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Tax Alert

Amendments in the Provisions of Revenue Memorandum Circular No. 5-2001 on the Grounds and Procedures for Constructive Distraint of Personal Property

03 Oct 2024 3 min read

(Revenue Memorandum Circular No. 96-2024, August 29, 2024) 
 
This Tax Alert is issued to inform all concerned on amendments on Section 2 of Revenue Memorandum Circular (RMC) No. 5-2001. This is to include the following instances when a notice or warrant of constructive distraint over the property/ies of a taxpayer may be issued.

  1. When a taxpayer who applies for retirement from business has a substantial amount of assessment pending with the Bureau of Internal Revenue (BIR);
  2. 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; 
  3. 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; 
  4. When the taxpayer uses aliases in bank accounts, other than the name for which he is legally and/or popularly known; 
  5. 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; 
  6. When a taxpayer's undeclared income2 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. 
  7. 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. 
  8. When the taxpayer, who is under tax investigation, tries to hide or conceal his personal property to prevent discovery thereof by tax authorities; 
  9. When the taxpayer, who is under tax investigation, intends to perform any act tending to obstruct the proceedings for collecting the tax due or which may be due from him; 
  10. When the taxpayer is tagged as “Cannot be Located”; and 
  11. Other analogous cases. 
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