Problems with Closing a Business

This is a concern of APC taken from my other blog birtaxinfo.i.ph.  I decided to post it here to help others with similar concerns. The other reason being is I've been having problems in posting especially if it the post is longer. Please see below the post of APC:

I have a concern. I applied with BIR 4 years ago to open a business but two weeks after applying with the BIR, I decided not to start the business o applied for closure of business with the BIR. Now, in Jan 2011 I opened another business in another RDO and the BIR said I have to apply for transfer of my TIN from old RDO to new RDO. Unfortunately, when I was processing the transfer, the old RDO said I have to show proof of income tax payment in 2008, 2009, 2010.
Since the old business never really started and I applied for closure 2 weeks after…there was really no income. I don’t have the records anymore to prove that it was filed for closure four years ago. What should I do so that my TIN can be transferred to the new RDO. Doesn’t BIR have any records in their system that the business was already closed? I didn’t even get the COR anymore. Why should I be penalized for a business that never really started and was applied for closure with the BIR just because I lost all the records already?

Posted by apc at March 14, 2011, 11:48 am

Hi APC, the Certificate of Closure is very important document that you indeed filed for closure and was confirmed and granted by the BIR.

You said you "applied" for closure. But did you really get a Certificate of Closure?

Based on what you said it seems the business was not closed. Even if you didn't yet get your COR your business remains active until you get that confirmation from BIR thru that Certificate of Closure.

This Certificate is likewise required by other government agencies comes tje time when you you need to transact with them. Like SSS, DTI, or SEC.

When you are granted or given the Certificate of Closure that's the time we can say your business is formally closed. And likewise withdrawn from the active database use to monitor business on their tax compliance.

I believe BIR has records of the Certificate of Closure they made. And can therefore be verified.

We should be very careful in keeping these documents as they serve as proof of certain transactions we made.

The initial stage of applying for closure is a "Letter of Intent" to close the business. Addressed to the Revenue District Officer of the BIR Branch where your business is registered.

The RDO will give a list of documents that you may need to submit. Mostly the business documents you use in recording your business transactions. The unused ORs or Invoices or both; books of accounts; etc.

Applying for closure of business is not the final stage of closing a business. It is only an initial process of closing a business.

It is only final when you are given the "Certificate of Closure" by the BIR. Unless you have this document your not off the grid yet and your still under the radar of the BIR.