Title
BIR rules on confidential tax info filing and rewards
Law
Bir Revenue Regulations No. 16-2010
Decision Date
Nov 25, 2010
Revenue Regulations No. 016-10 establishes guidelines for the filing of Confidential Information to investigate violations of the National Internal Revenue Code, with informers eligible for a reward if their information leads to the recovery of taxes and penalties or the conviction of the guilty party.
confidential information
case investigation
guidelines

Purpose and policy objectives

  • The regulation establishes guidelines, rules, and procedures for the filing of Confidential Information for violations of the NIRC of 1997, as amended.
  • The regulation facilitates the investigation of persons covered by filed Confidential Information.
  • The regulation delineates the responsibilities of BIR offices and units involved in: filing, investigation, disposition of Confidential Information, and the grant and payment of reward.

Core definitions and key terms

  • An Informer is any qualified person who voluntarily provides definite and sworn information not yet in the possession of the BIR nor of public knowledge, leading to the discovery of frauds or violations of the NIRC of 1997, as amended, resulting in recovery and/or conviction and/or imposition of a fine or penalty.
  • Confidential Information refers to the sworn written statement given voluntarily by an informer, which must definitely state the facts or acts constituting fraud committed by a person or entity denounced to have violated or be violating the NIRC of 1997, as amended.
  • Relatives within the Sixth (6th) Civil Degree of Consanguinity are the father, mother, children, grandchildren, grandfather, grandmother, brothers, sisters, uncles, aunts, nephews, nieces, first cousins, and second cousins of BIR officials and employees or other public officials or employees.

Coverage: who may file and what cases

  • Confidential Information may be filed by an informer against a denounced taxpayer for specific NIRC of 1997, as amended violations.
  • Confidential Information must be filed under oath and personally executed by the informer before the proper BIR office, depending on the violation and tax amount threshold.
  • Confidential Information covers filing before the Chief, Prosecution Division, BIR National Office for:
    • Attempt to Evade or Defeat Tax (Section 254 of the NIRC of 1997, as amended);
    • Failure to File Return, Supply Correct and Accurate Information, Pay Tax, Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation (Section 255 of the NIRC, as amended);
    • Failure or Refusal to Issue Receipts or Sales or Commercial Invoices, Violations Related to the Printing of such Receipts or Invoices or Other Violations (Section 264 of the NIRC of 1997, as amended);
    • Unlawful Pursuit of Business (Section 258 of the NIRC of 1997, as amended);
    • Use of multiple Tax Identification Number/s (TINs);
    • Making False Entries, Records or Reports or Using Falsified or False Accountable Forms (Section 257 of the NIRC, as amended); and
    • Other violations of the NIRC of 1997.
  • Confidential Information must be filed before the Chief, Legal Division of the Revenue Region having jurisdiction over the taxpayer when the estimated basic tax liability arising from the alleged violation is less than PHP 1,000,000.00.
  • Confidential Information may be used to support investigations of fraud or NIRC violations and, where applicable, reward entitlement based on recovery/collection, conviction, and/or imposition of penalties.

