BIR Ruling [DA-274-04]

May 17, 2004 BIR RULING [DA-274-04] Secs. 58, 251 & 255; 2-95 & 88-94 Hon. Aloysius R. Espinoza Municipal Vice Mayor Tago, Surigao del Sur S i r : This refers to your letter dated December 13, 2002 requesting for tax amnesty to the Local Government of Tago, Surigao del Sur on the under remittance of taxes withheld on government money payments and condonation of penalties, interest and surcharges on the late filing and remittance of withholding taxes due for the year 1999 and 2000. Documents show that on December 10, 2002, during the 42nd regular session, the Sangguniang Bayan members of the Municipality of Tago, Surigao del Sur adopted Resolution No. 191, series of 2002; that the Resolution provided that details of discrepancies for calendar year 1999 and 2000 showed that there were under remittance of taxes withheld on government money payments due to erroneous computation and non-withholding; that the Local Government of Tago was penalized for the late filing of withholding tax returns and late remittance of withholding tax; that the Sangguniang Bayan members allege that the withholding taxes on government money payments is additional responsibility of the local government; and that the imposition of penalties for non-compliance of the regulations is not justifiable since there was failure on the part of the BIR to disseminate information and instruction. In reply, please be informed that the taxes deducted and withheld by the withholding agent shall be held as a special fund in trust for the government until paid to the collecting officers pursuant to Section 58 in relation to Section 81 of the Tax Code of 1997. Moreover, paragraph 2 of Section 2.58.1 of Revenue Regulations No. 2-98 implementing Section 58 of the Tax Code of 1997 provides that "The taxes withheld by the withholding agents shall be maintained in separate accounts and should not be commingled with any other funds of the withholding agent. They shall be considered as a trust fund held for the government until they are remitted." Under Sections 251 and 255 of the Tax Code of 1997, it is specifically provided that "SEC. 251. Failure of a Withholding Agent to Collect and Remit Tax . Any person required to withhold, account for and remit any tax imposed by this Code or who willfully fails to withhold such tax, or account for and remit such tax, or aids or abets in any manner to evade any such tax or the payment thereof, shall, in addition to other penalties provided for under this Chapter, be liable upon conviction to a penalty equal to the total amount of the tax not withheld, or not accounted for and remitted." xxx xxx xxx "SEC. 251. Failure to File Return, Supply Correct and Accurate information, Pay Tax, Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation . Any person required under this Code or by rules and regulations promulgated thereunder to pay any tax, make a return, keep any record, or supply correct and accurate information, who willfully fails to pay such tax, make such return, keep such record, or supply such correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than Ten thousand pesos (P10,000) and suffer imprisonment of not less than one (1) year but not more than ten (10) years." It is clear that the imposition of the penalties prescribed therein for failure to remit taxes withheld is mandatory, as shown from the language and content, and therefore, cannot be waived. Any person required to collect, account for, and remit any tax imposed by the Tax Code of 1997, who willfully fails to collect such tax, or account for and remit such tax or willfully assists in any manner to evade any such tax or the payment thereof, shall, in addition to other penalties provided for in Chapter I and II, Title X of the Tax Code of 1997, be liable to a penalty equal to the total amount of the tax not collected, or not accounted for and remitted. Finally, we regret to inform you that as of this date, no tax amnesty is being given by the Government. In view of the foregoing, this Office regrets to deny your request. This serves as our final stand. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group