The BIR
issued the following guidelines in the pre-audit of income tax returns (ITRs)
of individuals engaged in business or practice of profession and corporate taxpayers
that are registered in the Revenue District Offices (RDOs).
Guidelines
and procedures
The
pre-audit of annual ITRs shall be conducted without field investigation. Also, the pre-audit shall not be covered by
an electronic Letter of Authority (eLA) or Tax Verification Notice (TVN). The Revenue District Officer shall be responsible
for assigning the annual ITRs in batch for pre-audit by the revenue officers.
The
pre-audit process shall involve the verification of the following:
(a) mathematical computation of income tax due and payment;
(b) correctness of claimed personal and additional exemptions;
(c) correctness and validity of claimed deductions/expenses subject to
ceiling/limitations;
(d) validity of claims for income tax holiday, tax exemption or other tax
incentives;
(e) correctness of application of minimum corporate income tax;
(f) claimed CWTs;
(g) correct utilization of tax credit certificates;
(h) corrections of claimed optional standard deduction;
(i) accuracy and applicability of net operating loss carryover; and
(j) completeness of required attachments to the annual ITRs.
In case
the pre-audit results in a deficiency tax, a registered mail shall be sent to
the concerned taxpayer requiring the settlement of the deficiency tax within 15
days from receipt of the letter from the BIR. If the taxpayer fails to respond
or does not pay the deficiency tax, the issuance of a preliminary assessment
notice (PAN) or final assessment notice (FAN) shall be recommended.
A
pre-audited annual ITR may still be selected for regular audit if it qualifies under
the selection criteria prescribed in the annual BIR audit program. All
preaudited annual ITRs with “no discrepancy” and ITRs where the taxpayer has
settled the deficiency tax shall no longer be transmitted to the assessment
division. However, the said return shall be retained in the RDO for possible
audit/investigation based on the BIR’s annual audit program.
(Revenue
Memorandum Order No. 25-2012, November 19, 2012
Tax Brief – December 2012
Punongbayan and Araullo
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