Garnishment via electronic means

As cliché as it may be, we all know that the only permanent thing in this world is change – and we live in a constantly changing one at that. Prior to the boom of the World Wide Web, business was primarily driven through manually prepared forms, typewritten contracts, and physical submission of documents to government agencies.

However, as we all know, advancements in technology have changed the way we live our lives. Today, it seems that we can do everything imaginable provided we have an internet connection and the software needed to do our work. Businesses can now be run at a click (or maybe a lot) of our keyboards and computer mice. Naturally, all organizations, including the government, have adapted to the fast-changing technological age that we live in. Processes are now being automated, and more systems are incorporating online tools as additional means to implement them.

Take for instance Revenue Regulations (RR) 11-2023 issued by the Department of Finance (DOF), which prescribes the use of electronic mail or e-mail, as well as electronic signatures as an additional mode of serving a warrant of garnishment (WG) pursuant to Sections 208 of the Tax Code. The RR seeks to include the use of e-mail and electronic signature as an additional mode of service of WGs to errant taxpayers in enforcing the tax authority’s collection efforts on delinquent internal revenue tax liabilities. In effect, the RR seeks to provide a speedy, efficient, and more effective way of determining and collecting assets of delinquent taxpayers.

Under the provision of the law for the procedure for garnishment, “bank accounts shall be garnished by serving a warrant of garnishment upon the taxpayer and upon the president, manager, treasurer or other responsible officer of the bank. Upon receipt of the warrant of garnishment, the bank shall turn over to the commissioner so much of the back accounts as may be sufficient to satisfy the claim of the government.” However, the difficulty in enforcing and serving WGs over the past years has prompted the DOF to issue the RR to enable its officers to serve a WG electronically.

For there to be a proper implementation of the service of WGs, revenue officers are mandated to observe the following policies and guidelines:

1. The regional director, assistant commissioner for collection service (CS), assistant commissioner for Large Taxpayers Service (LTS), and chief of large taxpayers district offices (LTDOs) shall issue and electronically sign the WGs issued against the deposits of the delinquent taxpayer.

2. The collection division, accounts receivable monitoring division (ARMD), LT-Collection Enforcement Division (LTCED), and the LTDO concerned shall use the official electronic mail of the Bureau of Internal Revenue to transmit and serve the signed WGs to the bank head offices and bank branches within the locality of the registered taxpayer simultaneously, showing details of tax liabilities of the taxpayers, which will serve as the basis for issuance of the WGs.

3. Bank head offices and branches are required to provide their official email address, if not yet available, to the concerned Bureau of Internal Revenue (BIR) office where they have registered.

4. The service of WG is considered completed 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. An acknowledgment receipt of the signed WGs may be requested by the concerned BIR offices from the authorized official of the concerned banks.

5. The BIR official or employee who sent the e-mail shall execute an Affidavit of Service with a printed copy of the transmittal made as proof of service. The affidavit will be attached to the records of the docket of the case together with a copy of the signed WG sent via email.

6. The concerned BIR office shall request the banks to facilitate and act expeditiously on the issued WGs and send a reply to the BIR. The copies of the served WG and acknowledgment receipt shall be sent to the concerned delinquent taxpayer through their e-mail address, if applicable, and through registered mail to the address registered in the Integrated Tax System (ITS) or Internal Revenue Integrated System (IRIS).

7. The concerned BIR office shall also send a claim letter for the garnished amount, if any, via e-mail addressed to the concerned banks and issue the authorization letter to the handling revenue officer to collect the garnishable amount, and claim the manager’s check corresponding to the deposit/s of the taxpayer under garnishment.

8. The revenue officer concerned shall remit the check in payment of the tax liability of the taxpayer concerned to the authorized agent bank where the taxpayer’s business is located.

The issuance of RR 11-2023 can be indicative of the responsiveness of the BIR to the business landscape’s relentless call for change and modernization. Not only will this bolster the collection efforts of the tax agency, but it can also be a good opportunity for the BIR to continue leveraging on technological advancements to facilitate other processes as well.

Arik Aaron C. Abu is a manager from the tax group of KPMG in the Philippines (R.G. Manabat & Co.), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The firm has been recognized as a Tier 1 in transfer pricing practice and in general corporate tax practice by the International Tax Review. For more information, you may reach out to Arik Aaron C. Abu or tax principal Kathleen L. Saga through [email protected], social media or visit www.home.kpmg/ph.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.