Surcharge for Failure to Pay the Proper Taxes

August 25, 1959 BIR RULING NO. 409-59 A & M Trading & Supply Co., Inc. 466 San Luis, Ermita M a n i l a Gentlemen : Reference is made to your letter dated August 19, 1959 requesting information as to whether or not you are liable to the 50% surcharge for failure to pay the proper taxes due from your business. In our letter to you dated August 18, 1959 (BIR Ruling No. 379), we ruled that, for the production of Pronto dry chemical hand fire extinguisher, Pronto battery reviver, and Pronto radiator cleanser which you do by mixing various chemical products, you are manufacturers subject to the fixed and percentage taxes prescribed in sections 182 and 186 of the Tax Code. It appears, however, that you have considered yourselves as mere repackers, for which reason, you have only been paying the graduated fixed annual tax. In reply thereto, I have the honor to inform you as follows: The 50% surcharge is imposed in cases where there is a deliberate intent on the part of the taxpayer to defraud the Government of its revenues. In your case, we believe that your failure to pay the correct tax due from your business arose from an honest mistake of the law. Under the circumstances, we are of the opinion that you are not liable to the 50% surcharge. However, for the belated payment of the percentage tax, you are liable to the 25 % surcharge, pursuant to section 183 of the Tax Code. You are, therefore, requested to make a return of your gross sales during the corresponding period, file the same with the City Treasurer and pay the tax. You must also pay your fixed tax as manufacturer since the start of your operations. All amounts heretofore paid by you as graduated fixed annual tax may be credited against the taxes due and payable by you provided that you file with this office the corresponding written claim therefor within two (2) years from the date of payment thereof. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue