BIR underscores due process in Oplan Kandado
Negros Occidental (7 May) -- Oplan Kandado is a program of the Bureau of Internal Revenue that closed down business establishments violating the tax rules and regulations, only after due process is employed.
The process usually takes about a month since BIR will draw out list of business with very low compliance, conduct surveillance, subject for review by the board before finally endorsed to the bureau?s commissioner for final decision.
Oplan Kandado applies to VAT taxpayers and whose shops are closed down only when found guilty of violating the four grounds such as:
- Issuance of unregistered receipt/non-issuance of receipts
- Failure to file the VAT returns
- Failure to register the business
- Under-declaration of more than 30% of the sales
The third ground is an unlawful pursuit of business even for NON-VAT taxpayers while the fourth ground is the most serious and most common reason for being padlocked.
Based on experience, according to BIR, under-declaration can go as high as 82-90 percent.
The closure still has to go through a process and when an establishment is padlocked it involves the police, barangay officials, and representative from the local electric company. BIR has to follow procedures as enumerated.
Oplan Kandado only refers to VAT taxpayers who either failed to issue registered receipts, failed to file VAT returns, failed to register the business and whose under-declaration of its sales is more than 30 percent of the actual sales.
The Revenue District Office identifies these taxpayers and draw out a list of taxpayers with very low compliance.
Then, the Regional Director issues a Mission Order for the revenue officers to conduct surveillance of not less than 10 days but not more than 30 days.
In the case of Revenue Region 12, before an overt surveillance takes place, Regional Director Araceli Francisco is set to conduct an Oplan Kandado Roadshow where identified taxpayers are invited to remind them of the process to avoid being padlocked.
As soon as the Mission Order is issued, revenue officers will go to the establishments for 10-30 days to check on the issuance of receipts, check, monitoring and record daily the sales for averaging. Then compare it to how much they filed to find out the amount of under-declaration.
If it is more than 30 percent, this establishment is subject to closure but if it is below, they will pay for it and they will be subjected to regular procedures.
The team will render a report recommending for the closure and will be submitted to the Review Board.
The Review Board is composed of the Regional Director, the Chief of Legal Division and the Chief of the Assessment Division who will then submit the report to the Commissioner.
The Commissioner or his authorized representative under national internal revenue code section 115 has the power to suspend the business operation and temporarily close the business establishment of any person for the violations.
After the review, the board sends a 48-hour notice to inform the taxpayers of the findings. If the taxpayer doesn?t agree that the under declaration is more than 30 percent, then he should submit documentary evidence to prove such.
If the taxpayer refuses, neglects or fails to submit a response within 2 days (48 hours), submits and insufficient reply, refuses, neglects or fails to comply with the terms of the 5-day voluntary compliance notice, then the Board prepares a memorandum recommending for closure for the approval and signature of the Commissioner.
A taxpayer is given five days to voluntarily comply with the requirements and payments before the closure order is served.
A Lifting order is issued only upon compliance of the registration requirements, invoicing requirements and filing of VAT returns.
In the case of under declaration, the closure order can only be temporarily lifted if in the case of seller of services, ten percent (10%) of undeclared gross receipts as found by BIR or one hundred ten percent (110%) of the adjusted basic tax due (after considering under declaration) whichever is higher.
In the case of seller of goods, five percent (5%) of undeclared gross sales as found by the BIR or one hundred ten percent (110%) of the adjusted basic tax due (after considering under declaration), whichever is higher.
Upon compliance and approval of the Commissioner, the lifting order shall be served immediately to the taxpayer.
BIR warns taxpayers to declare the true and correct sales and pay the correct taxes without claiming the input taxes by then, taxpayers don?t go through the stress, continue business operation and not pay the 50 percent surcharge.
If taxpayers will not pay the deficiency and the surcharge, they will graduate into the RATE program or the Run After Tax Evaders of the bureau and a criminal case will be filed against them.
Regional Director Francisco appeals to the taxpayers to cooperate and heed the call of the BIR.
Francisco said that Oplan Kandado seems harsh because the violations are severe.
"This is not a fear factor to our taxpayers. BIR is just telling them the realities covered by the tax code and BIR is just doing its mandate to collect taxes and implement tax programs," Francisco added. (PIA/EAD) [top]