Revenue Circular No. 096-2024: Key Points & Impact

The Bureau of Internal Revenue (BIR) of the Philippines has issued Revenue Memorandum Circular (RMC) No. 096-2024, which amends certain provisions of RMC No. 05-2001. This circular outlines the grounds and procedures for the implementation of Section 206 of the Tax Code of 1997 on constructive distraint. The amendments aim to include additional cases where a notice or warrant of constructive distraint over the property/ies of a taxpayer may be issued.

Key Provisions of RMC No. 096-2024

1. Substantial Assessment Pending: A notice or warrant of constructive distraint may be issued when a taxpayer applies for retirement from business with a substantial amount of assessment pending with the BIR. An assessment is considered substantial if it equals or exceeds the net worth or equity of the taxpayer during the current taxable year.

2. Frequent Travel: Taxpayers under tax investigation who have a record of leaving the Philippines at least twice a year over a twelve-month period may be subject to constructive distraint unless such trips are justified and connected with their business, profession, or employment.

3. Transfer of Assets: Taxpayers, other than banking institutions, who transfer their bank deposits and other valuable personal property/ies from the Philippines to any foreign country may also be subject to constructive distraint.

4. Use of Aliases: Taxpayers using aliases in bank accounts, other than the name for which they are legally and/or popularly known, may warrant the issuance of a notice or warrant of constructive distraint.

5. Ownership of Property by Others: When a taxpayer keeps bank deposits and owns other property/ies under the name of other persons, whether or not related to them, and the same are not under any lawful fiduciary or trust capacity, constructive distraint may be applied.

6. Undeclared Income: If a taxpayer's undeclared income is known to the public or the BIR by credible means and there is a strong reason to believe that the taxpayer will hide or conceal their property/ies, a notice or warrant of constructive distraint may be issued. Undeclared income refers to an amount exceeding at least thirty percent (30%) of the gross sales, gross receipts, or gross revenue declared per return.

7. Obstruction of Tax Collection: Taxpayers who intend to obstruct the proceedings for collecting the tax due or perform any act to prevent discovery thereof by tax authorities may be subject to constructive distraint.

8. Unlocatable Taxpayers: Taxpayers tagged as Cannot be Located may also warrant the issuance of a notice or warrant of constructive distraint.

9. Other Analogous Cases: Other similar cases may also be considered for the issuance of a notice or warrant of constructive distraint.

The circular emphasizes the importance of these provisions in ensuring compliance with tax laws and preventing tax evasion. All internal revenue officers, employees, and other concerned parties are enjoined to give this circular as wide a publicity as possible.

Reference: RMC No. 96-2024