BIR Ruling

January 7, 1970 Atty. Antonio T. Quion 2447 Simeon de Jesus San Rafael Village Manila S i r : This refers to your letter dated November 6, 1969 requesting opinion on the following: 1. In cases of inaccurate report on gross receipts by a bank due to mathematical errors, is the adjustment to be made thereon beyond the reglementary period subject to the provisions of Section 250 of the Tax Code? 2. In cases of overstatement of gross receipts, is the bank entitled to a refund on tax? 3. In cases of unintentional understatement of gross receipts, is the bank liable to the 25% surcharge, despite its voluntary declaration and payment of additional bank tax proper? 4. If and when surcharge is imposable, may it be compromised with the Commissioner of Internal Revenue under Section 309 of the Tax Code? In reply, I have the honor to inform you that 1. In cases of inaccurate report on gross receipts by a bank due to mathematical errors, and the adjustment is made beyond the statutory period provided in Section 250 of the tax Code, the bank tax due on the undeclared gross receipts as contained in the adjustment is subject to 25% surcharge imposed therein for having failed to pay the tax within the required period. The imposition of the said surcharge is mandatory and the Commissioner of Internal Revenue is not empowered to disregard it and substitute therefor his own personal judgment. (Koppel Inc. vs. Collector of Internal Revenue, 87 Phil. 348). 2. In cases of overstatement of gross receipts, the bank is entitled to refund of the excess bank tax paid by it provided that the bank files a claim for refund of the said excess tax in writing within a period of two (2) years after the payment of the tax. (Section 309, NIRC.) 3. In cases of unintentional understatement of gross receipts, the bank is nevertheless liable to the 25% surcharge on the deficiency tax despite the voluntary declaration and payment thereof, because the said 25% surcharge was paid as a penalty imposed with authority. As heretofore stated, the imposition of the 25% surcharge in case of late payment of the bank tax is mandatory, and, therefore, it is immaterial if the tax is paid voluntarily. The provision of Section 72 of the Tax Code cited in your letter does not apply since the same refers only to income tax. 4. The liability of the bank to the 25% surcharge in case of late payment of the bank tax cannot be the subject of compromise, pursuant to Section 309 of the Tax Code since the imposition thereof is in accordance with law. The authority of the Commissioner of Internal Revenue to compromise internal revenue cases can be exercised only if there is doubt as to the legality of the assessment or the ability to meet it. aisa dc Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue