Procedure in Granting Tax Credit Representing Erroneous Payment of the Graduated Annual Fixed Tax

February 21, 1986 REVENUE MEMORANDUM ORDER NO. 04-86 SUBJECT : Procedure in Granting Tax Credit Representing Erroneous Payment of the Graduated Annual Fixed Tax TO : All Internal Revenue Officers and Others Concerned This Office has already ruled that a person or entity subject to the fixed tax of P200.00 and the percentage tax of 1-1/2% on subsequent sales is no longer subject to the Graduated Annual Fixed Tax. (Revenue Memorandum Circular No. 2-86). However, despite this ruling, numerous taxpayers paid the Graduated Annual Fixed Tax instead of the fixed tax of P200.00, resulting in an erroneous payment and, therefore, the same should be returned to the taxpayer by way of refund or tax credit. cd i In order to expedite the return of the amount of tax erroneously paid, the following procedures are hereby prescribed: I. Authority to grant tax credit Regional Directors are hereby authorized to grant tax credit of erroneously paid Graduated Annual Fixed Tax, regardless of amount, which shall be applied by the taxpayer in payment of the 1-1/2% tax on subsequent sales. The claim should be filed within two (2) years from payment of the tax; otherwise, the claim should be denied. If the taxpayer desires to apply the tax credit in payment of other internal revenue tax or desires that the erroneous payment be refunded to him, the tax credit or the refund shall be granted by the National Office. In such case, all papers pertaining to the claim should be forwarded to the Appellate Division of this Office for processing of the claim. II. Procedure in processing claim for tax credit to be applied to the payment of the 1-1/2% tax on subsequent sales 1. A taxpayer who erroneously paid Graduated Annual Fixed Tax shall file his written claim for tax credit with the Revenue District Officer concerned. The request shall be accompanied by the original copy of the Revenue Official Receipt or Confirmation Receipt covering payment of the Graduated Annual Fixed Tax as well as a copy of the fixed tax return filed by the taxpayer upon which the taxpayer paid the graduated annual fixed tax. cdt 2. Upon receipt of the claim for tax credit, the authenticity of the payment of the Graduated Annual Fixed Tax shall be determined by verifying if the official receipt appear in BIR Form No. 12.31, if payment was made to a Collection Agent, or by verifying if the confirmation receipt is listed in BIR Form No. 12.56, if payment was made through an accredited bank. 3. After authentication of payment, the report thereon and the documents attached thereto shall be forwarded to the Chief, Legal Branch of the Regional Office who will prepare the corresponding Tax Credit Memo (TCM) for the signature of the Revenue Regional Director (see sample copy Annex A). The TCM shall be serially numbered for control purposes. The back of the TCM shall be provided with spaces for the amount of tax applied to be charged against the amount of tax credit which shall be authenticated by the Chief, Collection Branch. 4. The original copy of the TCM shall be mailed or delivered to the taxpayer concerned while the duplicate copy of the TCM and the report of verification shall be forwarded to the Chief, Collection Branch. III. Procedure in applying tax credit in payment of the 1-1/2% tax on subsequent sales 1. When the taxpayer desires to apply his TCM in payment of 1-1/2% tax on subsequent sale, he shall file a written request therefor with the Chief, Collection Branch, attaching thereto the original copy of the TCM issued to him. Such request may be filed with the Collection Agent or Revenue District Officer who shall forward the request with the attachment to the Chief, Collection Branch. 2. The Chief, Collection Branch shall issue the corresponding Tax Debit Memo (TDM) (see sample copy, Annex B). The TDM shall serve as receipt or evidence of the tax payment and shall be serially numbered for control purposes. 3. The original copy of the TDM shall be issued to the taxpayer. In case there is still a balance after the initial TDM is issued, the TCM shall be returned to the taxpayer; if the TCM is fully applied as payment of the tax, the original of the TCM and the duplicate copy of the TDM issued shall be retained and attached to the papers previously received by the Collection Branch from the Legal Branch concerning the tax credit. Upon full utilization of the tax credit, the TCM with its supporting documents shall be sent to the Administrative Branch for file and for future reference. Regional Directors shall prepare the following: a. Annex - C Report of TCM issued to be submitted on or before the 10th day of the month for TCM issued the preceding month. aisa dc b. Annex - D Report of Application of TCM to be submitted on or before the 25th day of the month for tax credits applied during the month. The reports shall be prepared in three (3) copies, the original, duplicate and triplicate copies shall be sent to the Revenue Accounting Office, Collection Office and Revenue Region File Copy, respectively. Strict compliance with the provisions of this Order is hereby enjoined. (SGD.) RUBEN B. ANCHETA Acting Commissioner ANNEX A Tax Credit Memo (For Graduated Annual Fixed Tax Only) TCM NO. _________ * __________________, 19____ _______________________ _______________________ _______________________ _______________________: We have credited to you the amount of ____________________________________ (in words) (P___________________), as erroneously paid graduated annual fixed tax which you can apply in payment of the 1-1/2% sales tax on subsequent sales. Please present this original copy of your Tax Credit Memo when you actually apply the tax credit. Very truly yours, REGIONAL DIRECTOR * The TCM Number shall be preceded by the Revenue Region Number e.g. 4-A-1. ANNEX B Tax Debit Memo TDM NO. _________ __________________, 19____ _______________________ _______________________ _______________________ _______________________: We have debited you the amount of ____________________________________ (in words) (P___________________), from the tax credit indicated in TCM below, against your payment of the 1-1/2% tax on subsequent sales in the following amount: for the ______________________ (period covered) per your letter request dated _________________________. Very truly yours, REGIONAL DIRECTOR BY: Chief, Collection Branch Note: Original TCM No. __________ surrendered in the amount of P_____________________. TAX CREDIT P______________ TAX DEBIT _______________ BALANCE _______________ Prepared by: Checked by: ANNEX C Report of TCM Issued Pursuant to RMO No. _______ ANNEX D Report of TDMs Issued Pursuant to RMO No. _________