WITH the recent destruction wrought by Typhoons Ondoy and Pepeng, the Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Order (RMO) 31-2009, which laid down the policies and guidelines for the reporting and claiming of casualty losses.

In order to claim losses from the recent typhoons as tax deductions, the taxpayer has to report the losses to the BIR within 45 days after the event. The report to the BIR shall be in the form of a sworn declaration of loss. This must be submitted by the taxpayer to the Revenue District Office (RDO) or Large Taxpayers Division where the taxpayer is registered.

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The sworn declaration must contain the following information:

1) Nature of the event giving rise to the loss and the time of its occurrence;

2) Description and location of the damaged properties;

3) Items needed to compute the losses such as the (a) cost or other basis of the properties; (b) depreciation allowed, if any; (c) value of the properties before and after the event; and (d) cost of repair;

4) Amount of insurance or other compensation received or receivable.

The sworn declaration should be accompanied by the documentary requirements necessary to prove the loss. These may include photographs showing the extent of damage, and the condition or value of property after it was repaired, restored or replaced.

The report shall be subject to the verification by the concerned BIR officer before a business taxpayer can actually claim the loss as deduction. (Source: Punongbayan & Araullo)