Question & AnswerQ&A (BIR REVENUE MEMORANDUM ORDER NO, 54-2000)
The primary objective is to provide policies and procedures for conducting surveillance on the business operations of any person to establish a prima facie basis for assessing internal revenue tax liabilities based on Section 6(c) of the NIRC of 1997.
The order covers persons perceived to underdeclare income or sales, those failing to issue or issuing unregistered official receipts/invoices, those who fail to file required returns or file fraudulent ones, and those who fail to register with the BIR as required by law.
Covert Surveillance is the surreptitious and undercover watch on a person's business operations for a certain period before conducting inventory of business documents or seizure of documents and properties related to violations under the NIRC.
Overt Surveillance starts with inventory taking of business documents and is followed by actual open observation and close monitoring of the business activities, with the subject duly informed of the surveillance presence and purpose.
The minimum period for Overt Surveillance is ten (10) days, with a maximum of thirty (30) days unless extended in writing.
Implementing officers conduct the surveillance, possess qualities like discretion and alertness, observe business operations, inventory business documents, and apprehend taxpayers found violating tax laws.
Unused sales invoices, official receipts, unauthorized official receipts/invoices, unregistered cash register machines, and point of sale machines may be inventoried and seized if unauthorized.
Findings can form the basis for assessing taxes for other months or years and are considered prima facie correct; they may lead to issuance of Letter of Authority for audit and assessment.
They must prepare monthly Status Reports on Surveillance Activities within ten days after the month ends and submit them to various BIR offices, including Enforcement Service, Regional Office, and Office of the Commissioner.