BIR Ruling [DA-120-01]

July 11, 2001 BIR RULING [DA-120-01] Sec . Victoria P . Garchitorena Head, Presidential Management Staff And Secretary to the Cabinet Office of the President of the Philippines Malacaang, Manila Dear Sec. Garchitorena : This refers to your letter dated May 15, 2001 on your request for this Office to immediately refund the Additional Compensation (ADCOM) Allowance taxes paid by some of your employees. Section 32(B)(7)(e) of the 1997 Tax Code in relation with Section 2(B)(11)(b) of Revenue Regulations No. 8-2000 specifically provides that the total exclusion from gross income of the said benefit, including the additional compensation allowance, should not exceed Thirty Thousand Pesos (P30,000.00). In other words, the ADCOM in excess of P30,000.00 would be included as part of the gross income of the employee concerned and shall be subject to the withholding tax on compensation. Moreover, the employee concerned should file a claim for refund with the Office of the Commissioner within two years from the date of payment of the tax regardless of any supervening cause that may arise after payment in accordance with Section 229 of the 1997 Tax Code. Accordingly, while this Office completely agrees with your position that the said ADCOM should not be subject to tax in accordance with Executive Order No. 219, s. 2000, the same cannot be automatically refunded. We suggest the affected employees apply for a refund or tax credit stating therein, among others, the details of the application for refund or tax credit, together with copies of their corresponding income tax returns. ESCTaA Hoping that the foregoing satisfactorily addressed your concerns. Very truly yours, (SGD.) REN G. BAEZ Commissioner of Internal Revenue