Treatment of Fixed or Variable Transportation, Representation and Other Allowances, and Extension of Time to Furnish BIR Form W-2

December 22, 1982 REVENUE MEMORANDUM CIRCULAR NO. 28-82 SUBJECT : Treatment of Fixed or Variable Transportation, Representation and Other Allowances, and Extension of Time to Furnish BIR Form W-2 TO : All Internal Revenue Officers, Withholding Agents and Others Concerned A. FIXED ALLOWANCES . In order to remove any doubt that fixed or variable allowances for transportation, representation and other allowances, are considered items of compensation subject to withholding of tax, paragraph c of Section 2 of Revenue Regulations No. 6-82, effective October 1, 1982, is quoted hereunder: "(c) In general. Fixed or variable transportation, representation and other allowances, which are received by a public officer or employee, or officer or employee of a private entity, in addition to the regular compensation fixed for his position or office is compensation subject to withholding. cd "Amounts paid specifically either as advance or reimbursement for transportation, representation and other bona-fide ordinary and necessary expenses incurred or reasonably expected to be incurred by the employee in the performance of his duties in the business of the employer are not compensation subject to withholding. However, if the reimbursement exceeds the actual expenses, the excess if not returned to the employer constitutes taxable compensation. Transportation and other reimbursed expenses must be identified either by making a separate payment or by specifically indicating the separate amounts where both compensation and expense allowances are combined in a single payment." Any other treatment is contrary to the express provision of Section 28(b) of the Tax Code, as amended by Batas Pambansa Blg. 135, which specifically includes allowances for "transportation, representation, entertainment" as items of gross compensation. Hence, that portion of BIR Ruling No. 164-82, dated May 6, 1982, holding that "Consequently, commutable allowances, i.e., fixed allowances given to employee become reimbursements or advances, as the case may be, if the employee makes an accounting or liquidation that the said allowances were actually spent in the performance of his duties," is deemed superseded. B. TIME TO FURNISH W-2 FOR 1992 EXTENDED . This being the initial year of implementation of the withholding tax on compensation income requiring the filing and furnishing of restructured forms, and under the authority of Section 95(c) of the National Internal Revenue Code, the time to furnish the certificate of Income Tax Withheld on Compensation, BIR Form W-2, to employees is extended to March 10, 1983, to give adequate time for its accomplishment by employers/withholding agents . cd i RUBEN A. ANCHETA Acting Commissioner