The digital age has revolutionized the way people do business, including those in government. In the tax arena, the Bureau of Internal Revenue (BIR) has been continuously innovating its processes by adopting digital transmittal of data from its stakeholders and now, by electronically serving warrants following the issue of Revenue Regulations (RR) No. 11-2023.
Traditionally, Warrants of Garnishments (WG) are issued to the depositary bank of delinquent taxpayers physically or via constructive/substituted means. However, starting Oct. 1, Revenue Officers may now serve WGs via e-mail to depository banks, thereby initiating the collection process without the need for personal service.
To implement this, the RR enumerated the following procedures:
1. The Regional Director (RD), Assistant Commissioner (ACIR)-Collection Service, ACIR-Large Taxpayer Service (LTS), or Chief of the Large Taxpayer District Offices (LTDO), is to issue and electronically sign the WGs covering the deposits of the delinquent taxpayer;
2. The Collection Division, Accounts Receivable Monitoring Division (ARMD), LT-Collection Enforcement Division (LTCED), or LTDOs are to use the BIR’s official e-mail address to serve the signed WGs to the Bank Head Offices and Bank Branches within the locality of the registered taxpayer, simultaneously showing the details of the tax liabilities of the taxpayers on which the corresponding WGs are based;
3. Bank Head Offices and Bank Branches are required to provide their official e-mail addresses, if not yet available, to the concerned BIR office where they are registered;
4. Service through e-mail is complete at the time such e-mail is made, or, when available, at the time that the electronic notification of service of the WG is sent. The Collection Division, ARMD, LTCED, or LTDOs may request an acknowledgement receipt of the signed WGs from the authorized official of the concerned banks;
5. As proof of service, the BIR official or employee who sent the e-mail is to execute an Affidavit of Service, with a printed proof of transmittal. This must be attached to the records of the docket of the case, together with the copy of the signed WGs sent via e-mail;
6. The Collection Division, ARMD, LTCED, or LTDOs is to request the concerned banks to facilitate and act expeditiously on the issued WGs and send the corresponding reply through the official e-mail address of the BIR. Immediately thereafter, a copy of the served WGs together with the acknowledgement receipt must be sent to the delinquent taxpayer through his/her/its e-mail address, if applicable, and through registered mail to the registered address indicated in the Integrated Tax System (ITS) and/or Internal Revenue Integrated System (IRIS);
7. The Collection Division, ARMD, LTCED or LTDOs are to send a claim letter for the garnished amount, if any, via e-mail addressed to the concerned banks, and issue an Authorization Letter to the handling Revenue Officer to collect the garnishable amount, and claim the manager’s check corresponding to deposit/s of the taxpayer under garnishment pursuant to the information electronically transmitted to the BIR by the concerned banks;
8. The Revenue Officer must remit the check in payment of the tax liabilities to the authorized agent bank where the taxpayers business is located.
The BIR is indeed utilizing the benefits of modern day technology to ensure a speedy, efficient and effective way of determining and collecting the assets of delinquent taxpayers. While I can appreciate the need to ensure that delinquent taxes are collected as soon as possible, this author would like to raise some concerns in relation to the collection strategies currently being employed by the BIR.
Over a year ago, the BIR started issuing WGs even while the assessment is pending appeal (i.e., upon mere issuance of the Final Decision on Disputed Assessment (FDDA). Technically, a WG should only be issued when the taxpayer is considered delinquent — meaning, the Commissioner of Internal Revenue (CIR) or RD has issued an assessment that has gained final and executory status, (i.e., in case the taxpayer failed to respond to the Final Assessment Notice [FAN]), or upon issuance by the Court of Tax Appeals (CTA) Division or En Banc of its decision upholding the assessment making it final and executory.
So if the BIR issues a WG despite the case not being final and executory, the taxpayer’s recourse to contest the premature issuance of the WG would be to file a motion to suspend the collection with the CTA. However, this will only be effective once the CTA has made its decision, which usually takes time. In the meantime though, leaving taxpayers without access to their bank accounts is detrimental to its business.
Here’s hoping the BIR revisits its collection strategy to ensure fairness and proper regard for the taxpayer’s right to due process.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Adriel Joshua Zaki Sim is an assistant manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of PricewaterhouseCoopers global network.