Recomputation of Income Tax for 1991 for Purposes of the Credit/refund of Excess Withholding Tax

October 2, 1992 REVENUE MEMORANDUM CIRCULAR NO. 46-92 SUBJECT : Recomputation of Income Tax for 1991 for Purposes of the Credit/Refund of Excess Withholding Tax TO : All Internal Revenue Officials and Others Concerned For the information and guidance of Internal Revenue Officials and others concerned, quoted hereunder is the full text of the Memorandum of the Commissioner dated September 25, 1992 to the Chief, Disbursement Accounting Division. "September 25, 1992 "MEMORANDUM TO: The Chief, Disbursement Accounting Division. Subject : Revenue Regulations No. 3-92 Prescribing the Guidelines for the credit/refund of excess withholding tax on compensation income for 1991 . It has come to the attention of this Office that some BIR employees who filed their income tax returns for 1991 did not declare the amount of Personnel Economic Relief Allowance (PERA) as part of compensation income for 1991 in view of the Memorandum Circular No. 145 of former President Corazon C. Aquino adopting the opinion dated 03 July 1991 of the Secretary of Justice that PERA is not taxable . casia In BIR Ruling dated March 2, 1992, which was circularized in Revenue Memorandum Circular No. 15-92 dated March 11, 1992, it was clarified that this Office has requested for a reconsideration of the said Opinion of the Secretary of Justice, and that pending resolution of our request, and in pursuance to the said directive of the President, government offices agencies and instrumentalities including government-owned and controlled corporations should stop deducting or withholding any income tax on PERA for 1992; that the concerned employees may file in writing with the BIR, Attn.: Appellate Division their individual claims for refund of the withholding tax on PERA for 1991 or those already paid to them, within two (2) years after payment of the tax pursuant to Sec. 204 of the Tax Code, as amended; and that appropriate action on the claim for refund will be taken as soon as a reply to said request for reconsideration is received from the Office of the President. To date, no reply has yet been received on our request for reconsideration. Since for taxable year 1991, the PERA has been subjected to the withholding tax and the same was remitted to the BIR, PERA should therefore be declared as part of compensation income for 1991, and the tax withheld therefrom could be tax credited in the income tax return to be filed on or before April 15, 1992. In connection therefore with the guidelines setforth in Revenue Regulations No. 3-92, the recomputation of income tax for 1991 should be based on the total income per withholding tax statement which includes the PERA and which should have been declared in the income tax return filed for 1991. The increased person and additional exemptions under R.A. No. 7167 should be applied, and whatever excess amount should be refunded to the concerned employee. If the income tax return filed did not reflect the PERA, and therefore there is a discrepancy between the amount of compensation per withholding tax statement and the income tax return filed, the recomputation should be made on the basis of the withholding tax statement which shows PERA as part of gross compensation income of an employee. acd For strict compliance. (Sgd.) JOSE U. ONG Commissioner of Internal Revenue" All Revenue officials, and employees are required to give this circular as wide a publicity as possible. (SGD.) EUFRACIO D. SANTOS Deputy Commissioner