Publishing the full text of DOF-DBM-COA Joint Circular 1-2000 dated January 3, 2000 Re: Guidelines in the remittance of all taxes withheld by National Government Agencies (NGAs) to the Bureau of Internal Revenue

March 15, 2000 REVENUE MEMORANDUM CIRCULAR NO. 03-00 SUBJECT : Publishing the Full Text of DOF-DBM-COA Joint Circular 1-2000 Dated January 3, 2000 Re: Guidelines in the Remittance of All Taxes Withheld by National Government Agencies (NGAs) to the Bureau of Internal Revenue TO : All Internal Revenue Officers, Employees and Others Concerned For information and guidelines of all revenue officials and employees, quoted hereunder is DOF-DBM-COA Joint Circular 1-2000 dated January 3, 2000: "DEPARTMENT OF FINANCE DEPARTMENT OF BUDGET AND MANAGEMENT COMMISSION ON AUDIT JOINT CIRCULAR NO. 1-2000 January 3, 2000 TO : All Heads of Departments/Agencies/State Universities and Colleges and Other Offices of the National Government; Heads of Accounting Units; COA Auditors and All Others Concerned SUBJECT : Guidelines in the Remittance of All Taxes Withheld by National Government Agencies (NGAs) to the Bureau of Internal Revenue (BIR) LexLib 1.0. PURPOSES 1.1. To authorize the use of the Tax Remittance Advice (TRA) as a mode of remittance to the BIR for all current and prior years' taxes withheld by the NGAs in lieu of the Modified Disbursement System (MDS) Checks and Authority to Debit the Account of the Agency (ADA); 1.2. To authorize the NGAs, BIR and Bureau of Treasury (BTr) to recognize remittance of all taxes withheld, collection and deposit, respectively, based on the TRAs issued by the Department of Budget and Management (DBM); LibLex 1.3. To provide the guidelines in the request, issuance and recording of the TRA; 1.4. To prescribe special journals in the recording of tax remittance through TRAs and non-TRA payments by the BIR and BTR; and 1.5. To prescribe the format for the TRA and the "Summary of Taxes Withheld" (STW) cdll 2.0. DEFINITION OF TERMS For the purpose of this circular, the following terms shall be construed to mean: 2.1. Taxes Withheld refer to all taxes deducted by the NGAs from the payments due to payees (employees, suppliers and contractors) as required by law and regulations. 2.2. Summary of Taxes Withheld refers to the document which summarizes the type and amount of taxes withheld based on the withholding tax returns. The STW, prescribed in Annex "A", shall be certified by the Chief Accountant and approved by Head of the NGA or his duly authorized representative. 2.3. TRA refers to the accountable document to be issued by the concerned DBM Office which shall be the basis for the NGAs to record the remittance of all taxes withheld to the BIR. The same document shall be the basis for the BIR and BTR to record the collection and deposit in their respective books of account. The prescribed form is shown in Annex "B". 3.0. GENERAL GUIDELINES 3.1. The use of the MDS check and ADA by NGAs in the remittance of all taxes withheld to the BIR shall be discontinued. Instead, the NGAs shall use the TRA in the remittance of all current and prior years' taxes withheld to the BIR. However, existing procedures shall still apply for those transactions of government agencies funded from the Working/Imprest Fund and Revolving Fund; 3.2. The account to be used in the remittance of all taxes withheld through the TRA shall be Cash Treasury/Agency Account Current Tax Remittance Advice (8-70-710) and the existing account of Cash Treasury/Agency Account Current Non-Cash Deposit (8-70-702) shall be used for the deposit of collections through TRA. The description and use of these accounts are discussed in Section 5.0 of this Joint Circular. 3.3. NGAs shall review and analyze the accounts used in recording taxes withheld and due the BIR and ensure that said amounts are recorded under the accounts, Trust, Liabilities-NGA, Taxes Withheld Covered by TRA (8-84-120) and Trust Liabilities-NGA, Taxes Withheld Not Covered by TRA (8-84-130). The description and use of this accounts are discussed in Section 5.0 of this Joint Circular; 3.4. All NGAs shall submit their letters of request duly supported by the STW on or before the 25th day of each month at the concerned DBM Office. The amount of request shall be equal to the unremitted current and prior years' taxes withheld as reflected under the credit balance of account 8-84-120; 3.4.1. Upon submission of its request, the NGA shall, likewise, file with the concerned Revenue District Office (RDO) a copy of the request and STW duly received by the DBM together with the required tax returns for all taxes withheld for compensation, expanded, final and government money payments (BIR Form 1601-C, 1601-E, 1601-F. and 1600 respectively); 3.5. Submission of all the requirements as cited under 3.4 and 3.4.1 shall be construed to be sufficient compliance by the NGA in the payment and filing requirements of the BIR, pursuant to Section 81 of the National Internal Revenue Code of 1997 (NIRC), subject to BIR audit. Incomplete submission of requirements shall be subject to the usual interest and other penalties for late payment and filing if said requirements are not completed on the 25th of each month. 3.5.1. The interest and other penalties resulting from the non-submission or late submission to the DBM of the request duly supported by the STW shall be the personal liability of the heads of agencies and the respective chief accountants in accordance with Section 272 of the NIRC as implemented by Revenue Regulations (RR) No. 10-97; 3.6. All adjustments (over or under-remittances) of taxes withheld by the NGAs shall be considered in the following month's request; 3.7. The concerned DBM Office shall issue the TRA within ten (10) working days upon receipt of the request duly supported by the STW from the concerned NGA, copy furnished the BIR and the BTR. All requests not duly supported by the STW shall be returned within five(5) working days upon receipt thereof; 3.8. The concerned NGA shall record TRAs received from the concerned DBM Office as remittances to the BIR for taxes withheld in its books of accounts; 3.9. The BIR Office shall record TRAs received from the concerned DBM Office as tax collection in the Journal of tax remittances By Government Agencies (JTRGA) as prescribed in Annex"C-1", 3.10. The BTR Office shall record the amount of TRAs received from the concerned DBM Office as deposit for the remittances of all taxes withheld by the NGAs in the Journal of Tax Deposits by Government Agencies(JTDGA) as prescribed in Annex "C-2", and 3.11. All heads of agencies and the respective chief accountants shall ensure that the taxes withheld are in accordance with the law and existing rules and regulations. 4.0. RESPONSIBILITIES 4.1. The concerned DBM Office shall: 4.1.1 Issue the Notice of Cash Allocation (NCA) to the NGAs net of estimated withholding taxes for their current year's operating requirements and net of actual withholding taxes for accounts payable; 4.1.2. Issue the TRA to the NGA concerned, copy furnished the BIR and BTR, within ten (10) working days upon receipt of its request duly supported by the STW: cdll 4.1.3. Return all requests submitted by the NGAs that are not duly supported by the STW within five (5) working days upon receipt thereof; and 4.1.4. Provide BIR and BTR with the serial numbers of TRAs to be issued. llcd 4.2. The NGAs shall: 4.2.1 Comply with the registration requirements of the BIR as a withholding agent pursuant to Sec. 236 of the NIRC; 4.2.2. Pay employees/suppliers/contractors for services rendered/goods delivered net of withholding taxes; 4.2.3. Record in the books of accounts all taxes withheld by crediting account 8-84-120 for TRAs and/or account 8-84-130 for non-TRA payments; 4.2.4. Analyze and review the accounts used in recording all taxes withheld and due the BIR and ensure that said amounts are recorded under account 8-84-120 and/or account 8-84-130; 4.2.5. Prepare and submit to the concerned DBM Office on or before the 25th of each month, the request for the issuance of TRA duly supported by the STW. The STW should be numbered as follows: cdlex 1st three(3) digits Revenue District Office (RDO) code Next two(2) digits Department code Next five(5) digits Agency code Next four(4) digits Year Last three(3) digits Sequential number of STW prepared for the year Example: 021-19-B9789-2000-001 (1st STW prepared for the year 2000 by the Regional Office III of the Department of Public Works and Highways that falls under the jurisdiction of RDO 21, San Fernando, Pampanga) LibLex Ensure that the amount of request should be equal to the unremitted taxes withheld as reflected under the credit balance of account 8-84-120 excluding penalties (interest, surcharge & compromise); 4.2.6. File with the concerned BIR Office the required tax returns for all taxes withheld for compensation, expanded, final and government money payments (BIR Form 1601-C, 1601-E, 1601-F and 1600 respectively) together with a copy of the request and STW duly received by the DBM; cdll 4.2.7. Ensure that adjustments of over or under-remittance of taxes withheld are considered in the following month's request for the issuance of the TRA; 4.2.8. Record the remittance of taxes withheld in its books of accounts upon receipt of the TRA from the concerned DBM Office; and 4.2.9. Attach the TRA to the corresponding STW. 4.3. The concerned BTR Office shall: 4.3.1. Record in the JTDGA the amount of TRAs received from the DBM as deposit for the remittance of all taxes withheld by the NGAs. Provide BIR every Monday with the list of TRAs received from the DBM during the preceding week: 4.3.2. Reconcile the amount of TRAs recorded in the JTDGA with the list of TRAs provided by the BIR under 4.4.5; prcd 4.3.3. Inform