Informer disqualifications and required validity

  • The regulation disqualifies any BIR official or employee or any other incumbent public official or employee from availing of the reward.
  • The regulation disqualifies any relative within the sixth (6th) civil degree of consanguinity of a BIR official or employee or other public official or employee from availing of the reward.
  • The regulation disqualifies even retired or otherwise separated BIR officials or employees or other public officials who acquired the information in the course of duty during incumbency.
  • Confidential Information is treated as valid only if ALL of the following requisites are met:
    • The informer is not disqualified under Section 3 and must state in the sworn information that the informer is not related within the sixth (6th) civil degree of consanguinity to any BIR official or employee or any other public official or employee; otherwise, the Confidential Information is invalid.
    • Voluntary sworn information must be provided on tax fraud or NIRC violation allegedly committed by the denounced taxpayer, with definite, concise, and credible facts (not a general statement).
    • The information must specify:
      • (1) the name and address of the taxpayer committing the violation;
      • (2) the taxable period when the fraud or violation was committed;
      • (3) the internal revenue law allegedly violated;
      • (4) the address of witnesses, if any; and
      • (5) other facts pertinent to the violation.
    • The information must be supported by substantial evidence or relevant evidence that a reasonable mind might accept as adequate to justify a conclusion, including:
      • BIR Certificate of Registration;
      • Income Tax Returns;
      • Deed of Absolute Sale;
      • License to Operate Business in the Philippines as issued by the SEC;
      • General Information Sheet (GIS) obtained from the SEC;
      • Audited Financial Statements; and
      • Other relevant documents.
    • The evidence submitted must be certified true copies, meaning authenticated and signed by the authorized officer of the agency having custody of the original.
    • For evaluation, mere photocopies of documents within the custody of the denounced taxpayer (private records) may be accepted.
    • If the informer does not possess or control the documents but knows the person who has custody/control or where they are kept, the informer must state in the sworn information the person and/or the location where the documents, records, and books are kept.
    • The information must not yet be in the possession of the BIR.
    • The information must not refer to a case already pending or previously investigated or examined by the Commissioner of Internal Revenue or any deputy/agent/examiner, or by the Secretary of Finance or any deputy/agent.
    • Information filed with the Department of Finance and its attached agencies, including the BIR, must not be treated as valid Confidential Information.
    • The information must not refer to or be exactly similar to a previous information filed by another informer covering the same taxpayer describing the same scheme or covering the same taxable year or period.
  • If the informer withheld required information regarding relationship and receives the reward, the informer is liable to penalty of perjury and must restitute to the BIR the amount of reward wrongfully obtained, inclusive of legal interest.

Filing, processing, and confidentiality rules

  • Confidential Information must be sworn, personally executed, and filed before the proper BIR authority (National Office or Revenue Regional Office) based on the rules on filing venue and tax threshold.
  • The regulation requires that the format of the sworn Confidential Information follow the sample attached as Annex A.
  • For cases at the National Office, the Chief, Prosecution Division evaluates the information and determines if it qualifies as valid under Section 5.
  • If the information is invalid and insufficient, the informer is notified within three (3) days from receipt, and the supporting documents must be returned.
  • For valid Confidential Information at the National Office, the informer must execute under oath four (4) copies before the Chief, Prosecution Division, and attach one (1) copy of supporting documents to each copy.
  • At the National Office, the Records Management Division, BIR National Office numbers and records the confidential entry in the Confidential Entry Book, reflecting:
    • date and time received;
    • Book Entry Number;
    • informer name and address;
    • person denounced name and address;
    • witnesses’ names and addresses, if any;
    • subject matter; and
    • list of submitted records/documents/books.
  • At the National Office, supporting documents are identified, marked, and sequentially numbered.
  • At the National Office, distribution of copies is mandatory:
    • the first copy is retained by the Records Management Division;
    • the second copy is forwarded to the Enforcement Service for indorsement to the National Investigation Division (NID) for preliminary investigation and/or audit;
    • the third copy is forwarded to the Chief, Prosecution Division for file and future reference (including processing of reward claim); and
    • the fourth copy is furnished to the informer as identification/proof.
  • For cases at the Revenue Regional Office, the Chief, Legal Division evaluates under Section 5.
  • If invalid and insufficient at the Revenue Regional Office, the informer is notified within three (3) days from receipt and the supporting documents are returned.
  • For valid Confidential Information at the Revenue Regional Office, the informer executes four (4) copies before the Chief, Legal Division, attaching one (1) copy of supporting documents to each copy.
  • At the Revenue Regional Office, numbering and recording in the Confidential Entry Book is done by the Records Management Division, BIR National Office, reflecting the same basic intake details required at the National Office.
  • At the Revenue Regional Office, distribution of copies is mandatory:
    • the first copy is retained by the Records Management Division;
    • the second copy is forwarded to the Regional Director for transmittal to its Special Investigation Division (SID) for preliminary investigation and/or audit;
    • the third copy is forwarded to the Regional Director for transmittal to the Legal Division for filing and reference (including processing of reward claim); and
    • the fourth copy is furnished to the informer.
  • The Records Management Division must observe strict confidentiality of the contents of the Confidential Information, except as provided by the regulation.
  • The regulation requires non-disclosure of the informer’s identity:
    • The Records Management Division must delete the informer’s name and any information appearing in the second copy intended for NID/SID that may lead to the informer’s identity.
    • The case docket must bear no information on the informer’s identity from start until completion of investigation.
    • In extremely meritorious cases, the Chief, NID or SID must have access to the identity or contact details when needed for communication with the informer.

