Procedures in Issuing and Processing of Tax Credit Memos for Taxes Withheld on Wages, Pursuant to Section 18 of Revenue Regulations V-8, as Amended by Revenue Regulations No. 2-76

February 3, 1976 REVENUE MEMORANDUM ORDER NO. 10-76 SUBJECT : Procedures in Issuing and Processing of Tax Credit Memos for Taxes Withheld on Wages, Pursuant to Section 18 of Revenue Regulations V-8, as Amended by Revenue Regulations No. 2-76 TO : All Internal Revenue Officers, Withholding Agents and others concerned The following procedures in issuing and processing of Tax Credit Memos for taxes withheld on wages, hereinafter to be known as TCM, are hereby prescribed for the guidance and compliance of all concerned. I. Printing of Tax Credit Memos; Pre-audit of Returns; Issuing and Processing of Tax Credit Memos . a. Printing of TCM . The TCM shall be printed and serially pre-numbered for control purposes (see attached sample form, Annex "A"). The TCM is an accountable form. b. Pre-audit of Returns . It shall be the duty of the Withholding Tax Division to pre-audit all income tax returns with claims for refunds of excess income taxes withheld on wages. It shall issue a TCM in favor of the taxpayer concerned when the refundable amount has been determined to be thirty pesos (P30.00) or less. All other returns shall be processed in accordance with existing procedures. c. Issuance of TCM . The TCM shall be signed for the Commissioner of Internal Revenue by the Revenue Service Chief (Assessment). It shall be issued in triplicate: Original for the employee entitled to the refund Duplicate for the employer-withholding agent Triplicate to be retained by the Withholding Tax Division and attached to the duplicate copy of the income tax return. cdta d. Processing of the TCM . Immediately after the TCM has been issued, the triplicate copy shall be attached to the original copy of the income tax return and transmitted to the Data Processing Center (DPC) in batches of 100. The DPC shall prepare an alphabetical list showing the names and addresses of taxpayers, assessment numbers of income tax returns, tax credit memo numbers and amounts thereof, two (2) copies of which shall be furnished the Withholding Tax Division. The DPC shall also cross-check the information on the said list with the annual reconciliation of quarterly returns (W-3). For accounting purposes, the DPC shall also furnish the Accounting Division and the Bureau Auditor a monthly summary of TCM issued. II. Authority of Withholding Agents; Remittance Procedures; and Duty of Collection Agents . a. Authority . The employer is authorized to pay the employee the amount stated in the TCM out of the remittable funds of income taxes withheld on wages, and the employee may demand payment within forty (40) days from date of presentation. At the option of the employee, the employer can apply or credit the employee with the amount of the TCM against the amount otherwise to be withheld as income tax on his wages. The TCM shall be valid only within one (1) year from date of issue. b. Remittance Procedure . In the calendar quarter in which the TCMs are used by the employer to remit or pay income taxes withheld on wages, the quarterly return (W-1) shall be accompanied by the Employer's Remittance Statement (see attached sample form, Annex "B") and the copies of TCMs surrendered and duly signed by the recipient employees. The remittable amount not covered by TCMs shall be paid in accordance with the existing remittance procedure. c. Duty of the Collection Agent or Authorized Revenue Officer to Receive Payment 1. Collection agent in Greater Manila Area and in other places where payment thru authorized agent banks is required After ascertaining the correctness of the Employer's Statement of Remittance accompanying the quarterly return (W-1), the Collection Agent or revenue issuing officer shall issue the corresponding Revenue Tax Receipt covering the cash payment. He shall acknowledge the receipt of the TCM submitted by annotating on both copies of quarterly return (W-1) the TCM numbers and affixing his signature thereon. If the space on the W-1 is not sufficient to accommodate the TCM numbers, a list of such TCM numbers and the amounts involved shall be prepared and attached to the original copy of the return (W-1) which shall also be signed by him. The quarterly return and the TCMs shall be transmitted direct to the Withholding Tax Division not later than ten (10) days from date of receipt. If after payment, the employer desires to submit the quarterly return, TCMs paid or credited directly to the Withholding Tax Division, the same acknowledgment shall be accomplished by the receiving officer therein. 2. Collection agent in other places The collection agent in other places shall also verify the Employer's Remittance Statement accompanying the quarterly return (W-1) and issue the corresponding official receipt. He is also required to acknowledge receipt of the TCMs submitted in the same manner and form described in paragraph 1 above. The quarterly return (W-1) together with the TCMs received shall likewise be transmitted direct to the Withholding Tax Division not later than ten (10) days from date of receipt. In all cases, all concerned shall verify the correctness of the quarterly return as to the ID number of the employer, official or revenue tax receipt numbers, dates and amounts paid for the quarter, signature of the authorized officer of the employer in order to avoid unnecessary delay in the auditing and processing of the said return. III. Effectivity . This Order shall take effect immediately. All concerned are hereby enjoined to observe strictly the provisions hereof. EFREN I. PLANA Acting Commissioner of Internal Revenue TAN 1456-040-3 Attn: Chief, Accountant Sir/Madam: We are furnishing you herewith copies of Revenue Regulations No. 2-76, providing for the refund or credit of excess taxes withheld on wages through the tax credit memo mechanism and Revenue Memorandum Order No. 10-76, which prescribes the procedures for the issuance, use and processing of such tax credit memo. Revenue Regulations No. 2-76 authorizes employers to pay the amount shown on the tax credit memo to their employees named therein out of the taxes withheld remittable to the Bureau of Internal Revenue, or credit such refundable amount against the income tax otherwise to be withheld from the employee concerned. This scheme was adopted to expedite refunds for the benefit of your employees. Your utmost cooperation will be highly appreciated in this regard. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN 1456-040-3 ANNEX "B" EMPLOYER'S REMITTANCE STATEMENT EMPLOYER: __________________________________ I. D. NO. _____________ For the Quarter Ending ____________________________, 19 ____________ Total Income Taxes Withheld Payable to BIR _________ P _______________ Less: (a) Tax Credit Memo paid * ________ P __________ (b) Tax Credit Memo credited * _____ __________ BALANCE PAYABLE _____________________________ P ________________ ______________________________ Chief Accountant/or Authorized Officer *TCM NO. *Amount Paid/Credited P P TOTAL ___________ ___________ P ___________ P ____________