BIR Ruling [UN-348-95]

September 27, 1995 BIR RULING [UN-348-95] Sycip Gorres Velayo & Co. 6760 Ayala Avenue, Makati Metro Manila Attention: Atty . C . P . Noel Tax Division Gentlemen : This refers to your letter dated February 7, 1995 requesting for the waiver of the 25% surcharge on the voluntary offer of your client, Goodyear Philippines, Inc. to pay its deficiency withholding tax liability for its failure to withhold the tax on the compensation income of its employees for July 1994 in the amount of P2,142,593.97 representing the basic tax due plus interest. aisadc It is represented that the late withholding of the tax on compensation of its employees for July 1994 arose out of a computer generated error and was not discovered until the post audit was conducted; that the unfamiliarity of the newly assigned staff handling the payroll account on the company's computer system contributed to the said omission; that apparently, the said staff picked up the gross earning figure for hourly paid employees and overlooked the gross earnings for the salaried employees on the honest belief that the figure shown in the computer generated statement already represents the total gross earnings for both salaried and hourly paid employees; that in the course of the year end audit, the omission was discovered; that because of your client's corporate policy to faithfully comply with tax laws, it immediately corrected the error by including the July gross earnings for the salaried employees in the Annual Information Return of Income Tax Withheld on Compensation, Expanded and Final Withholding Taxes (BIR Form 1743-1R) for 1994; that as a good corporate taxpayer and as a manifestation of good faith, your client also prepared an amended Monthly Remittance Return of Income Taxes Withheld for July 1994 to correct the omission of the salaried employees and is now voluntarily offering to pay the basic tax due plus interest; that your client was not guilty of an intentional violation of the law, it simply committed an honest mistake in complying with the reporting of its withholding tax liability for reasons beyond its control; and that you are submitting, the amended July 1994 monthly return and your offer to pay P2,142,593.97 as deficiency withholding tax on compensation for July 1994 detailed as follows: Basic Tax Due P1,961,000.00 Interest from August 10, 1994 to February 10, 1995 P181,593.97 P2,142,593.97 =========== In view of the reasons stated in your letter, this Office hereby accepts your clients' voluntary offer of payment. This, however, does not constitute a waiver of our right to investigate the withholding tax return filed by your client for the aforestated period, and consequently assess and collect the corresponding deficiency taxes, inclusive of statutory penalties that may be found still due from subject taxpayer as a result thereof. You are therefore, requested to pay the amount of P2,142,593.97 representing the basic deficiency withholding tax on compensation income for July 1994 plus interest within five (5) days from receipt hereof; otherwise, this Office shall enforce collection thereof through the summary remedies prescribed by law. cdll Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue