BIR Ruling [DA-063-01]

April 18, 2001 BIR RULING [DA-063-01] Mr . Melchor S . Ramos Assistant Commissioner Collection Service Dear Mr. Ramos : This refers to your request for an opinion on whether the application of CHECKERED FARMS, INC. for the utilization of their TCC in payment of surcharge and interest on their deficiency taxes can be favorably acted upon in light of Revenue Regulations No. 5-2000 (RR 5-2000 for brevity). In reply, please be informed that Section 3 of RR 5-2000 specifically states that: "SEC. 3. USES OF TAX CREDIT CERTIFICATE . Whenever a Tax Credit Certificate (TCC) is issued to a taxpayer to acknowledge the existence of a valid tax credit, such Tax Credit Certificate may be used by the grantee or his assignee in the payment of his direct internal revenue tax liability , such as income tax, documentary stamp tax, excise tax and other internal revenue taxes . . ." (Emphasis ours.) The question posed before this Office is: Whether surcharge and interest are considered direct internal revenue tax liabilities. Section 247(a) of the 1997 Tax Code is quite instructive in providing that: "SEC. 247. General Provisions . . . . (a) The additions to the tax or deficiency tax prescribed in this Chapter shall apply to all taxes, fees and charges imposed in this Code. The amount so added to the tax shall be collected at the same time, in the same manner and as part of the tax. xxx xxx xxx" (Emphasis ours.) Crystal clear from the above-quoted provision that the additions, such as surcharges and interests, form an integral part of the tax to be imposed. By the same token, the additions assume the nature of the tax imposed whether it is a direct tax or indirect tax. In other words, should the tax imposed is in the nature of a direct internal revenue tax liability, the additions thereon are considered direct revenue tax liabilities. In view of the foregoing, should the deficiency taxes of CHECKERED FARMS, INC. be a direct internal revenue tax liability, and not one of the exceptions enumerated in Section 3 of RR No. 5-2000, the surcharge and interest shall likewise be considered direct internal revenue tax liabilities. It being so, the TCC may be utilized in payment of the surcharge and interest due thereon. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered void. ACDIcS Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group