Preliminary investigation and investigation confidentiality

  • For cases covered by a sworn Confidential Information at the National Office, the Chief, NID assigns the case to an investigator.
  • The assigned investigator at the National Office has sixty (60) working days from assignment to conduct a preliminary investigation to determine whether probable cause exists that tax fraud or an NIRC violation was committed.
  • If probable cause exists at the National Office, a report requesting issuance of an Electronic Letter of Authority (eLA) is prepared, and the Chief, NID submits the report and recommendation to the Assistant Commissioner, Enforcement Service for review by the Deputy Commissioner, Legal and Inspection Group, and for approval by the Commissioner who issues the eLA.
  • If the information is insufficient to establish probable cause at the National Office, the informer is notified within ten (10) working days from the time findings are established that the denunciation will be referred for purposes of regular audit to the appropriate Revenue Region/District Office with jurisdiction.
  • If the informer fails to substantiate allegations, fails to provide contact addresses/telephone/cellular numbers and means to be contacted, or cannot be reached despite diligent efforts by NID, the Confidential Information is archived.
  • For cases covered by Denunciation Letters or unsworn complaints, sent through electronic or ordinary mail at the National Office:
    • the Chief, NID assigns the denunciation to an investigator;
    • the assigned investigator has thirty (30) days to evaluate;
    • within ten (10) working days from receipt of the memo-assignment from the Chief, NID, the investigator sends a letter acknowledging receipt and advising submission of additional information/supporting documents if necessary.
  • For insufficient information at the National Office under denunciation letters/unsworn complaints, the informer is notified within ten (10) working days from findings established that the information will be forwarded for regular audit to the appropriate Revenue Region/District Office with jurisdiction.
  • The regulation requires that where information and evidence are sufficient, the informer is invited to appear and execute under oath a sworn Affidavit of Confidential Information before the Chief, Prosecution Division.
  • The regulation makes the sworn affidavit a prerequisite for entitlement to the reward.
  • If the informer fails to appear and execute the affidavit despite invitation, the NID nonetheless continues the preliminary investigation.
  • At the Regional Office, where cases are directly filed with the Revenue Region/District Office or referred by the Assistant Commissioner, Enforcement Service:
    • the Chief, SID assigns the information to an investigator;
    • the investigator has sixty (60) working days from receipt to complete the preliminary investigation on probable cause.
  • If information is insufficient at the Regional Office, the informer is notified within ten (10) working days from findings established that the information is archived.
  • If probable cause exists at the Regional Office, the Chief, SID submits a report for approval by the Regional Director, who refers it to the Revenue District Officer (RDO); the Regional Director issues the eLA upon request of the RDO.
  • Confidentiality of investigation under the regulation requires, upon commencement of the investigation process:
    • assigned investigators must not divulge to third parties, including the informer, any information, data, or documents gathered during investigation;
    • investigators may provide the informer only updates on the status of the investigation.

Reward eligibility, computation, and allocation

  • An informer is entitled to a reward only if the Confidential Information is instrumental in the discovery of the fraud or NIRC violation or special laws administered by the BIR and results in:
    • actual recovery or collection of revenues, surcharges, and fees, and/or
    • conviction of the guilty party/parties, and/or
    • imposition of any fine or penalty, and/or
    • actual collection of a compromise amount in case of amicable settlement.
  • Where there are two (2) or more informers in the same case:
    • the informer who gave information in full satisfaction of the reward conditions is entitled to the reward.
    • if each informer meets all conditions fully, the informer who first furnished the information is entitled to the reward.
    • if two (2) or more persons jointly filed and are qualified, they divide the reward equally among themselves.
  • The reward amount is ten percent (10%) of the taxes and penalties (or compromise amount in case of compromise settlement) actually collected as a result of the Confidential Information, or One Million Pesos (P1,000,000.00) per case, whichever is lower.
  • Taxes assessed resulting from a valid Confidential Information involving commission of criminal fraud established beyond reasonable doubt must not be compromised under Section 204 of the NIRC of 1997, as amended.
  • Taxpayers subject of a valid Confidential Information are excluded from the coverage of any administrative program of the Bureau meant to facilitate and enhance revenue collection (e.g., VAP, VAAP, CTRP, etc.), unless otherwise provided by relevant revenue issuances, and such taxpayers cannot avail of “last priority in audit or investigation” or other benefits under such programs.

