Published 17 February 2020, The Daily Tribune
Tax assessments are every taxpayer’s concern. Aside from the payment of basic tax assessed from years seemingly long forgotten, the taxpayer is also made liable to pay interest, surcharges and compromise penalties. These additions to tax, known as civil penalties, may double an honest miscalculation or a wrong appreciation of our confusing tax laws.
Republic Act (RA) 11213, otherwise known as the Tax Amnesty Act, was dubbed as the government’s Valentine’s gift to the Filipino taxpayer, having been signed into law on 14 February 2019.
Pursuant to this law, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) 04-2019, which provides that delinquent accounts, or tax due from a taxpayer arising from the audit of BIR which had been issued Final Assessment Notices that have become final and executory, may be cleared upon payment of a percentage of the basic tax assessed. We can imagine a taxpayer who has failed to protest or appeal an assessment, thereby losing his opportunity to question BIR’s computations and is now obligated to pay the assessed deficiency tax(es). With the Tax Amnesty Act, the taxpayer will be granted forgiveness in the form of reduced tax liabilities.
An application for amnesty on a delinquent account must be filed with the BIR. Tax liabilities are reduced to a certain percentage of the basic tax assessed in accordance with Section 18 of RA 11232 and RR 04-2019. Delinquent accounts and assessments which have become final and executory are allowed a tax amnesty rate of 40 percent of the basic tax assessed. For tax cases that have been brought to courts and are already subject of final and executory judgments, the tax amnesty rate is 50 percent of the basic tax assessed. Criminal tax cases may also be the subject of tax amnesty at 60 percent of the basic tax assessed. Failure to remit withholding taxes is given an amnesty rate of 100 percent of the basic tax assessed. Aside from the reduction of the basic tax assessed, all civil penalties — interest, surcharge and compromise penalties — will be cancelled.
The Valentine’s gift is likewise only for the prompt and timely taxpayer. Revenue Memorandum Circular (RMC) 57-2019 clarified a deadline for availment for certain assessments, e.g., for assessments which were the subject of a protest by the taxpayer, the taxpayer may withdraw such protest on or before 24 April 2019, and such will be considered as a “delinquent account” and, therefore, qualified for tax amnesty. However, it appears that not all Valentine’s gifts are well-received, or the intended recipients may not even know that they have a gift for them. The deadline has passed, and some taxpayers have missed it.
In an effort to encourage taxpayers to avail themselves of and generate revenues out of the tax amnesty program, the BIR extended the period of forgiveness. BIR recently issued RMC 11-2020 dated 06 February 2020 which effectively extended the deadline for application of tax amnesty and relaxed the rules on documentation.
RMC 11-2020, the deadline to withdraw one’s protest against an FAN/FDL or appeal of an FDDA, has been extended from 24 April 2019 to 23 April 2020. The withdrawal of the protest or appeal will retroact to 24 April 2019 and will be considered delinquent as of that date. However, the FAN/FLD or FDDA, whose protest or appeal will be subsequently withdrawn, should have been received by the taxpayer at the latest on 25 March 2019 to be considered delinquent on or before 24 April 2019.
To avail of the tax amnesty on delinquent accounts, there are documentary requirements as set forth in RR 04-2019. A Tax Amnesty Return (TAR) completely and accurately accomplished and made under oath, Acceptance Payment Form (APF) duly validated or stamped, Certificate of Tax Delinquencies/Tax Liabilities issued by concerned BIR offices, and a copy of the assessment found in the FAN/FDDA shall be submitted to the BIR.
RMC 57-2019 provides that the filing of the TAR with complete documentary requirements should be made within the one-year availment period, which is until 23 April 2020. Failure to submit all the documentary requirements within the said date will disqualify a taxpayer from availing of the tax amnesty. However, in RMC 11-2020, the rules were relaxed to allow more taxpayers to avail of the program. The new circular provides that if the taxpayer has already secured the Certificate of Tax Delinquencies/Tax Liabilities and endorsement of the Acceptance Payment Form but have paid the amnesty tax due on 23 April 2020, an extended period of 30 days shall be given for the submission of the complete documentary requirements. With this, the taxpayer is given up to 23 May 2020 to comply. The encouraging words of the Circular provide: this is to give the taxpayer “every opportunity.”
Not all gifts demand themselves to be accepted, but this is a gift that wants so. Considering that April 2019 has long passed, this renewed opportunity to start with a clean slate is a welcome development for taxpayers who may have missed the previous deadline. Tax liabilities of past years may haunt us at present, but with the newly issued RMC 57-2019, the government is now extending further its forgiveness.
For comments and questions, please send an email to cabdo@divinalaw.com.