the BIR- National Office (NO) of any discrepancy and immediately effect the necessary adjustments; and, 4.3.4. Update the BIR with the list of those NGAs newly authorized to use the Working/Imprest Fund and Revolving Fund. 4.4. The concerned BIR Office shall: 4.4.1. Monitor the NGAs' compliance with the registration requirements as withholding agents pursuant to Sec. 236 of the NIRC; 4.4.2. Inform the NGAs of the specific RDO where they shall file the requirements as enumerated in 4.2.5. Likewise, inform them of their assigned RDO code; 4.4.3. Monitor the NGAs' compliance with the requirements as enumerated in 4.2.6 Likewise, monitor the tax payments and remittances of NGAs which have transactions that are funded from the Working/Imprest Fund and Revolving Fund; LexLib 4.4.4. Reconcile TRAs received from the DBM with the tax returns, copies of the requests and STWs filed by the NGAs; 4.4.5. Record all TRAs received from the concerned DBM Office as tax collection in the JTRGA. Provide BTR every Monday with the list of TRAs received from the DBM during the preceding week; cdll 4.4.6. Reconcile the amount of TRAs recorded in the JTRGA with the list of TRAs provided by the BTR under 4.3.1.; 4.4.7. Inform the BTR-Central Office of any discrepancy and immediately effect the necessary adjustments; and 4.4.8. Verify the accuracy of all taxes withheld and remitted by the NGAs through the regular audit of their filed withholding tax returns. llcd 4.5. The concerned COA Office shall: 4.5.1. Ensure that all NGAs have recorded all current and prior years' taxes withheld and due the BIR under account 8-84-120 and/or account 8-84-130 and taxes remitted through the TRA under account 8-70-710; 4.5.2. Inform the concerned BIR Office of any NGA under its jurisdiction which failed to withhold taxes in accordance with COA Memorandum No. 99-049 dated August 25,1999. llcd 5.0. ACCOUNTS AND ILLUSTRATIVE ACCOUNTING ENTRIES 5.1. The following accounts to be used are hereby prescribed: 5.1.1. Cash Treasury/Agency Account Current Tax Remittance Advice (TRA) (8-70-710). This account is used to record the remittance of taxes withheld by NGAs to the BIR based on the TRA issued by the DBM. prcd Books of Agency Debit this account for: Year-end closing to the National Clearing Account Adjustment-reduction (in parenthesis) Credit this account for: Remittance of taxes withheld based on TRA Adjustment-addition Adjustment-reduction (in parenthesis) Books of the BTR Debit this account for: Remittance of taxes withheld by the NGAs based on the TRA. Adjustment-addition Adjustment-reduction (in parenthesis) Credit this account for: Year-end closing to the national Clearing Account Adjustment-reduction (in parenthesis) LexLib 5.1.2. Trust Liabilities NGAs, Taxes Withheld Covered by TRA (8-84-120) This account is used to record the amount of taxes withheld for the account of BIR, the remittance of which is through the TRAs. Debit this account for: Remittance to the BIR of taxes withheld through the TRA. Adjustment-reduction (in parenthesis) Credit this account for: Amount of taxes withheld for the account of the BIR Adjustment-addition Adjustment-reduction (in parenthesis) cdll 5.1.3. Trust Liabilities NGAs, Taxes Withheld Not Covered by TRA (8-84-130) This account is used to record the amount of taxes withheld for the account of the BIR, the remittance of which is not through the TRA. Debit this account for: Remittance to the BIR of taxes withheld through checks. Adjustment-reduction (in parenthesis) Credit this account for: Amount of taxes withheld for the BIR. Adjustment-addition Adjustment-reduction (in parenthesis) LexLib 5.2. The account Cash Treasury/Agency Account Current, Non-Cash Deposit (8-70-702) is revised to include remittance of tax due the BIR thru Tax Remittance Advice. The revised definition is as follows: This account is used to record collections of the revenue collecting agencies of the Government for payment of obligations due the government such as taxes and duties. This account shall, likewise, be used to record TRAs issued by DBM for taxes remitted by NGAs. Books of Revenue Collecting Agencies Debit this account for: Deposit to BTR of taxes covered by TRA Deposit of other non-cash collections of NGAs Adjustment-addition Adjustment-reduction (in parenthesis) Credit this account for: Year-end closing to the National Clearing Account Adjustment-reduction (in parenthesis) Books of the BTR Debit this account for: Year-end closing to the National Clearing Account Adjustment-reduction (in parenthesis) Credit this account for: Deposit by BIR of tax collections covered by TRA Deposit of non-cash collections of NGAs Adjustment-reduction (in parenthesis) 5.3. The illustrative accounting entries are shown in Annex "D" hereof. prcd 6.0. PENALTY CLAUSE Non-compliance with the provisions of this Joint Circular by the responsible officers shall subject such officers to a fine or imprisonment or both as provided for under Sections 250,252,and 272 of the NIRC. 7.0. REPEALING CLAUSE All provisions of existing circulars, rules and regulations or parts thereof which are inconsistent with the provisions of this Joint Circular are hereby rescinded/repealed and or modified accordingly. 8.0. SAVING CLAUSE Cases not covered in this Joint Circular shall be referred to the DBM and shall be jointly resolved with COA 9.0. EFFECTIVITY This Joint Circular shall take effect fifteen (15) days after publication in a newspaper of general circulation. (SGD.) JOSE T. PARDO (SGD.) BENJAMIN E. DIOKNO Secretary Secretary Department of finance Department of Budget and Management (SGD.) CELSO D. GANGAN Chairman Commission on Audit" All revenue officials and employees are required to give this circular as wide a publicity as possible. (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue ANNEX A ANNEX B TAX REMITTANCE ADVICE NO. ______________ NAME OF AGENCY/CODE DEPARTMENT/CODE FUND DATE CODE This is to notify you that the amount of _______________________________________________________________________ has been issued to cover outstanding withholding tax liabilities as of ________________ per "Summary of Taxes Withheld" No. ________________ It is understood that the recording of the amount herein released shall be in accordance with prescribed budgeting, accounting and auditing rules and regulations pursuant to the DOF-DBM-COA Joint Circular No. ____________. Recommending Approval: Approved: _____________________ _____________________ This Tax Remittance Advice shall be valid only if with the duly machine-validated amount and official seal of the DBM, accompanied by the "Summary of Taxes Withheld". ANNEX C-1 Journal of Tax Remittances by Government Agencies Bureau of Internal Revenue JOURNAL OF TAX REMITTANCES BY GOVERNMENT AGENCIES Instructions 1. The blank spaces and columns shall be filled up accordingly as follows: a. Heading The month, year, fund name/code and sheet number shall be indicated. b. Date The date the Consolidated Report of Daily Collections (CRDC) submitted by the Depository Bank/TRA is recorded in this journal shall be entered in this column. c. CRDC/TRA The number and the date of CRDC/TRA shall be entered in this column. d. Agency Name The name of the agency indicated in the TRA shall be entered in this column. e. Debit Column The total amount remitted for taxes withheld as indicated in the CRDC/TRA. f. Credit Column The total amount representing income tax revenue which is equal to the amount remitted. g. Breakdown of Income The details of income tax collection per items in the ITW and ITR. 2. A new sheet shall be started at the beginning of each month. The sheet shall be numbered in one series for each fiscal year. 3. At the end of the month, the journal shall be footed, balanced and ruled. The ruling shall be made immediately after the last entry. 4. Posting in the general ledger shall be made directly from the journal. A check mark immediately underneath the total of the columns shall be made to indicate completion of posting in the general ledger. 5. Each sheet of the journal shall be certified correct by the Chief Accountant as follows: "Certified Correct" __________________ Name of Accountant _______________ Designation ANNEX C-2 Journal of Tax Deposits by Government Agencies Bureau of the Treasury JOURNAL OF TAX DEPOSITS BY GOVERNMENT AGENCIES Instructions 1. The blank spaces and columns shall be filled up accordingly as follows: a. Heading The month, year, fund name/code and sheet number shall be indicated. b. Date The date the Bank Credit Advice (BCA) submitted by the Bangko Sentral ng Pilipinas/TRA issued by the DBM is recorded shall be entered in this column. c. BCA/TRA The number and the date of BCA/TRA shall be entered in this column. d. Agency Name The name of the agency indicated in the BCA/TRA shall be entered in this column. e. Address The address of the agency indicated in the BCA/TRA shall be entered in this column. f. Debit and Credit Columns The total amount remitted for taxes withheld as indicated in the BCA/TRA. 2. A new sheet shall be started at the beginning of each month. The sheet shall be numbered in one series for each fiscal year. 3. At the end of the month, the journal shall be footed, balanced and ruled. The ruling shall be made immediately after the last entry. 4. Posting in the general ledger shall be made directly from the journal. A check mark immediately underneath the total of the columns shall be made to indicate completion of posting in the general ledger. 5. Each sheet of the journal shall be certified correct by the Chief Accountant as follows: "Certified Correct" __________________ Name of Accountant _______________ Designation Illustrative Accounting Entries Remittance of Taxes Withheld Thru Tax Remittance Advice (TRA)