BIR Ruling

August 10, 1976 Payment of Compromise Penalty under LOI 308 This refers to your offer to settle under Letter of Instruction No. 308 the amount of P21,000.00, representing the unpaid balance of withheld taxes on the 1970 wages of your employees, including 5% surcharge and 1% monthly interest as of May 26, 1972, by paying 10% of said amount of P21,000.00. In reply, you are advised that after a study of the aforementioned Letter of Instruction, this Office has arrived at the conclusion that your liability as a withholding agent cannot be compromised under LOI No. 308 as said Letter of Instruction covers only the delinquent accounts of the taxpayers themselves. The amount of P21,000.00 represents income taxes due from your employees which you deducted from their salaries and which you should have held in a special fund in trust for the Government until the same are paid to the collecting officers of this Bureau (see Article 4 of Supplement A, Tax Code). In other words, the amount of P21,000.00 is not a mere delinquent account of a taxpayer. It is money of the government which should have been remitted to this Bureau within the period prescribed in the law and implementing regulations. As the taxes withheld by you during the months from January to December, 1970 amounted to more than P200.00 per month, you should have remitted to this Bureau the amounts so withheld by you within ten days after the close of each month. (see Section 19, Revenue Regulation No. V-8, as amended) In view thereof, your request to settle under LOI No. 308 the amount of P21,000.00, representing the balance of income taxes withheld from your employees during the year 1970 is hereby denied. Accordingly, demand is hereby made upon you to pay within twenty days from your receipt hereof, the aforesaid amount of P21,000.00, plus the delinquency interests that have accrued, otherwise this Office shall be constrained to avail of the remedies provided for in the Tax Code. cdtech