Request for Waiver of Surcharge and Interest for Failure to Pay on Time the Second Installment of Income Tax Liability

September 10, 1996 BIR RULING NO. 099-96 248 & 249-000-00-099-96 Ms. Alicia F. Mansia c/o Ms. Helen Annie W. Quimpo BIR National Office Building Quezon City This refers to your letter dated August 4, 1996 requesting for the waiver of the surcharge and interest for your failure to pay on time the second installment of your income tax liability for taxable year 1995 in the amount of P47,681 which was due last July 15, 1996. LLphil It is represented that on July 12, 1996, you gave your Urban Bank check payable to the BIR to SGV & Co.; that on July 14, 1996 you left for Thuket, Thailand to attend your company's Regional Conference; that you gave your ATM card to your brother and left him instructions to debit your savings account and credit your current account to cover your check issuances; that your check was returned by Urban Bank for insufficient funds; that later on you discovered that your savings account balance was still intact and had not been debited for the amount of P47,631.00 needed to cover your check issuances to the BIR and your Citibank Visa credit card payment in the amount of P18,381.61; and that you were informed that the Fund Transfer Limit of P50,000 was not for your transaction but for one banking day such that ATM message in "Transaction Declined Exceeded Account Limit." In reply thereto, please be informed that the obligation to pay interest and surcharge under the Tax Code is mandatory. ( Commissioner of Internal Revenue vs . Limpan Investment Corporation , L-28644 dated July 31 , 1970 ). The surcharge and interest respectively imposed under Sections 248 (3) and 249 (a) of the Tax Code, as amended, are but just 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 ; Castro vs . Collector of Internal Revenue , 6 SCRA 886 ) Thus, there shall be imposed in addition to the tax required to be paid, a penalty equivalent to twenty-five percent (25%) of the amount due in case of failure to pay the tax within the time prescribed for its payment; and interest at the rate of twenty percent (20%) per annum from the date prescribed for its payment until the amount is fully paid (Sections 248 (3) and 249 both of the Tax Code, as amended). Such being the case, and since the foregoing reasons for your failure to pay the second installment of your income tax liability last July 15, 1996 is not meritorious, your request for the waiver of the surcharge and interest is hereby denied. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue