THE Bureau of Internal Revenue (BIR) has previously issued Revenue Memorandum Order (RMO) 3-2009, also known as ?Oplan Kandado,? a program addresses the non-compliance by taxpayers of certain essential requirements, such as the issuance of receipts, filing of returns, declaration of taxable transactions, taxpayer registration and paying the correct amount of taxes.
Although issued in the early part of 2009, the BIR has recently become more active in Oplan Kandado?s implementation nationwide. The BIR through the program has already closed several business establishments including prominent retail stores and restaurants.
Based on the RMO, the following shall be the only grounds for suspension or temporary closure of business: a) failure to issue receipts or invoices by a VAT-registered or registrable taxpayer; b) failure to file a Value-Added Tax return; c) understatement of taxable sales or receipts by 30 percent or more of the correct amount thereof in the case of a VAT-registered or registrable taxpayer; or, d) failure to register.
The BIR however, consistent with the principles of due process, first conducts surveillance of the taxpayer and gathers documentary proof as basis of the imposition of the closure or suspension order. Any reports prepared by the handling revenue officer shall be reviewed by the head of the investigating office and a review board.
If a report is approved by a review board, a 48-hour notice shall be served to the taxpayer, requiring him to explain under oath why he should not be dealt with administratively, by suspension of business or temporary closure of his establishment, and/or criminally, for violation of pertinent provisions of the Tax Code.
Upon the taxpayer's submission of the explanation, or if none is submitted on or before the deadline, the review board shall decide whether or not to terminate the case, or to pursue administrative/criminal action against the taxpayer, as the case may be.
If a review board deems it necessary to pursue administrative or criminal action against a non-compliant taxpayer, it shall cause the preparation of a five-day VAT Compliance Notice (VCN).
In the event that a taxpayer refuses, neglects or fails to submit within the prescribed period, a response to a VCN, submitted a response that was later found to be insufficient, or refuses, neglects or fails to comply with the terms of the 5-Day VCN, the review board shall recommend the closure of the establishment, for the approval of the commissioner.
The closure of a business establishment shall last for a period of not less than five days, and shall be enforced until the violation is rectified. Upon rectification by the taxpayer of the violation, the review board concerned shall recommend the lifting of the closure order, for the approval of the commissioner.
The author is a tax manager in a leading tax and auditing firm. He is from Cebu and is a graduate of theAteneo Law School (Juris Doctor in Laws, Second Honors), and UP Cebu (Bachelor of Business Management, Cum Laude). He has also completed his Masters of Law Degree from the University of California Hastings School of Law with specialization in International Business and Trade. Send feedback to email@example.com.