BIR Ruling

March 23, 1973 Mr. Carlos C. Syquia Vice-President Commercial Bank and Trust Co. Makati, Rizal D-703 S i r : This refers to your letter dated November 16, 1972 requesting information on the following queries, regarding the applicability of "Supplement B-A System of Income Tax Withholding on Non-wage Income, to wit: "1. Personal Exemption An individual is entitled to a (P1,800/P3,000) personal exemption depending upon his status at the end of the calendar year. If he makes a summary declaration for a certain quarter, will be declared such exemption in full or just in proportion to the period covered by his declaration, say one-fourth (). Further to this, what is the effect if a subsequent quarterly period the individual concerned changes his status from single to married thereby entitling him to a P3,000 exemption instead of P1,800: What is the proper procedure to be followed in such a case? "2. Pension Funds If a pension fund has already acquired an exemption status from the BIR, would it still be necessary to file quarterly summary declarations? "3. Deficiency Taxes To understand that any underdeclaration results in a deficiency tax plus interest. From what time shall interest be reckoned with? Is it reckoned from the date of payment or the date when it accrued? For practical purposes, it may be difficult to trace to which quarter an underdeclaration is applicable. "4. Under the last paragraph of the supplement, it only speaks of corporation required to file the adjustment return on or before 15th day of the Fourth month following the close of the taxable year. Does this mean that individuals are excluded from filing an adjustment return? "5. Mixed Income The foregoing supplement covers only non-wage income meaning these income not subject to withholding taxes. What if an individual has both? Is he required to make a quarterly declaration of non-wage income solely? If the answer is in the affirmative, would this not affect the tax bracket of the individual and would in most cases result in a deficiency if the Adjustment Return is prepared at the end of the year since if the wage income had been included it would have brought up his tax bracket? "6. Mechanics a. May we know if there is a specified form to be used for the quarterly summary declaration? b. Would you be requiring tax information returns from dividend paying companies everytime a summary declaration is submitted? These are normally sent out by these companies at the end of the calendar year? cdta In reply, I have the honor to inform you as follows: "Supplement B", a new supplement added to Title II of the National Internal Revenue Code by Presidential Decree No. 30, dated October 27, 1972 applies only to corporations subject to income tax under Section 24 of the Tax Code by placing them on a withholding system. (Section 1, Revenue Regulations No. 12-72, dated December 1, 1972, implementing Presidential Decree No. 30) Said "Supplement B" does not apply to individual taxpayers already subject to withholding tax under Supplement A to Title II of the Tax Code. This answers your questions 1, 4 and 5. A pension fund which is declared tax exempt is not required to file quarterly returns under Supplement B, Title II, Tax Code. Pursuant to Section 8 of Revenue Regulations No. 12-72, interest upon the amount determined as a deficiency shall be assessed at the same time as the deficiency; shall be paid upon notice and demand from the Commissioner of Internal Revenue and shall be collected as part of the tax at the rate of fifteen (15) per centum per annum from the date of prescribed for the payment of the tax to the date the deficiency is assessed, provided; that the maximum amount to be collected as interest on deficiency shall in no case exceed the amount corresponding to a period not later than the fifteenth day of April or the fifteenth of the fourth month following the close of the taxable year; provided, further than no interest on deficiency quarterly tax shall be assessed at any time after final assessment of the actual income tax due for the taxable year. For the year 1972, the taxpayer is allowed to file only one return for the three quarters, pursuant to Section 5(b) of Revenue Regulations No. 12-72, dated December 1, 1972, although payment may be made quarterly on the dates schedules in the aforesaid regulation. The net taxable income for the quarter and the income tax due thereon, computed in accordance with the provisions of Title II of the National Internal Revenue Code shall be declared in the quarterly return (B.I.R. Form 1702-Q) which shall be filed with, and the tax due thereon paid, to the Commissioner of Internal Revenue, Revenue Regional Director, Revenue District Officer, or the Collection Agent of the City or municipality where the corporation's principal office is located and where its books of accounts and other data from which the return is prepared are kept; in case of a corporation that has no office of any kind or agency in the Philippines, then the return shall be filed and the tax thereon paid with the Commissioner of Internal Revenue. Information returns provided by Section 75 of the Tax Codes are not required to be attached in the quarterly returns to be filed by corporations under Supplement B, Title II, of the Tax Code. Finally, there is no instance where the filing of the quarterly returns may be extended. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue