REVENUE REGULATIONS NO. 18-2005 issued on November 11, 2005 provides the policies, procedures and guidelines in the implementation of Enhanced Voluntary Assessment Program (EVAP). The privilege of last priority in audit and investigation granted under the Program shall apply to all internal revenue taxes covering the taxable year ending December 31, 2004 and all prior years including taxes for one-time transactions such as estate tax, donor’s tax, capital gains tax, expanded withholding tax and documentary stamp tax on the transfer, sale, exchange or disposition of assets. Said Program shall also cover taxpayers enjoying preferential tax treatment. Any person, natural or juridical, including estates and trusts, liable to pay any of the stated internal revenue taxes for the said specified period/s who, due to inadvertence or otherwise, erroneously paid his/its internal revenue tax liabilities or failed to file tax returns/pay taxes, may avail of the EVAP, except those falling under any of the following instances: a. Those taxpayers who have already been issued a Final Assessment Notice (FAN) on or before the effectivity of this Regulations with respect to the internal revenue taxes applicable to the taxable period(s) covered by the FAN; b. Persons under investigation as a result of verified information filed by a Tax Informer, duly processed and recorded in the BIR Official Registry Book on or before the effectivity of this Regulations; c. Tax fraud cases filed and pending in the Department of Justice or in the courts for adjudication; d. Those with unpaid tax liability as admitted and reflected in the books of accounts/records, or financial statements and tax returns of the covered period, with respect to the tax type covered by the said admitted tax liability, unless they first pay the same (i.e., DST payable, withholding tax payable, and unpaid individuals’ second installment of income tax, etc.); and e. Cases handled by the Bureau of Internal Revenue under the Run After Tax Evaders (RATE) Program. If a Letter Notice (LN) or a FAN is issued to the taxpayer after qualifying for the EVAP, the LN/FAN shall be considered cancelled, except as otherwise provided in the Regulations. A taxpayer who has availed of the EVAP shall not be audited except upon prior authorization and approval of the Commissioner of Internal Revenue when there is strong evidence or finding of understatement in the payment of a taxpayer’s correct tax liability by more than 30% as supported by a written report of the appropriate office stating in detail the facts and the law on which such finding is based: Provided, however, that any EVAP payment should be allowed as tax credit against the deficiency tax due, if any, in case the concerned taxpayer has been subjected to tax audit. Audit of taxpayers shall automatically be suspended upon filing of application and payment of the EVAP amount. However, if the audit case is prescribing within 6 months from date of application and payment of the EVAP, the availment should be evaluated within 5 days from receipt of the payment to determine its qualification hereunder. If after evaluation, the taxpayer has been disqualified under this Regulations, the audit shall be revived and should proceed accordingly. Letters of Authority (LAs)/Audit Notices (ANs), LNs, Taxpayer Verification Notices (TVNs) and Mission Orders (MOs) shall be cancelled and withdrawn for EVAP availments with issued Certificate of Qualification. The suspension of audit/investigation and the cancellation of the authority to audit/investigate, shall be on a per tax type basis or only on the kind of tax covered by the EVAP availment. Before any LA/AN, LN, TVN or MO is issued against a taxpayer for the taxable year/s covered by EVAP, it is incumbent upon the investigating office to ensure that the taxpayer has not validly availed of the EVAP. The EVAP applicant-taxpayer shall signify his intention to avail of last priority in the audit and investigation by filing his application and paying the EVAP amount with the appropriate BIR collection agent (Accredited Agent Bank (AAB) or Revenue Collection Officer (RCO)/Deputized Municipal Treasurer (DMT), in the absence of AAB using BIR Forms to be prescribed by the Commissioner of Internal Revenue subject to the following conditions: a) The EVAP amount to be paid shall be the higher amount between the result of the computation using the prescribed percentage in the applicable or covered taxable year or the minimum EVAP payment in absolute amount per taxable year. b) EVAP payments shall not include any tax debit memo, creditable withholding tax and Minimum Corporate Income Tax (MCIT) carry-over. The EVAP payment cannot be used as tax credit in the year of payment as well as in the returns for subsequent year/s nor as a deduction for internal revenue tax purposes. Nonetheless, if despite EVAP availment, tax audit is conducted on the covered year under the circumstances allowed by this Regulations, the EVAP payment shall be credited against the deficiency tax after audit. c) The Tax Clearance Certificate (TCC) or the Certificate Authorizing Registration (CAR) shall be issued in accordance with the procedures prescribed by the Bureau after the verification of the taxpayer’s compliance of the asset and liability valuation rules as well as evaluation of the documents submitted to substantiate the assets reported and the deductions claimed. The clearance to be issued shall cover only the assets declared by the taxpayer in the tax return/declaration. Taxpayers who have applied for No Audit Program (NAP) but whose availments are found to be invalid may avail of the privilege under this program. Payment under NAP may be credited against the EVAP on a per tax type basis. When the EVAP amount is in excess of P 5,000,000.00, the taxpayer may elect to pay the tax in 3 equal installments provided that all installment payments shall be made on or before December 31, 2005. If any installment is not paid on or before the date fixed for its payment, the whole amount of tax unpaid becomes due and payable together with the delinquency penalties. Taxpayers may request in writing an extension for installment payment of EVAP on the ground of financial incapacity. The request shall be approved by the concerned Regional Director (RD)/Officer-in-Charge (OIC), Large Taxpayers Service (LTS) upon compliance with the following conditions: a) Taxpayer must submit a list of banks in which he/it maintains bank deposits/accounts; b) Taxpayer must execute a waiver of bank secrecy of deposits thereby authorizing the BIR to inquire into the bank accounts of the taxpayer in order to verify his claim of financial incapacity; c) Taxpayer must submit a written undertaking to pay the EVAP installments within a period not exceeding 6 months from date of filing his/its EVAP application; and d) Taxpayer must put up a bond corresponding to the installment payments to be made if the tax case is prescribing within 6 months from the date of filing the EVAP application. The above-mentioned requirements must be filed with the Revenue District Office (RDO) having jurisdiction over the taxpayer, or at the LTS, in the case of large taxpayers, at the time of the submission of EVAP application form. All EVAP-Application Forms (AF) and validated EVAP-Payment Form (PF), and such other documents as may be required and duly received by the RDO or LTS shall serve as proof of the taxpayer’s availment of EVAP. All EVAP availments made shall be subject to the review and evaluation of the concerned Regional Office (RO)/LTS. Upon verification of the correctness of the taxpayer’s availment of the privilege of last priority in the audit and investigation, the RD/OIC, LTS shall issue a Certificate of Qualification for the privileges granted. Nonetheless, if the review reveals deficiencies or defects in the EVAP availment, the reviewing BIR Office shall inform the originating BIR Office to require the taxpayer to comply, correct or rectify the deficiencies or defects. Upon completion of all the requirements and satisfaction of all the conditions, the Certificate of Qualification shall be issued. The EVAP availment shall be reviewed within 30 days from date of application and payment and the resulting Certificate of Qualification or Notice of Disqualification, whichever is applicable, shall accordingly be issued. A taxpayer who has received a Notice of Disqualification may appeal the same to the Assessment Service, through the Assessment Programs Division (APD), whose recommendation shall be subject to approval by the Commissioner after review by the Deputy Commissioner, Operations Group. The EVAP Program is valid until December 30, 2005.