REVENUE MEMORANDUM CIRCULAR NO. 29-2009 issued on June 3, 2009 clarifies certain issues relative to the processing of claims for tax credit/refund.
     Section 112 (C) of the Tax Code of 1997, as amended by Republic Act No. 9337, provides, among others, that in proper cases, the Commissioner of Internal Revenue (CIR) shall grant a refund or issue the Tax Credit Certificate (TCC) for creditable input taxes within 120 days from the date of submission of complete documents. For the purpose of defining “proper cases”, the taxpayer/claimant must have complied with the following conditions/requirements upon audit/verification of his/its claim:

1. 1. 1. 1. Submission of complete documents necessary to determine and/or ascertain the correctness of the return and the amount to be refunded/credited;
         2. That all books of accounts and accounting records pertaining to the claim are immediately available to the concerned Revenue Officer (RO), for audit/ verification;
         3. Any discrepancies/findings upon audit/verification shall be reconciled/explained in writing by the taxpayer/claimant within 5 days from receipt of the notification from the RO; and
         4. The taxpayer/claimant has signified his concurrence to the outcome of the audit/verification, which shall be evidenced by an Agreement Form.

    In cases where taxpayer failed to comply with the above conditions/ requirements, the running of the 120-day period shall stop from the date of notification to the taxpayer. Likewise, the running of the 120-day period shall be suspended in case a question of law arises during the conduct of audit/verification and/or review of the claim for tax refund/credit, and the issue is referred to the Legal Division or the Legal Service, as the case may be, for resolution and issuance of legal opinion, which should be rendered within 30 working days from receipt of the request.
     To accurately document the time frame in processing the claim, the taxpayer shall signify in writing the date when the books and records are available for audit/ verification by the RO and the date of submission of documents to explain/reconcile discrepancies and findings, if applicable.
     In case of simultaneous audit of all internal revenue tax liabilities and claim for Value-Added Tax (VAT) refund/credit, the processing of VAT claims shall be prioritized and should not be held in abeyance pending the completion of the audit for all internal revenue tax liabilities.
     Application for tax refund/TCC shall be denied if the taxpayer/claimant failed to submit complete supporting documents or failed to comply with the aforesaid audit/verification requirements, where applicable, after 3 notifications from the processing/ investigating office. For this purpose, the concerned processing/ investigating office shall prepare and issue the corresponding Denial Letter to the taxpayer/claimant.
      In lieu of the procedures mentioned in Revenue Memorandum Order (RMO) No. 16- 2007, the RO, in addition to the regular verification of sales invoices, official receipts, books of accounts and accounting records of the claimant, may require the taxpayer/claimant to present other proofs/secondary evidence to substantiate the authenticity of purchases made, such as, delivery receipts, check vouchers and cancelled checks. However, the RO shall still access the ITS – Registration System to verify if the suppliers are legitimately registered with the BIR.
     In relation to RMO No. 22-2007, the input tax on importation may be allowed as input tax credit even if Bureau of Customs (BOC) data are not available at the Audit Information, Tax Exe mption and Incentives Division or within any office in the BIR, provided that the taxpayer/claimant has fully substantiated such claim by presenting the original copies of import entry declarations, sales invoice and delivery receipt of the claimant’s supplier/seller, and official receipt issued by the BOC on VAT and customs duties paid. The RO shall note on the photocopies of the documents that he has verified the documents against the original copies. Further, the RO shall state on the memorandum report that the recommendation for tax credit on VAT on importation shall be subject to post- verification by the BOC. Subsequently, it is incumbent upon the BOC to verify the authenticity of the documents before it releases its TCC to the taxpayer/claimant.
     Revenue Officials and Officers shall comply with the requests for issuance of certifications, certified true copies of tax returns and documents necessary in the processing of claims for tax refund/credit within 5 working days from receipt thereof, while request for a legal resolution or opinion shall be complied within 30 working days from receipt of the request from investigating/processing offices. Non-compliance of concerned RO and employees on the foregoing shall be reported by the investigating/ processing office to the Assistant Commissioner, Inspection Service, copy furnished the Deputy Commissioner – Operations Group and Assistant Commissioner – Assessment Service, for appropriate investigation and imposition of sanctions, if warranted.