BIR Ruling

August 17, 1976 MEMORANDUM FOR: Mr. Lauro D. Abrahan Assistant Commissioner In connection with your Memorandum dated August 12, 1976, stated hereunder is your query as well as the answer thereto. cdt " Query : "If the second installment for income tax is not paid on time, from what date will the interest commence? "a) Is it from April 16 up to the date of payment, or "b) Is it from July 16, up to the date of payment. "xxx xxx xxx." Answer : The interest will commence from July 16. Section 51 (a) (2) and Section 51 (a) (1) of the Tax Code are quoted as follows: "Section 51. Payment and assessment of income tax . (a) Payment of tax . (1) . . . "xxx xxx xxx "(2) Installment payments . When the tax due is in excess of one thousand pesos, the taxpayer may elect to pay the tax in two equal installments, in which case, the first installment shall be paid at the time the return is filed and the second installment, on or before the fifteenth day of July following the close of the calendar year, or on or before the fifteenth day of the seventh month following the close of the fiscal year, as the case may be. If any installment is not paid on or before the date fixed for its payment, the whole amount of the tax unpaid becomes due and payable together with the delinquency penalties . (Emphasis ours) "xxx xxx xxx "(e) Additions to the tax in case of non-payment . "(1) Tax shown on the return . Where the amount determined by the taxpayer as the tax imposed by this Title or any installment thereof, or any part of such amount or installment, is not paid on or before the date prescribed for its payment, there shall be collected as a part of the tax, interest upon such unpaid amount at the rate of fourteen per centum per annum from the date prescribed for its payment until it is paid: . . " From the above-quoted provisions of Section 51(a)(2), if any installment is not paid on time, "the whole amount of the tax unpaid" is subject to delinquency penalties. Consequently, in the case where the second installment is not paid on time, such installment which is "the whole amount of tax unpaid" is the only amount subject to delinquency penalties. Under Section 51(e)(1) above-quoted, there shall be collected upon "such unpaid amount" which is the second installment, an annual interest of 14% from the date prescribed for its payment until it is paid. In other words, said interest shall commence from July 16 which is the day following the due date of payment of said installment. aisa dc Respectfully submitted: PRISCILLA R. GONZALES Revenue Service Chief (Legal) TAN-1258-814-1