Tax Alert No. 40 [Revenue Memorandum Circular (RMC) No. 96-2024 dated 05 July 2024]

05 Sep 2024

Amending Certain Provisions of RMC No. 05-2001 on the Grounds and Procedures for the Implementation of Section 206 of the Tax Code of 1997 on Constructive Distraint

Please be informed that RMC No. 96-2024 was issued to amend Section 2 of RMC No. 05-2001 to include other cases when a notice or warrant of constructive distraint over the property/ies of a taxpayer may be issued. A notice or warrant of constructive distraint may be issued in the instances including but not limited to the following cases:

When a taxpayer who applies for retirement from business has a substantial amount of assessment (i.e., equal to or higher than the net worth or equity of the taxpayer during the current taxable year) pending with the BIR;
When a taxpayer who is under investigation has a record of leaving the Philippines at least twice a year over a twelve (12) month period, unless justified and/or connected with his business, profession, or employment;
When a taxpayer, other than a banking institution, who is under tax investigation has a record of transferring his bank deposits and other valuable personal property/ies from the Philippines to any foreign country;
When the taxpayer uses aliases in bank accounts, other than the name for which he is legally and/or popularly known;
When the taxpayer keeps bank deposits and owns other property/ies under the name of other persons and the same are not under any lawful fiduciary or trust capacity;
When a taxpayer's undeclared income (i.e., an amount exceeding by at least 30% of the gross sales/receipts/revenue declared per return) is known to the public or to the BIR by credible means and there is a strong reason to believe that the taxpayer, in the natural course of events, will have a great tendency to hide or conceal his property/ies.
When the BIR receives information or complaint pertaining to undeclared income in an amount exceeding by at least 30% of gross sales, gross receipts or gross revenue declared per return of a particular taxpayer and there is enough reason to believe that the said information is correct as when the complaint or information is supported by substantial and credible evidence.
When the taxpayer tries to hide or conceal his personal property to prevent discovery thereof by tax authorities;
When the taxpayer intends to perform any act tending to obstruct the proceedings for collecting the tax due or which may be due from him;
When the taxpayer is tagged as “Cannot be Located”; and
Other analogous cases.