REPUBLIKA NG PILIPINAS

KAGAWARAN NG PANANALAPI
KAWANIHAN NG RENTAS INTERNAS

October 17, 2005

REVENUE MEMORANDUM ORDER NO. 29-2005

SUBJECT : Prescribing the Guidelines and Procedures in Resolving Issues on

Change in Accounting Period/Type.

TO : All Assistant Commissioners, Regional Directors, Revenue Data

Center Heads, Revenue District Officers, Division Chiefs and Revenue
Employees Concerned

I. OBJECTIVES:
A. Define the guidelines and procedures in resolving issues on change in
accounting period/type affecting REG, RPS, CBR, RCS, CMS and Audit
systems.

B. Define the roles and responsibilities of all concerned offices.

C. Address the issues/problems prior to the implementation/roll-out of Lot B –

Development of the eITS: Phase I of BIR Outsourcing Initiative

II. BACKGROUND:
Currently, taxpayer other than individual, is permitted to change his accounting
period/type as approved by the Commissioner or as delegated to the Regional
Director/Assistant Commissioner by submitting BIR Form No. 1905 together with
the required attachments (e.g. SEC amendment, approval letter, etc.). The
Integrated Tax System (ITS) handles this change by adding a new record or
replacing the existing record either online or thru datafix in Registration (REG)
System.

There are also cases that a change in accounting period/type is necessary in

the system when there is inconsistency between REG system and the actual
accounting period/type the taxpayer is using.

1
 However, problems occur in interfacing other systems like Return Processing
System (RPS), Collection and Bank Reconciliation (CBR) , Returns Compliance
System (RCS), Case Monitoring System (CMS) and Audit (AUD).

Enhancement of these interfacing systems to accommodate new requirements

need revisiting/revising the ITS design. Hence, it was put on-hold but to be
included in Lot B – Development of the eITS: Phase I of BIR Outsourcing Initiative.

III. PROCEDURES:
In order to address such problems, scenarios are illustrated below with the
corresponding solutions/actions to be taken.

CASE NO. 1 - FILING OF AMENDED RETURN OR COMPLIANCE RETURN FOR

PREVIOUS ACCOUNTING PERIOD/TYPE

Taxpayer filed a return and the accounting period/type is different from the latest
accounting period/type in the REG System. Return may be an amended return or a
compliance return (for stop filer) wherein accounting period/type declared on the return
filed is the previous accounting period/type. Return was then encoded but resulted to
suspended return. The Error Code 1011 (inconsistent accounting period in REG and in
return) in RPS, and either Error Code NM (accounting type mismatched) or Error Code
NF (unregistered accounting type) in CBR are encountered.

ACTIONS TO BE TAKEN:

a) Revenue District Office/Large Taxpayer District Office (RDO/LTDO)/LT-

Document Processing & Quality Assurance Division (LT-DPQAD)-Error
Handler prepares and provides RDO/LTDO-Taxpayer Service Section
(TSS), LTAD I (RDO 116 - Regular Large Taxpayers) & LTAD II (RDO
121 – Excise Taxpayers) – REG Section the ‘List of Taxpayers with
Suspended Returns/Payments’ (Annex “A”) with Error Codes 1011,
and either NM or NF of taxpayer(s) for REG verification of current/correct
accounting period/type.

b) REG Officer/User of RDO/LTDO-TSS/LTAD I/LTAD II-REG Section

verifies and determines the Annex “A” based from the taxpayer’s correct
accounting period/type he is filing. Pertinent documents, such as the
previously submitted BIR Form No. 1905 together with the required
attachment/s, if there is/are any, reflecting the change from the old
accounting period/type to the current/correct accounting period/type shall
be retrieved to be attached to a Data Fix Request Form and for approval
of the Revenue District Officer/Division Chief (RDO/DC).

c) REG Officer/User forwards to Revenue Data Center/Help Desk

(RDC/HD) the approved Data Fix Request Form and attach photocopy of
taxpayer’s BIR Form No. 1905 together with the required attachment/s, if

2
 there is/are any, and the Annex “A” for appropriate action. (Activities b
and c shall be accomplished within five [5] days upon receipt of the
Annex “A”.)

d) RDC/HD logs in the Paradigm System the issue/problem and forwards

the documents to the Information Systems Development Service –
Systems Maintenance and Support Division (ISDS–SMSD) for
appropriate action.

e) ISDS-SMSD prepares a migration request for changing the value of the

accounting period/type in the REG System with the correct one and
informs the RDC/HD via Paradigm System.

f) RDC/HD verifies correctness of the data fixed through the REG System.

