BIR Ruling [DA-193-00]

March 30, 2000 BIR RULING [DA-193-00] RR 2-94; R.A. 7432; 58-97; DA-193-2000 Mr. Vic B. Milaor c/o Strata 200 Condominium Corporation Strata 200 Building, Emerald Avenue Pasig City S i r : This refers to your letter dated June 24, 1999 requesting for exemption from income tax and for a refund of the income tax withheld by your employer since 1995. It is represented that you are a Senior citizen; that you are 65 years old; that you are presently employed by Strata 200 Condominium Corporation with an annual income of more or less P96,000.00; and that with the current recession, economic crises and high cost of living due to the devaluation of the peso, it is difficult to sustain your family and personal needs. LexLib In reply, please be informed that Section 3 of Revenue Regulations No. 2-94, implementing Sec. 4 of R.A. No. 7432, otherwise known as the "Senior Citizens Act," provides as follows: "SEC. 3. INCOME TAX BENEFIT AND PRIVILEGES FOR THE SENIOR CITIZENS . Senior citizens qualified as such by the Commissioner of Internal Revenue or his duly authorized representative, who, for purposes of these regulations, is the Regional Director of the Revenue Region having jurisdiction of the city or municipality where they are permanent residents shall be entitled to the following tax benefit and privileges: "a. Exemption from the payment of individual income tax provided that their annual taxable income does not exceed the poverty level of P60,000 or such amount as may be determined by the NEDA for a certain taxable year. xxx xxx xxx In relation to this, Secs. 5 and 6 of the same Regulations provides as follows: "SEC. 5. AVAILMENT OF INCOME TAX EXEMPTION . A senior citizen who shall avail of' the exemption from income tax is required to submit the following documents to the Revenue District Officer (RDO) of the place where he is a permanent resident, who shall make the necessary verification and report for purposes of the income tax exemption to be issued by the Commissioner of Internal Revenue or his duly authorized representative: "xxx xxx xxx "c. If employed, a copy of his withholding tax statement (BIR Form W-2) FOR THE PRECEDING TAXABLE YEAR; llcd "c.1. A senior citizen who derives taxable (fixed) compensation income from only one employer in an amount not exceeding P60,000 per annum shall be exempt from income tax and consequently from the withholding tax prescribed under Sec. 72 Chapter 10, Title 11 of the NIRC, as amended (now Section 79 of the Tax Code of 1997). "d. If self-employed, (i.e., practice of profession, or in business as single proprietorship) a copy of his income tax return (ITR) for the preceding taxable year together with the annual license or permit issued by the city or municipality where he has his principal place of business, supported by a copy of his declaration of sales or income. "d.1. A senior citizen who derives taxable compensation income from two (2) or more employers, or who receives mixed income from employment and business shall still file an income tax return. "The RDO concerned shall transmit his verification report/recommendation to the said Regional Director, as duly authorized representative of the Commissioner, for issuance of the certificate of income tax exemption to the senior citizen. "For purposes of applying for the OSCA ID Card, the duly stamped income tax return and/or the BIR Certification shall be honored." "xxx xxx xxx "SEC. 6. TAXABILITY OF SENIOR CITIZENS TO OTHER INTERNAL REVENUE TAXES . "a. A senior citizen whose annual taxable income exceeds the poverty level of P60,000 or such amount as may thereafter be determined by the NEDA for a certain taxable year, shall be liable to the individual income tax in the full amount thereof on his taxable income net of allowable deductions. "b. Regardless of the amount of taxable income, a senior citizen who derives income from self-employment, business and practice of profession shall be subject to other internal revenue taxes which include but are not limited to the value-added tax, caterer's tax, documentary stamp tax, overseas communications tax, excise taxes, and other percentage taxes. He shall, therefore, file the corresponding business tax returns in accordance with existing law, rules and regulations. "xxx xxx xxx Accordingly, only senior citizens whose annual taxable income from ONLY ONE EMPLOYER WHICH DOES NOT EXCEED the poverty level of P60,000 or such amount as may be determined by the NEDA for a certain taxable year shall be exempt from the payment of individual income tax and consequently from the withholding tax and his exemption shall be determined by the Regional Director of the Revenue Region having jurisdiction of the city or municipality where the senior citizen is a permanent resident in accordance with the provisions of Sec. 5 of RR 2-94, in relation to Secs. 3 and 6 of the same Regulations. Conversely, senior citizens whose annual taxable income EXCEEDS P60,000 shall not be exempt from the payment of individual income tax and consequently shall be subject to the withholding tax prescribed under RR 2-98, as amended. In view of the foregoing, we regret to inform you that this Office cannot grant your request for exemption from income tax and claim for refund of the tax withheld from your income beginning 1995 since your annual income exceeds the poverty level of P60,000.00. (BIR Ruling No. 58-97 dated May 15, 1997) cdlex Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)