It has been around 217 days or close to seven months, yet the COVID-19 pandemic is still with us in the form of quarantines and lockdowns of varying levels on most people except essential workers. Consequently, we have seen how operations have been disrupted for many businesses — a growing number of companies with office-based work, including our firm, have continued with and strengthened work-from-home (WFH) arrangements to keep things business as usual in these unusual times.
Because of fear of going out, most people have opted for online transactions. From the hype of 10.10 online shopping sales to the overwhelming options for door-to-door delivery of food, groceries, and packages — the goal is to bring people’s usual outdoor experience right to their homes.
This is nothing new for the BIR. In May 2019, the BIR issued Revenue Memorandum Order (RMO) No. 40-2019 prescribing the procedures for the proper service of assessment notices with the provisions of Section 3.1.6 of Revenue Regulations (RR) No. 18-2013. However, the regulations only cover the service of assessment notices (i.e. PAN, FLD/FAN, and FDDA).
On Oct. 6, 2020, the BIR issued RMC No. 110-2020, which provides detailed guidelines on the proper modes of service of an electronic Letter of Authority (eLA).
A Letter of Authority (LoA) is the authority given to the appropriate revenue officer assigned to assess functions pursuant to Section 6(A) of the National Internal Revenue Code (NIRC) of 1997, as amended. Without the LoA, the examination or assessment can be nullified.
Thus, an eLA must be served to the concerned taxpayer by the Revenue Officers assigned or any BIR employee as duly authorized for this purpose by delivery of a notice through personal service to his registered or known address, or wherever the taxpayer may be found.
Taxpayers who are currently in a WFH setup might be wondering: “Can BIR serve the eLA at my residence or wherever I may be found in case our office is closed?”
Technically, the answer is yes: a known address refers to a place other than the registered address where business activities of the party are conducted or place of residence.
In cases where personal service is not possible, such as when the concerned taxpayer or his authorized representative, or authorized officer in case of a non-individual taxpayer, cannot be found in the registered address, the eLA may be served either by substituted service or by mail.
In substituted service, the eLA may be left at the taxpayer’s registered address or where the business activities are conducted with his clerk or with a person having charge thereof. However, if the known address is the place of residence, substituted service can be made by leaving the copy with a person of legal age residing therein.
If no person is found at the party’s registered or known address, or when a party is found but refuses to receive the eLA, the ROs are to bring a barangay official and two disinterested witnesses (i.e. persons of legal age other than employees of the BIR) so that they may personally observe and attest to such absence or refusal, as the case may be.
Service by mail is to be done by sending copy of the eLA through registered mail by the Philippine Postal Corp. (PhlPost) with an instruction to the postmaster to return the mail to the sender after 10 days, if undelivered; through a reputable professional courier company (PCC); or through ordinary mail, if no registry or reputable courier is available in the locality of the taxpayer.
For eLAs served through personal or substituted service, the date of receipt, name and signature of the person acknowledging receipt or barangay officials/witnesses, as applicable, need to be indicated on the back of the duplicate copy of the eLA.
Personal service will be deemed complete upon actual delivery of the eLA to the taxpayer or his representative. Service by registered mail is considered complete upon actual receipt by the taxpayer or after five days from the date of receipt of the first notice of the postmaster, whichever date is earlier. Service by ordinary mail is considered complete upon the expiration of 10 days after mailing.
Service to the tax agent/practitioner, who is appointed or authorized by the taxpayer, is deemed service to the taxpayer.
Interestingly, the BIR has not yet included electronic mail (e-mail) through the official government e-mail address of the RO as substituted service of eLAs and assessment notices.
With all the foregoing guidelines, we drill down to the question of how the BIR will determine the taxpayer’s known address or the authorized representative and its known address to deliver the eLA.
The Tax Code provides that officers required by law to file the returns for domestic corporations are the President, the Vice-President, or other principal officers. They are considered automatic authorized representatives and may give authorization to other personnel to act on the taxpayer’s behalf. For the known address, BIR may refer to the taxpayer’s GIS, ITR and By-laws to identify where the authorized representatives can be found.
Admittedly, servicing eLAs somewhere other than the registered business address is quite unlikely to most of us. In addition, while these WFH and door-to-door delivery schemes are primarily for the advantage of keeping up business continuity, the BIR reiterates its intentions on the proper and flexible ways of notifying the taxpayers about examinations and assessments especially in these unusual times.
At the end of the day, it is truly rewarding to know that any online orders have been shipped with minimal risk of infection when the shipment arrives. But as a taxpayer, would you feel the same way if a knock at your door turns out to be an eLA?
Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
Gladys Mae M. Dimaya is a senior in charge of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.