‘Last priority’ audit rules of BIR tightened

Fewer taxpayers will be practically spared from a tax audit as the Bureau of Internal Revenue added requirements for inclusion in the “last priority” list of those to be audited for obligations in tax years 2009 and 2010.

In Revenue Memorandum Order No. 22-2011 dated June 1, Internal Revenue Commissioner Kim S. Henares said that those on the last priority list must have reported at least a 2-percent increase in income tax payments for the preceding years.

Also, a taxpayer should also have submitted all BIR requirements on tax filings—with all required fields on such reports filled in.

These new qualifications are in addition to the requirement, as stated in earlier RMOs, that taxpayers who pay an effective income tax rate of 18 percent will be the last ones that the BIR might check on.

This is on condition that the BIR has not issued the taxpayer any notice on unsettled obligations.

On the other hand, lawyers, doctors, engineers, accountants and other taxpayers who rendered professional services remain on the priority list of those who will undergo an audit.

This means such professionals are most likely to be audited.

Revenue Memorandum Order No. 3-2011 issued last February states that the initiative is meant to enhance taxpayers’ voluntary compliance by encouraging payment of the correct amount of taxes.

The BIR expects to grow its full-year collection by at least 14 percent from some P822 billion raised in 2010.

The 2010 yield represented an increase of 9.6 percent from the P750.29 billion collection in 2009, but it was 4.4 percent short of the P860-billion target.

According to the Department of Finance (DoF), the BIR’s parent agency, the bureau is tasked to raise P940 billion in 2011.

Data from the DoF showed that the government posted a budget surplus of P61 million in the first four months, a turnaround from a budget deficit of P131.8 billion in the year-ago period.

In the four months to April, government revenues reached a total of P461.4 billion, or 18.2 percent higher than last year’s P390.3 billion.

The BIR contributed P302.9 billion, up by 14.3 percent from year-ago collections pegged at P265 billion.

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