• If correct, HD informs in writing the REG Officer/User and Error

Handler.
• Otherwise, HD informs ISDS-SMSD for any errors/discrepancies.

g) RDO/LTDO/LT-DPQAD–Error Handler validates the RPS and CBR

errors until the record is posted in TAS and resolves the succeeding
errors that would arise. Afterwards, prepares and provides REG
Officer/User the ‘Request for Accounting Period Reversion’ (Annex
“B”) to revert the correct accounting period of the concerned taxpayer(s)
in REG System.

h) REG Officer/User fills out another DataFix Request Form together with
the Annex “B” for approval of the RDO/DC for the purpose of updating
the accounting period/type to its current/latest value.

i) Perform items d, e, and f.

CASE NO. 2 – REGISTERED ACCOUNTING PERIOD/TYPE IS DIFFERENT FROM

THE FILED RETURNS FROM THE START OF ITS BUSINESS

Same Error Codes 1011, and either of NM or NF are being encountered, when the
accounting period/type in the REG System is the wrong accounting period/type
implemented for a given taxpayer due to wrong encoding.

Example:
REGISTRATION Table Correct Value per TP
Acctg. Period /Type C F
Effective Date 05/01/1999 05/01/1999
Start Month 01 05

As per BIR records, the taxpayer should be a ‘Fiscal’ filer from the start of its business.
Apparently in REG System, the accounting period/type in his account is ‘Calendar’.
Taxpayer was not informed that the accounting period/type registered in his account is

3
not consistent with the accounting period/type used in his filed returns. All these returns
filed as ‘Fiscal’ were then converted and posted into a ‘Calendar’ accounting period/type
by the Error Handler. On the other hand, the Error Handler upon discovery of this
situation informs the REG User/Officer of the discrepancy in the taxpayer’s accounting
period/type per return filed and in REG system.

ACTIONS TO BE TAKEN:

a) RDO/LTDO/LT-DPQAD-Error Handler reverses all returns and

payments posted in wrong accounting period/type and re-encodes to the
current/correct accounting period/type. Afterwards, prepares and provides
RDO/LTDO-TSS/LTAD I/LTAD II-REG Section the Annex “A” for REG
verification of current/correct accounting period/type.

b) REG Officer/User of RDO/LTDO-TSS/LTAD I/LTAD II-REG Section

verifies and determines the Annex “A” against the taxpayer’s submitted
BIR Form No. 1905 together with the required attachment/s, if there is/are
any, to be attached to the DataFix Request Form.

c) REG Officer/User fills out a DataFix Request Form and attach photocopy
of the retrieved BIR Form No. 1905 together with the other required
attachment/s, if there is/are any, and the Annex “A” for approval of the
RDO/DC and subsequently forward to RDC/HD for appropriate action.
(Activities b and c shall be accomplished within five [5] days upon receipt
of the Annex “A”.) At the same time, prepares and provides RDO
Collection or Assessment Section/LTDO/LTAD I/LTAD II/LT
Collection Enforcement Division (CED) - Case Officer/Examiner the
‘Request for Validation of all Open RCS Cases’ (Annex “C”) to
validate open RCS case/s of the taxpayer(s), if there is/are any.

d) Case Officer/Examiner of RDO Collection or Assessment

Section/LTDO/LTAD I/LTAD II/LTCED validates the open RCS case/s, if
there is/are any.

e) Case Officer/Examiner fills out a Datafix Request Form together with

other required document/s for approval of the RDO/DC and subsequently
forward to RDC/HD for closure of invalid case/s, if there is/ are any.

f) RDC/HD logs in the Paradigm System the issue/problem:

• For Annex “A”, forwards the documents to the ISDS–SMSD for
appropriate action.
• For Annex “C”, revalidates and runs the generic RCS case closure
script to close invalid case/s.

g) ISDS-SMSD prepares a migration request for changing the value of the

accounting period/type in the REG System with the correct one and
informs the RDC/HD via Paradigm System.

4
 h) RDC/HD verifies correctness of the data fixed through:
1) REG System
• If correct, HD informs in writing the REG Officer/User and Error
Handler.
• Otherwise, HD informs ISDS-SMSD for any errors/discrepancies.
2) RCS on-line facility and informs the Case Officer/Examiner.

i) RDO/LTDO/LT-DPQAD–Error Handler validates the suspended

return/payment in RPS/CBR until the record is posted in TAS.

CASE NO. 3 - FILING OF RETURNS UNDER THE NEW ACCOUNTING PERIOD/TYPE

Taxpayer requested a change of his accounting period/type from Calendar to Fiscal or

vice versa by submitting BIR Form No. 1905 together with the required attachment/s, if
there is/are any (e.g., approval letter, etc.), which was duly approved by the concerned
BIR official. Taxpayer then filed his returns using the new accounting period/type, which
change was not implemented by the RDO/LTDO/LTADI/LTADII in the taxpayer
registration database under the REG System.

All returns filed and the corresponding tax payments due thereon, if there is/are any,
under the new accounting period/type were then erroneously converted and posted
under the old accounting period/type by the Error Handler. On the other hand, the
Error Handler upon discovery of the situation informs the REG Officer/ User of the
discrepancy in his accounting period/type per return filed and in REG System.

ACTIONS TO BE TAKEN:

a) RDO/LTDO/LT-DPQAD-Error Handler reverses all returns and

payments posted in wrong accounting period/type and re-encodes to the
current/correct accounting period/type. Afterwards, prepares and provides
RDO/LTDO-TSS/LTAD I/LTAD II-REG Section the Annex “A” for REG
verification of current/correct accounting period/type.

Please note that:

• Returns and payments to be reversed should have a return period

that is covered by the effective date of the new accounting
period/type; and
• Returns and payments posted in old accounting period/type with a
return period prior to effective date of new accounting period/type
should not be included for reversal.

b) REG Officer/User of RDO/LTDO-TSS/LTAD I/LTAD II-REG Section

verifies and determines the Annex “A” against the taxpayer’s submitted
BIR Form No. 1905 together with the required attachment/s, if there is/are
any, to be attached to the DataFix Request Form.

5
c) REG Officer/User fills out a DataFix Request Form and attach photocopy
of the retrieved BIR Form No. 1905 together with the other required
attachment/s, if there is/are any, and Annex “A” for approval of the
RDO/DC and subsequently forward to RDC/HD for appropriate action.
(Activities b and c shall be accomplished within five [5] days upon receipt
of the Annex “A”.). At the same time, prepares and provides RDO
Collection or Assessment Section/LTDO/LTAD I/LTAD II/LT
Collection Enforcement Division (CED) - Case Officer/Examiner the
Annex “C” to validate open RCS case/s of the taxpayer(s), if there is/are
any.

d) Case Officer/Examiner of RDO Collection or Assessment

Section/LTDO/LTAD I/LTAD II/LTCED validates the open RCS case/s, if
there is/are any.

e) Case Officer/Examiner fills out a Datafix Request Form together with

other required document/s for approval of the RDO/DC and subsequently
forward to RDC/HD for closure of invalid case/s, if there is/are any.

f) RDC/HD logs in the Paradigm System the issue/problem:

• For Annex “A”, forwards the documents to the ISDS–SMSD for
appropriate action.
• For Annex “C”, revalidates and runs the generic RCS case closure
script to close invalid case/s.

g) ISDS-SMSD prepares a migration request for changing the value of the

accounting period/type in the REG System with the correct one and
informs the RDC/HD via Paradigm System.

h) RDC/HD verifies correctness of the data fixed through:

1) REG System
• If correct, HD informs in writing the REG Officer/User and Error
Handler.
• Otherwise, HD informs ISDS-SMSD for any errors/discrepancies.
2) RCS on-line facility and informs the Case Officer/Examiner.

i) RDO/LTDO/LT-DPQAD–Error Handler validates the suspended

return/payment in RPS/CBR until the record is posted in TAS.

6
CASE NO. 4 – GENERATION OF AUDIT NOTICE

Taxpayer is being audited for a taxable period that falls within the effectivity of
the old accounting period/type but the accounting period/type reflected in the
Audit Notice is the current accounting period/type.

ACTIONS TO BE TAKEN:

a) Revenue Officer (RO) fills out a DataFix Request Form for the purpose
of correcting the taxable period in the Audit Notice and all other related
system correspondences for approval of the RDO/DC and/or Regional
Director/Assistant Commissioner.

b) RDO/DC forwards to RDC/HD the approved DataFix Request Form.

c) RDC/HD logs in the Paradigm System the issue/problem and forwards

the documents to the ISDS–SMSD for appropriate action.

d) ISDS-SMSD prepares a migration request to correct the taxable period in

the Audit Notice and all other related system correspondences.
Afterwards, informs the RDC/HD via Paradigm System.

e) RDC/HD verifies correctness of the data fixed through the Case

Monitoring System (CMS) and AUD.
• If correct, HD informs the RDO/DC.
• Otherwise, HD informs ISDS-SMSD for any errors/discrepancies.

IV. REPEALING CLAUSE

This Revenue Memorandum Order (RMO) supplements the existing revenue
issuances on procedures affecting REG, RPS, CBR, RCS, CMS and Audit
systems.

V. EFFECTIVITY
This RMO shall take effect immediately.

(Original Signed)
JOSE MARIO C. BUÑAG
OIC, Commissioner Of Internal Revenue

G2