, manufacture of others (not elsewhere classified), hotels and
restaurants, construction and identified wholesale/retail trade.
B. Excise Large Taxpayers
i. RDO No. 121 - Excise Large Taxpayers 1 - shall be composed of alcohol,
power, mining and sugar industry.
ii. RDO No. 124 - Excise Large Taxpayers 2 - shall be composed of tobacco,
petroleum, cement, non-essential and automobiles industry.
The personnel complement of the split/restructured RDOs shall consist of a
Division Chief and an Assistant Division Chief, together with an appropriate number of
staff to initially come from the approved staffing pattern of the concerned original RDOs.

20. REVENUE DELEGATION AUTHORITY ORDER NO. 2-2010 issued on February 18,
2010 delegates to the following Assistant Commissioners (ACIR) the authority to approve
and/or sign the listed documents, in view of the absence of Deputy Commissioner Nelson
M. Aspe of the Operations Group:
A. For ACIR, Collection Service
a. Tax Debit Memos (TDMs) as utilization of Tax Credit Certificates (TCCs);
b. TCCs issued arising from transfers, revalidations of TCCs issued solely by
the BIR and those jointly issued by the BIR and the Department of Finance
One Stop-Shop Tax Credit and Duty Drawback Center (DOF-OSS);
c. Transfer and Revalidation Approval Recommendation addressed to the
Executive Director of the DOF-OSS; and
d. Approval of applications for cash conversions of TCCs.
B. For ACIR, Assessment Service
a. TCCs other than those mentioned above; and
b. Tax Refunds Approval
The authority shall cover only those transactions involving amounts less than
Twenty Five Million Pesos. However, for cases involving amounts of Twenty Five Million
Pesos or more, the same shall be approved and signed by the Commissioner of Internal
Revenue, upon recommendation by the concerned Assistant Commissioner through the
Office of the Deputy Commissioner for Operations Group.
Said authority is automatically revoked upon the resumption of duty of Deputy
Commissioner Aspe.

21. REVENUE DELEGATION AUTHORITY ORDER NO. 3-2010 issued on February 22,
2010 assigns temporarily to the Deputy Commissioner for Legal and Inspection Group the
authority to sign Closure Orders and Memorandum Reports, including the lifting of such
Closure Orders relative to the implementation of the Oplan Kandado Program.
Said authority is automatically revoked upon resumption of duty of Deputy
Commissioner Nelson M. Aspe of the Operations Group.