Tax Exemption for Involuntary Separation Not Applicable to Retired/Retiring Government Employees Without Security of Tenure

October 7, 1992 BIR RULING NO. 285-92 28 (b) (7) (B) 000-00 285-92 Philippine Senate Old Congress Bldg., Manila Attention: Ms . Fara S . Villanueva Chief Accountant Gentlemen : This refers to your letter dated 9 July 1992 requesting a ruling on whether the separation benefits to be received by the retired/retiring employees of the Senate, whose services were terminated at the end of the current Congress being co-terminus with their employer are exempt from tax and consequently, from withholding tax. In reply, please be informed that the phrase "beyond the control of the said official or employee" under Section 28 (b) (7) (B) of the Tax Code as amended, connotes involuntariness on the part of the official or employee. The separation from the service of the official or employee must not be asked for or initiated by him. It must not be of his own volition or choice. However, in the case of government employees, in the absence of security of tenure where the appointment is merely temporary or casual in nature, the provision of Section 28 (b) (7) (B) of the Tax Code as amended, granting tax exemption for involuntary separation, does not apply. Based on the foregoing, any and all amounts to be received by your retired/retiring employees are subject to tax and consequently, to the withholding tax. prcd Very truly yours, JOSE U. ONG Commissioner of Internal Revenue