BIR Ruling [DA-629-99]

November 9, 1999 BIR RULING [DA-629-99] Diaz Murillo Dalupan Certified Public Accountants 5th Floor, Don Jacinto Building Dela Rosa corner Salcedo Sts. Legaspi Village, Makati City Attention: Atty . Millard M . Manseguiao Managing Director Tax & Corporate Services Division Gentlemen : This refers to your letter dated July 5, 1999 requesting on behalf of your client, New Bridge Networks (Asia) Limited (NN(A)L), for waiver of the surcharge, interest and compromise penalties aggregating P61,512.23 due to the late remittance of monthly withholding tax from its personnel payroll covering the period from April to June 1998. It appears that the NN(A)L engaged the services of Professional Payroll Specialist, Inc. (Payroll) to handle the preparation of its personnel payroll, to withhold and prepare BIR Form 1601 formerly 1743W to accompany remittance of withholding tax due from their employees in addition to other payroll related remittances, i.e., contributions to the Social Security System (SSS) and Home Development Mutual Fund (HDMF); that Payroll failed to remit the withholding tax on due date for the following reasons: 1. The bank refused to accept the duly accomplished and signed returns and the accompanying payments because several documents were required to be submitted first (i.e., Taxpayers Record Update, Certificate of Registration, Enrollment form with requirements thereon, etc.) 2. The bank required the taxpayer to open a peso savings account and maintain certain balance; and 3. The bank was not accepting check payments payable to the BIR that given the short period in complying with the new and unfamiliar requirements, it was impossible for Payroll to remit the monthly withholding tax of NN(A)L personnel on due date; and that it was only August 6, 1998 when the BIR pursuant to Revenue Regulation No. 6-98, and after NN(A)L obtained its TRU's and other documents that its remittance of monthly withholding tax was accepted. In reply, please be informed that your request is hereby denied for lack of legal basis. The obligation to pay interests and surcharges under the Tax Code is mandatory. (Commissioner of Internal Revenue vs. Limpan Investment Corporation, L-28644 dated July 31, 1970). The surcharges and interests respectively imposed under Sections 248 and 249 of the Tax Code of 1997 are just but compensation to the state for the delay in paying the tax and the concomitant use by the taxpayer of funds that rightfully should be in the hands of the government. (Central Azucarera de San Pedro vs. Court of Tax Appeals, 20 SCRA 345) (BIR Ruling No. DA-137-98 dated April 13, 1998) You are therefore requested to advise your client, NN(A)L to remit the monthly withholding tax on its payroll payments together with the corresponding interests and surcharges in case it has not yet remitted the same. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)