Prescribing the Procedures on the Receipt, Transmittal and Processing of the Monthly Remittance Returns of Income Taxes Withheld (BIR Form 1743 W)

July 21, 1986 REVENUE MEMORANDUM ORDER NO. 23-86 SUBJECT : Prescribing the Procedures on the Receipt, Transmittal and Processing of the Monthly Remittance Returns of Income Taxes Withheld (BIR Form 1743 W) TO : All Internal Revenue Officers and Others Concerned I. Coverage This Order shall be applicable exclusively to remittances of taxes withheld on compensation, expanded and final income taxes using BIR Form 1743 W. II. Objectives A. Provide a more effective system in the receipt, transmittal and processing of BIR Form 1743 W. B. Develop a manual system parallel to the envisioned computerized system of promptly discovering withholding agents who failed to withhold and/or to remit taxes. C. Decentralize the processing and auditing of BIR Form 1743 W to the Withholding Tax Unit of Revenue District Offices. III. Receipt of Returns and Acceptance of Payments A. Place of filing returns and payment of tax Withholding tax returns shall be filed with and taxes withheld remitted to the Collection Agent (CA), Revenue District Officer (RD) or authorized Municipal Treasurer (MT) of the locality where the Withholding Agent (WA) has his legal residence or principal place of business or if the WA is a corporation, where its principal office is located. The same rule shall apply in the case of branch duly registered as WA. Filing of the return with the improper revenue district office shall be penalized with a surcharge equivalent to 25% of the amount due. B. Mandatory Acceptance of Taxes Withheld Remittance of taxes withheld shall be accepted even if the return is imperfect. An imperfect return refers to any of the following: 1. Return with unvalidated payment order (PO). It is one which does not reflect the Confirmation Receipt No. (CR) in the "Details of Payment" portion. 2. Return where any of the following information is not indicated: a) Name, address, withholding agent's identification number (ID No.), taxpayer account number (TAN). b) Period covered (month and year in which taxes were withheld). c) Any of the information required in the "Adjustment for Previous Month(s)" portion. d) All other informations required in the "Details of Payment" portion. e) Amount of income payment under Schedules 1(b) and 2 on which the rate of withholding is applied. 3. Return is unsigned. 4. Return is out-of-district or out-of-region. IV. Duties and Responsibilities A. Collection Agent 1. Receive 3 copies of BIR Form 1743 W whether taxable or exempt. In case where the ID No. shows that the return being filed is out-of-district or out-of-region, direct WA to file in the proper revenue district office otherwise impose 25% surcharge upon filing of the return. 2. Check the returns and segregate the out-of-district, out-of-region and all other imperfect returns. 3. Issue separately for compensation, expanded and final withholding tax a PO, in places where payment thru banks is prescribed, or Revenue Official Receipt (ROR), where there are no authorized agent banks, for respective amount of withheld taxes due per return. 4. Indicate on the return under "Details of Payment" the PO and CR Nos. or ROR No., date of payment and amount paid on all copies of the return upon presentation by the WA of the CR. 5. Retain original and triplicate copies of the return and release duplicate copy to WA. In no case shall the WA's copy be released without the CR and the required notations on the "Details of Payment" portion. 6. Mark all the imperfect returns with the appropriate code. Place the letter or as many letters, depending on the violations, on the upper right hand corner of both copies of the return. For this purpose, the following codes shall be used by both the CA and Withholding Tax Unit (WTU): CODE DESCRIPTION/VIOLATION A Non-withholding/underwithholding B Non-remittance/underremittance C Late filing D Late remittance E Out-of-district F Out-of-region Returns with unreleased duplicate copies (WA's copy) shall be considered imperfect by reason of unvalidated PO and all three (3) copies of the returns should be marked with "B" (non-remittance). 7. Batch the segregated returns in 50's. Returns marked "B", whether the only defect or one of several defects, should likewise be segregated from the other imperfect returns. 8. Accomplish separate transmittal sheet using BIR Form W-6 (Revised form attached as Annex 'A') in five (5) copies for each batch of 50 returns. Indicate the corresponding ID No. of each WA on the W-6. Add taxes indicated as remitted on all returns in each batch of W-6 classified into compensation, expanded and final taxes. 9. Transmit all batches of perfect and imperfect returns (original & triplicate copies) to the RDO not later than three (3) working days after last filing date. B. Revenue District Officers 1. Check regularly the availability of BIR Form 1743 W in every collection office. 2. Assign Revenue Examiners to assist CAs in the receipt and transmittal of returns, whenever necessary. 