Early tax return filing urged with April 16 deadline near
TAXPAYERS should move to file their income tax returns (ITR) before the annual deadline, the tax chief said, with new forms and stringent rules to be implemented by the Bureau of Internal Revenue (BIR) this year.
Individual and corporate taxpayers are required to submit their annual ITRs, covering their taxable income in 2011, on or before April 16. The deadline normally is April 15 but that date falls on a Sunday this year.
“We are urging all taxpayers to file their ITRs as early as now. We will strictly enact the rules,” BIR Commissioner Kim S. Jacinto-Henares said in a phone interview last week.
She cited Revenue Regulations 4-2012, issued on March 28, disallowing the abatement of penalties and interest on taxpayers who submit their ITRs a day late due to a failure to beat bank cutoff times.
“There will be no more amnesty for them. A deadline is a deadline. Taxpayers have all the chances to file their ITRs even before April 16,” Ms. Henares declared.
Authorized agent banks will even be open on Saturdays this month, while weekday operations will continue until 5:00 p.m., she added.
Meanwhile, Revenue Memorandum Order 3-2012, dated March 22, clarifies that only selected government officials and employees will be allowed to file their ITRs outside of their registered Revenue Districts.
Members of the Armed Forces of the Philippines and the Philippine National Police, as well as public school teachers, professors and instructors, can submit their returns in any authorized bank even outside the jurisdiction of their home Revenue District Offices (RDO).
“This order... shall only cover returns filed by the above taxpayers on or before April 16, 2012. Thereafter, ITRs... shall be filed only with the RDO where they are registered,” the issuance states.
A new set of ITR forms -- 1700, 1701 and 1702 -- will also be used for the filings.
There are no major changes for individual taxpayers except for a section on passive income. They can disclose their gains from rent, royalties and interest income but this is optional.
Corporate taxpayers, on the other hand, will be mandated to identify their different lines of businesses, break down their respective tax treatments and identify the tax incentives availed.
“To help taxpayers get used to the new ITR forms, they are uploaded on the BIR website. They are also interactive, so they can just fill it up with the necessary information, and the taxes will automatically be computed,” Ms. Henares said.
The BIR chief, though, offered this rule of thumb, especially for first-time taxpayers: “If you are in doubt of any income you received, just report and declare it. If you cannot substantiate your expense, and it is not related to your business, you cannot deduct it.”
Tammy H. Lipana, chairperson of the Philippine Chamber of Commerce and Industry tax committee, also urged taxpayers to scrutinize their disclosures and ensure that they pay the correct amount of taxes.
“It is better to be safe than sorry. As we have seen last year, the BIR is very serious about going after tax evaders,” she said in a phone interview.
If there are any errors in the ITR, the taxpayer should immediately amend it with the BIR and pay the penalties. Once a letter of authority has been issued to investigate an erroneous ITR, corrections will no longer be accepted, she explained.
For her part, Lina P. Figueroa, a principal at Punongbayan & Araullo, stressed that taxpayers should even keep track of minor details in their ITRs.
In particular, individuals who changed employers or addresses should verify their taxpayer identification numbers to ensure that they file at the correct RDO.
“Filing with the wrong venue or RDO is subject to a 25% penalty, though this can also be applied for abatement,” Ms. Figueroa said in an e-mail.
Tax requirements also tend to vary among banks that accept payments.
“For example, under the rules, they should be able to accept either personal/company checks or manager’s checks. But some banks accept only manager’s checks,” Ms. Figueroa said.
Some banks also demand proof of BIR registration while others keep a copy of the ITRs for their records, so taxpayers should prepare extras.
Lastly, taxpayers should be able to trace all information declared in their tax returns to their books. This will facilitate a swift investigation in case the BIR conducts an audit, Ms. Figueroa said. -- Diane Claire J. Jiao
(As published in BusinessWorld, 10 April 2012.)