Some mention the Bureau of Internal Revenue’s (BIR) practice of issuing Authority to Cancel Assessment (ATCA) for tax deficiency and/or tax delinquency assessment that are paid. As a result, the question of whether a taxpayer is entitled to the issuance of an ATCA persists.
With its renewed efforts to account for clean, and determine collectivity of its Accounts Receivables/Delinquent Accounts (ARs/DAs) as part of its concerted tax collection activities, the BIR recently issued Revenue Memorandum Order (RMO) No. 33-2018. The RMO aims to implement an improved system for managing BIR’s ARs/Das while simultaneously setting an objective write-off mechanism to purge its database of tax arrears longer collectible.
Under RMO No. 33-2018, the issuance of ATCA as proof of cancellation of the applicable tax assessments pursuant to a Final Assessment Notice/Formal Letter of Demands (FAN/FLD) is mandatory. Accordingly, issuance of ATCA shall be made on the following:
The difference between the amounts of the original tax assessment and the reduced tax assessment after the originally issued FAN/FLD has been modified, amended, or declared null and void pursuant to final administrative decision by the BIR commissioner or his duly authorized representative.
A final approval of the applications for compromise settlement and abatement or cancellation of penalties has been secured.
A court of competent authority has decided to modify, amend, or declare with finality the nullity of a tax assessment, as shown in the entry of judgement.
A court of competent authority has declared that the AR/DA is uncollectible due to the insolvency of the taxpayer.
The taxpayer availed of tax amnesty as indicated by the taxpayer’s inclusion in the List of Tax Amnesty Availers provided by the Office of the BIR commissioner or the BIR deputy commissioner for Operations.
Condonation of the assessment by virtue of law as duly approved by the BIR commissioner or his authorized representative.
When the right of the government to assess/collect the deficiency/delinquent taxes has prescribed and such cancellation due to the aforesaid reason has been approved by the commissioner based on the recommendation of the National Committee on Prescribed Cases.
ARs/DAs recommended for write-off and approved by the BIR Commissioner or his authorized representative on grounds such as but not limited to the following:
• Individual taxpayer is deceased and no distrainable or leviable asset can be found
• Permanent cessation of business
• Dissolution
• Taxpayer is a general partnership and the individual partners are already deceased
• AR/DA cases with a total amount due of P20,000 and below, provided that all collection enforcement summary remedies have been fully exhausted.
Other meritorious cases deemed necessary by the BIR commissioner to be covered by ATCA.
The issuance of an ATCA is not mandatory after the payment of tax deficiency and tax discrepancy assessments. The non-inclusion of payment of tax assessments in the above list bolsters the claim of tax officers that the best evidence for the conclusion of a particular assessment are the payment forms used in the settlement of assessed amounts.
While it may be argued that tax assessment cases can be included in the category “Other meritorious cases”, it seems otherwise. If there was actual intent on the part of the BIR to include paid tax assessments on the list, then it would have specifically provided for it in RMO No. 33-2018, in the same vein that the difference between the original assessment indicated in the FAN/FLD and the assessment indicated in the FDDA is provided in the aforementioned list.
Further, there was no discussion of any participation from the taxpayer in the procedure for issuing an ATCA. While RMO 33-2018 provides that the ATCA shall be prepared in quadruplicates, the taxpayer is not entitled to receive a copy of such since each copy of the ATCA is allotted to the docket of the case and the relevant divisions of the BIR.
Obviously, the ATCA is an internal document of the BIR and serves the purpose of tracking and accounting receivables, collections, delinquent, and uncollectible BIR accounts. In other words, the ATCA is a tool by the BIR to manage its accounts and is not meant to be issued for the convenience or security of taxpayers.
The author is a Senior Manager with the Tax & Corporate Services division of Navarro Amper & Co., the local member firm of Deloitte Southeast Asia Ltd. – a member firm of Deloitte Touche Tohmatsu Limited – comprising Deloitte practices operating in Brunei, Cambodia, Guam, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
source: Manila Times
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