3. See to it that the returns are transmitted by the CAs not later than 3 days after the last filing date otherwise have the returns collected to avoid further delay. C. Withholding Tax Units 1. Acknowledge receipt of returns on proper space on all copies of W-6 and return to CA the 5th copy. 2. Check from each batch of returns transmitted by the CA if the ID Nos. of all the WAs in the batch have been reflected on the covering -6. Note on the 4 copies of the W-6 in case there are omissions. 3. Pre-audit returns. Indicate findings on the upper right hand corner of both original and triplicate copies of the returns, in accordance with the codes given. (Indicate as many letters as there are findings which require assessment and/or imposition of penalty.) The batches as transmitted by the CAs should not be disturbed except in the following cases: a. out-of-district or out-of-region returns inadvertently not segregated by the CA. b. returns which refer to a period (month) different from the period stated on the covering W-6. 4. Transmit out-of-district/out-of-region returns (original & triplicate copies) to the Withholding Tax Unit of the RDO/Regional Office concerned. 5. Detach the original from the triplicate of return. 6. Transmit directly to the Revenue Computer Center (RCC) the original copies of the returns with the 1st and 2nd copies of W-6, not later than the 5th day of the succeeding month in which the returns were filed. 7. Send, simultaneous with those for RCC, the 3rd and 4th copies of the W-6 to Withholding Tax Division (WTD) and Regional Director, respectively. 8. Give priority of action to those returns with unreleased duplicate copies (WA's copy) by sending immediately letter to the WA (see prescribed form marked Annex 'B') requiring the presentation of the CR corresponding to the PO issued. Release WA's copy after posting the required information on the duplicate and triplicate copies of the return, upon compliance. 9. Check totals made by CA on W-6 by kind of withholding tax, for reporting purposes. 10. Arrange the triplicate of the returns in numerical sequence and in multiples of 50's according to the WA's ID No. If there are 50 returns in the batch, then all the WAs have filed their returns. However, if the batch has less than 50 returns, the breaks in the numerical sequence represent the WAs who have not filed their returns. Prepare a list of these WA's without returns and send immediately a letter (see attached form marked Annex 'C'). 11. Post on ledger cards (Annex 'D') arranged according to the numerical sequence of the WA's ID No., the following date from the return filed: a) Kind of tax withheld b) Period Covered c) Date Paid d) CR No./ROR No. e) Amount 12. Prepare Assessment Notices based on the pre-audited returns for the collection of taxes including increments. 13. Prepare Monthly Withholding Tax Report (BIR Form W-7; see prescribed form marked Annex 'E') in three copies for submission not later than the 7th day of the succeeding month in which the returns were filed to the following: a) Regional Director - Original b) WTD - Duplicate c) WTU file copy - Triplicate D. Revenue Regional Director 1. Coordinate and monitor the prompt transmittal of returns to RCC. 2. Take immediate action on RDOs who fail to transmit their returns on time and/or to report delinquencies to the CIR thru the WTD. 3. See to it that WTR forms are readily available in every RDO. 4. Receive copies of BIR Forms W-6 and W-7 for purposes of effective supervision and control of the performance of RDOs in implementing the withholding tax system. E. Withholding Tax Division 1. Monitor and control the effectiveness of the withholding tax system on compensation, expanded and final taxes in the Regional Offices. F. Revenue Computer Center (RCC) 1. Acknowledge receipt of original copies of returns on proper space of W-6 and return the 2nd copy to the WTU of the RDO concerned. 2. Capture from the 1743 W the following information, by RDO: On Identity of WA a) Name b) ID No. c) TAN d) Address On Tax Payment a) Kind of withholding tax (compensation, expanded or final) b) Period Covered (month) c) Date Paid d) CR/ROR No. e) Amount 3. Match the data captured from the 1743 W against the CR/ROR of payment. 4. Match the filers of 1743 W in each RDO as against the updated list of registered WAs. 5. Generate the following reports for each RDO, sequentially arranged by ID No. of WA. 6. a) List of non-filers on compensation, expanded and final taxes. b) List of WA whose CR/ROR No. Indicated on the return did not match with the CR/ROR of payment on filers. c) List of withholding agents with the following violations: - Late filing - Late remittance - Non-remittance 7. Transmit the foregoing reports not later than 60 days from receipt of returns from the WTU, as follows: Original (together with all the processed returns) - RDO concerned Duplicate - WTD V. Repealing Clause All revenue memorandum orders inconsistent herewith are hereby repealed. acd VI. Effectivity This revenue memorandum order shall take effect on all taxes withheld beginning July 1, 1986. However, RCC's responsibility for the preparation and submission of all reports required herein is hereby deferred to July 1, 1987. (SGD.) BIENVENIDO A. TAN, JR. Commissioner