Publishing Sections 85 and 87 of the National Internal Revenue Code of 1977

August 4, 1977 REVENUE MEMORANDUM CIRCULAR NO. 38-77 SUBJECT : Publishing Sections 85 and 87 of the National Internal Revenue Code of 1977 TO : All Internal Revenue Officers and others concerned For the information and guidance of all concerned, there is quoted below, sections 85 and 87 of the National Internal Revenue Code of 1977 as promulgated under Presidential Decree No. 1158. "SEC. 85. Method of computing corporate quarterly income tax . Every corporation shall file in duplicate a quarterly summary declaration of its gross income and deductions on a cumulative basis for the preceding quarter or quarters upon which the income tax, as provided in Title II of this Code, shall be levied, collected and paid. The tax so computed shall be decreased by the amount of the tax previously paid or assessed during the preceding quarters and shall be paid not later than sixty (60) days from the close of each of the first three (3) quarters of the taxable year, whether calendar or fiscal year. "SEC. 87. Filing of adjustment returns and final payment of income tax . On or before the fifteenth day of April or on or before the fifteenth day of the fourth month following the close of the fiscal year, every taxpayer covered by this Chapter shall file an adjustment return covering the total net taxable income of the preceding calendar or fiscal year and if the sum of the quarterly tax payments made during that year is not equal to the total tax due on the entire net taxable income of that year, the corporation shall either (a) pay the excess tax still due or (b) be refunded the excess amount paid, as the case may be. In case the corporation is entitled to a refund of excess estimated quarterly income taxes paid, the refundable amount shown in its final and adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year." FEATURES OF THE AMENDMENT SECTION 85 Under the original provision of Presidential Decree No. 30, a corporation is required to file a quarterly declaration of its gross income and deductions. Each taxable quarter was considered independently of the other so that the gross income and deductions for one taxable quarter could not be cumulated with those of the succeeding taxable quarters. Under section 85 of the new Code, the gross income and deductions declared in one quarter will now be allowed to be cumulated with those of the succeeding quarters of the same taxable year. The tax paid for any one quarter on cumulative basis will be credited against the quarterly tax liability for each succeeding quarters of the taxable year. SECTION 87 Under Article 4 of Presidential Decree 30, the excess quarterly payments of income tax reported in the final and adjustment return is refundable or creditable only upon approval by the Commissioner of Internal Revenue. Under section 87 of the new Tax Code, any such excess and refundable corporate quarterly income tax payments for a taxable year can be automatically credited against the corporate quarterly tax liability for the taxable quarters of the succeeding taxable year. EFFECTIVITY The above quoted provisions of the new Tax Code took effect on June 3, 1977. For taxable quarters ending after June 3, 1977, corporations may now file their quarterly tax returns on a cumulative basis. Refundable quarterly income tax payments appearing on a final and adjustment return of a corporation whose taxable year ends after June 3, 1977, may be credited automatically against the quarterly income tax liability for the taxable quarters of the succeeding taxable year. ENFORCEMENT All internal revenue officers and others concerned are enjoined to give this circular as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8