BIR Ruling [DA-321-97]

September 24, 1997 BIR RULING [DA-321-97] Bulacan State University Malolos, Bulacan Attention: Ms. Rosario Pimentel President Gentlemen : This refers to your faxed letter dated April 16, 1996, which was received by the Law Division on August 6, 1997 requesting for the condonation of your penalties for non-compliance with Revenue Regulations No. 12-94 regarding your year-end adjustment of withholding tax on the compensation income of your employees for the years 1987 and 1988. It is represented that Warrants of Distraint and Levy Nos. 25 and 26 have been issued against you by Revenue District Office No. 25 for your failure to deduct from your employees the corresponding year-end adjustment of their withholding tax on compensation for the years 1987 and 1988 and that your reasons for non-compliance of the said Revenue Regulations are the following: 1. Year-end benefits at those times were uncertain. It was not included in the regular appropriation of government agencies. The guidelines to that effect were issued on the latter part of November and the year-end benefits were received before the holiday season was over. The guidelines provided that the year-end benefits would not be subject to withholding tax but to be reported as taxable income in filing the income tax return. You could not make the necessary adjustment on the income tax to be withhold from your employees' salaries for the month of December because of the limited time. Your monthly payroll were being prepared and processed ahead of time; ECTIcS 2. In order for you to be cleared from these obligation, the concerned BIR Office advised you to show proof of payment through your employees' income tax returns for the deficiency on the income tax withheld. But unfortunately, you could not produce all those documents because some of your employees had retired, resigned, been terminated/separated from the service. You have inquired from the Revenue District Office No. 25 if you could avail of a copy of the income tax returns of your employees but their response was that it was difficult and impossible to retrieve all of them; 3. You also made inquiries with the Department of Budget and Management if funds would be provided for the purpose but their response was negative; and 4. Being a state institution that is fully subsidized by the national government, you have nothing to offer except the promise of faithful compliance with the BIR Regulations. CSIcHA In reply, thereto, please be informed that based on the aforestated meritorious reasons that you have cited, we hereby grant your request for condonation of the penalties prescribed under Sec. 8 of Revenue Regulations No. 6-85, as amended, for failure to comply with the provisions of the said Regulations, for the years 1987 and 1988. Nevertheless, proper adjustments and remittance should be made for the subject years, if the same had not been done yet. You are however, reminded to be extra cautious with your duties and responsibilities as a withholding agent to prevent any similar occurrence in the future. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, and/or any of the requirements imposed in this letter are not complied with, then this ruling shall be considered null and void. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue