Guidelines on the Payment by Taxpayers of 50% or More of the Previous Year's Tax Liability

April 26, 1989 REVENUE MEMORANDUM CIRCULAR NO. 23-89 SUBJECT : Guidelines on the Payment by Taxpayers of 50% or More of the Previous Year's Tax Liability TO : All Assistant Commissioners, Revenue Directors, Revenue District Officers and Others Concerned To insure uniformity on the treatment of the 1988 returns with payment of 50% or more over the previous year the following guidelines are issued in accordance with the twin Memoranda issued by the Commissioner of Internal Revenue to all Revenue Directors, Revenue District Officers and Chief, Assessment Branches, on April 11 and 18, 1989. A. Coverage and Limitation This covers the 1988 Income and Business tax returns. The availment is not an amnesty nor a last priority privilege. B. Bases of the Payment of the 50% Additional Tax or more 1. In cases where both income and business tax returns were already investigated and deficiency taxes were assessed, said deficiency taxes shall be added to the basic taxes to determine compliance with the payment of 50% or more; 2. If the 1987 income or business tax returns are in the process of investigation and no deficiency assessment has yet been issued against the taxpayer, the estimated assessment, such as mandatory assessments shall already be included in the computation; 3. In case the 1987 tax return indicates a net loss, then the taxpayer is required to file a correct 1988 return and pay the correct tax thereon. If the business is subject to percentage taxes then an increase of at least 50% of what has already been paid in business tax is required; 4. If the 1987 return is exempt, such as a BOI registered enterprise becoming taxable in 1988, the tax to be paid must be equivalent to 50% or more than the 1987 income tax presumptively computed including the business tax liability; 5. If the 1987 income tax return shows a combination of both compensation and business income, the total tax due per return will be the basis where no deficiency have been assessed; 6. If the taxpayer is new and filing only in 1988 he should file correct tax returns and pay the correct taxes. In other words he should start clean. cdt C. Amendment of the Return and Payment of the Tax Due 1. If the taxpayer wishes to start clean with his 1988 tax return to avail of the sympathetic case-to-case treatment from the present tax administration but the returns already filed for taxable year 1988 for income and business tax purposes do not exceed that of 1987 by at least 50%, he can still amend his returns not later than May 2, 1989 and pay the difference of the basic tax without any increment; 2. In amending the returns the regular income tax and/or business tax return forms shall be used. No special return is required. 3. The taxpayer has two options in treating the 50% or more tax payment; a) Preferably by adjusting the Financial Statement to reflect the taxable income and compute the tax due thereon, or b) Make a simple payment without necessarily amending the financial statement as a manifestation of the taxpayers sincerity and willingness to support the government. 4. The taxpayer is required to indicate on the face of the return (1988 ITR), preferably at the bottom space of the return the tax or taxes paid in 1987; 5. For VAT and other business taxes paid in 1988, at least 50% additional payment based on the tax liability is required. D. Taxpayer to Inform BIR If a taxpayer has already complied with the payment of at least 50% over that of the 1987 tax liabilities and has not indicated the 1987 tax payment on the face of the 1988 tax return, the taxpayer should inform the Bureau that he has in fact complied with the requirement with the request that both the original and the duplicate copies of the taxpayer's 1988 tax return after having been duly processed for classification and numbering by the Assessment Branch of the respective Revenue Region be forwarded to the office of the Commissioner by writing to the Revenue Director, Attention: Chief, Assessment Branch where his legal residence or principal place of business is located, copy furnished: The Commissioner of Internal Revenue, Attention: The Chief, Tax Information and Assistance Division, National Office Building, Diliman, Quezon City, by attaching a photo copy of the face of the 1988 Tax Returns. aisa dc E. Processing of the Returns Filed All returns filed under this policy shall be processed in the Regional Offices by their respective Assessment Branches only for purposes of classification and indication of the corresponding assessment numbers. These returns (original and duplicate) shall then be transmitted by the Regional Directors to the Office of the Commissioner in batches of 100 returns per bundle with a transmittal list indicating the name, address and the assessment number of the particular return not later than May 12, 1989. All revenue officials and employees are enjoined to give this Circular the widest publicity possible. cd i (SGD.) JOSE U. ONG Commissioner of Internal Revenue