Reporting, follow-ups, claims filing, payment process

  • The NID or SID must prepare a report containing the legal and factual basis for entitlement to the informer’s reward and must forward it, with the case docket, to the:
    • Prosecution Division of the National Office, or
    • Legal Division of the Revenue Region,
      for evaluation.
  • The NID or SID may render a partial report for payment of informer’s reward on undisputed issues clearly referring to the confidential information.
  • The NID or SID must attach a certification from the Revenue Accounting Division confirming that payment has already been made by the denounced taxpayer.
  • The regulation requires periodic status updates:
    • On or before the tenth (10th) day of each month following receipt of denunciation/information by the NID/SID, a letter advising the informer about the status must be sent.
    • Updates may provide only current status and must not disclose specific actions taken or to be taken, and must not reveal any information, data, or documents gathered against the subject taxpayer.
  • Follow-ups or update requests by informers must be made in writing and must indicate:
    • the informer’s name and C.I. No. appearing in the confidential information, or
    • the Memo Assignment Order No. for unsworn confidential information.
  • Follow-up requests that do not include the required identifiers, that are made through telephone, made personally, or made beyond three (3) years from the filing date of the Confidential Information are not entertained.
  • Valid written follow-ups or requests must be acted upon by the assigned investigator within ten (10) working days from date of receipt via:
    • a Memorandum Report and a draft letter addressed to the informer;
    • the Memorandum Report must be signed by the Supervisor of the concerned NID/SID group; and
    • the NID/SID Chief signs the draft letter if the Memorandum Report is in order.
  • The informer’s reward claim must be filed with the Prosecution Division at the BIR National Office or with the Legal Division of the Revenue Regional Office depending on the case processing venue.
  • Reward claims must be filed within three (3) years from the date of actual payment, recovery, collection of revenues, surcharges, and fees, and/or imposition of any fine or penalty, and/or actual collection of the compromise amount in case of amicable settlement.
  • For claims on cases investigated at the NID:
    • the claim is filed with the Prosecution Division, National Office;
    • the Chief, Prosecution Division evaluates entitlement;
    • the Chief forwards recommendation of approval/denial to the Assistant Commissioner, Enforcement Service;
    • the Assistant Commissioner forwards to the Deputy Commissioner, Legal and Inspection Group;
    • the Deputy Commissioner forwards to the Commissioner of Internal Revenue;
    • if meritorious, the Commissioner forwards to the Secretary of Finance for final approval; otherwise the Commissioner notifies the claimant/informer of denial.
  • For claims on cases investigated at the SID:
    • the claim is filed with the Legal Division of the concerned Revenue Regional Office;
    • the Chief, Legal Division evaluates entitlement;
    • the Chief forwards recommendation of approval/denial to the Regional Director;
    • the Regional Director forwards to the Deputy Commissioner, Legal and Inspection Group;
    • the Deputy Commissioner forwards to the Commissioner of Internal Revenue;
    • if meritorious, the Commissioner forwards to the Secretary of Finance for final approval; otherwise the Commissioner notifies the claimant/informer of denial.
  • Payment of the reward occurs after approval from the Secretary of Finance:
    • the Enforcement Service prepares a Disbursement Voucher (DV) with supporting documents and forwards it to the Accounting Division for processing subject to budgeting, accounting, auditing, and other rules;
    • after processing, Accounting Division forwards to Financial Services for approval of payment;
    • after approval, Financial Services forwards to the General Services Division for preparation of the check subject to existing Revenue Delegation Authority Order and other rules.
  • The reward is subject to a final withholding tax:
    • the final withholding tax rate is ten percent (10%);
    • the withholding and remittance to the BIR are done by the Accounting Division in the manner provided by law.

Repeal clause

  • The regulation repeals all existing issuances or portions of issuances that are inconsistent with BIR Revenue Regulations No. 16-2010.

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