BIR Releases Clarifications on the RPS Assessment

To address the concerns of taxpayers who have received Return Processing System (“RPS”) Assessments, the Bureau of Internal Revenue (“BIR”), released Revenue Memorandum Circular No. 7-2023 (“RMC 7-2023”). 

“RPS” refers to the BIR’s information system which processes tax returns filed by taxpayers. Meanwhile, a RPS Assessment is issued whenever BIR’s system detects any of the following instances: 

1. Tax return was filed late, but no corresponding penalties were paid;
2. Tax return was filed with declared tax due, but no corresponding payment was detected; or
3. Tax return was filed with tax due, but the payment detected was only partial. 

As per the BIR, the contents of a RPS Assessment are not tax assessments arising from the conduct of an audit or investigation of the taxpayer’s books of accounts and other relevant records. Instead, they are tax payables based on the taxpayer’s own tax declaration as reflected in the tax returns filed. The sending of RPS Assessment should not be treated as an Assessment Notice arising from an audit where the taxpayer has a chance to contest or protest. Instead, the RPS Assessment should be treated as a Collection Letter, the sending of which is part of the civil/administrative remedies of the BIR. The BIR also clarified that since no books of accounts and accounting records of the taxpayer were examined or subject to an audit, the issuance of a Letter of Authority is not required.