8box Solutions Inc.


Contact Number: 09369340340
Email: sales@8box.solutions

REVENUE MEMORANDUM ORDER NO. 18-2017 issued on August 14, 2017 prescribes the policies, guidelines and procedures for tagging/classifying inactive business taxpayers. Inactive Taxpayers shall have an “Inactive” status and shall be defined as: a. Registered business taxpayers (individuals and non-individuals) who were identified to have failed to file all of the required internal revenue tax returns for all tax types that they are registered and pay taxes due thereon for the last two (2) consecutive years from the date of the last returns filed; or the date of registration covering the scenarios specified in the Order; b. A taxpayer that has notified the BIR district office of the temporary cessation of its business operations; c. Cannot be Located Taxpayers – taxpayers which cannot be located or contacted after the conduct of the ocular inspection/verification/Tax Compliance Verification Drive or taxpayers that cannot be served Letter Notices, Letter of Authorities and Tax Verification Notices due to failure of the concerned Revenue Officers to locate the subject taxpayers after exhausting all possible means to do so. All registered taxpayers engaged in trade or business (individual or non-individual) who falls under the definition of inactive taxpayers of the Order shall be classified as Inactive Business Taxpayers. Inactive self-employed individual who is also registered as an employee (mixedincome earner) shall not be tagged as “Inactive”. However, any unused Official Receipts/ Invoices for which a valid Authority to Print has been previously granted to his business shall be deemed cancelled/invalidated upon end-dating of its registered business tax types and shall be duly surrendered to the concerned Revenue District Office for destruction. The Cash Register Machine/Point-of-Sale Permits issued, as well as any unused Official Receipts/Invoices for which a valid Authority to Print has been previously granted to all Business Taxpayers tagged as Inactive shall be deemed cancelled/invalidated as of date of tagging. In the case of TIN issued to Estate of a Decedent under ONETT, upon full payment of the Estate Tax by the heirs, administrator or executor, the issued TIN for the Estate shall be tagged as “Inactive”. However, in case of additional properties discovered after payment of the Estate Tax, the TIN previously issued for such Estate shall be updated to “Active” status in order to facilitate the filing of the amended Estate Tax return and shall be tagged “Inactive” upon full settlement of the tax liabilities of the Estate. In case the decedent’s business is operated by heirs under the “Estate of Decedent”, the TIN shall not be cancelled. It shall be treated as a separate individual taxpayer until closed/liquidated by the heirs, in accordance with existing rules and procedures. All concerned Revenue District Officers (RDOs)/Chief, Large Taxpayers Divisions (LTDs) shall perform and undertake the following necessary verification and validation strategies before finalizing the list for tagging as inactive taxpayers: a. Verify/validate if the said tagging of the non-filer of tax returns is not due to unencoded/un-uploaded tax returns, and that open cases do not pertain to suspended tax returns; b. Include in the Tax Compliance Verification Drive operations to confirm its physical existence/non-existence; and c. Ensure that only qualified registered business taxpayers, who have undergone strict validation process prescribed in this Order shall be recommended for tagging as “Inactive” taxpayers. Business taxpayers included in the List of Inactive Taxpayers who were found existing and operational will be given a prescribed reminder letter requiring them to respond within five (5) working days upon receipt of such letter. If no response is received from the taxpayer within the prescribed period, the RDOs/LTDs shall recommend closure of business operation and file appropriate criminal/civil charges based on existing rules and regulations. Registered individual business taxpayer who has erroneous taxpayer type classification during registration must submit a duly notarized affidavit to that effect to their respective RDO. The RDO, thru the Client Support Section (CSS) Chief, shall conduct thorough validation/verification if taxpayers have not filed and paid any tax returns on the erroneous tax/form type. In cases where a return was filed and/or paid, open cases thereto shall be considered valid and shall be subjected to corresponding penalties. Otherwise, all existing open cases shall be deemed invalid and be subjected to “datafix” by their respective Revenue Data Center. Further, the RDO, thru the CSS Chief, shall update the registration information and correct the taxpayer type classification. Permanent closure of business shall be effected only upon submission of the necessary documents prior to changing of the status from “Inactive” to “Ceased/ Dissolved” and resolution/closure of valid “stop-filer” cases. However, upon filing of closure of business, the RDO (thru the CSS Chief) must effect the end-dating of tax types and form types to prevent creation of invalid “stop-filer” cases and immediate commencement of investigation, if necessary. Penalties shall be imposed on taxpayers who failed to file/pay tax returns up to the time of filing the application for closure of business. Taxpayer shall then be required to submit duly accomplished BIR Form 1905 and necessary requirements for the closure of the business registration. Business taxpayers that would be tagged as “Inactive” but determined to have business transactions in the future shall be reactivated to have their status reverted back to “Active” and applicable form types and tax types shall be re-opened/registered/ encoded. Once reverted to active status, taxpayers shall be required to apply for a new set of invoices/receipts, if applicable. RDOs/LTDs using Electronic Tax Information System (eTIS) shall end-date/deregister the form types/tax types and tag the identified inactive taxpayers as “Inactive” using eTIS-TRS. RDOs using ITS shall end-date the form types/tax types of the identified inactive business taxpayers and tag as “Inactive” upon enhancement of the ITS or any future system that becomes readily available for such purpose.