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New BIR ITR Forms

New BIR ITR Forms

The BIR has released the June 2011 versions of the following annual income tax returns:

      •    BIR Form 1700 -  for use of individuals earning purely compensation income
      •    BIR Form 1701 - for self-employed individuals, individuals with mixed income, and   estates and trusts
      •    BIR Form 1702 - for corporations and partnerships

Except for the inclusion of two new sections on  taxpayer activity profile and tax relief availment, no significant changes were introduced in BIR Form 1702.

On the other hand, the revised BIR Forms 1700 and 1701 now require disclosure of additional information such as income subjected to final tax, income exempt from tax, and exclusions from gross income under Section 32(B) of the Tax Code.
Individuals who are currently required to file BIR Forms 1700 and 1701 under existing laws and regulations are required  to use the enhanced versions  and accomplish the supplemental information under Part IV of the Form 1700 or Part VIII of Form 1701.  

Who are required to file income tax returns - expanded coverage

Under the guidelines and instructions of the enhanced BIR Form 1700, pure compensation income earners whose  income tax  has been correctly withheld (hence previously qualified for substituted filing)  shall now be required to file an income tax return if their annual taxable exceeds P500,000.  Hence, they should also accomplish Part IV of enhanced BIR Form 1700.

Filing of enhanced BIR Form 1700 will also be mandatory for  individual taxpayers whose sole income has been subjected to final withholding tax with aggregate final tax withheld exceeding P125,000 annually (whether remitted or not remitted to the BIR) and individuals whose sole income is exempt from income tax and whose total annual income (exempt) exceeds P500,000.  However, they will accomplish  only Part I and Part IV of the return.

Effectivity of the new returns

The new returns shall be used for the annual income tax filing covering  calendar year 2011, which is due  on or before April 15, 2012. The new versions shall also be required for juridical entities following fiscal year of reporting starting with  fiscal year ending January 31, 2012.
Other taxpayers concerns:

   1.  It would be recalled that the additional information required in the revised returns were the same information required to be disclosed in the account information return (AIR) to be filed or attached to the income tax return of certain individual taxpayers under Revenue Regulation No. 02-2011 but was later suspended by RR 6-2011.

   2.  Since the RMC did not provide for the quarterly returns, it is assumed that the old quarterly returns version BIR Form 1701Q and 1702Q shall continue to be used for the quarterly filings of corporations and individuals engaged in business, unless BIR makes further announcements.

   3.  It is also advised that individuals start documenting their other income subjected to final tax so that they will have the required information by the time the ITR is due for filing.  Income received which are exempt from income tax should likewise be monitored.

Please see attached copy of RMC 40-2011 and revised BIR Forms.