Procedures in the Receipt, Transmittal and Processing of Returns Covering Withholding Taxes Under Section 53 of the National Internal Revenue Code

1980 REVENUE MEMORANDUM ORDER NO. 28-80 SUBJECT : Procedures in the Receipt, Transmittal and Processing of Returns Covering Withholding Taxes Under Section 53 of the National Internal Revenue Code TO : All Internal Revenue Officers and Others Concerned In order to facilitate the receipt and transmittal of withholding tax returns required to be filed under Section 54, NIRC; to avoid unnecessary delays in processing, and to define the duties and responsibilities of the officers involved therein, the following procedures are hereby promulgated: A. RETURNS . The returns covered in this Order are the following: Kind Forms Due date 1. Quarterly Return BIR Form No. 1743A On or before the last day of the month following the close of the calendar quarter. BIR Form No. 1743C On or before the 25th day of the month following the close of the calendar quarter. 2. Annual Return BIR Form No. 1743B On or before March 1 of the following year. BIR Form No. 1743D On or before Jan. 31 of the following year. 3. Monthly remittance statement (See Annex B) The monthly remittance is required of every withholding agent when the aggregate amount of taxes withheld during any of the first two months of the quarter is five hundred pesos (P500.00) or more. Monthly remittance shall be made within 20 days after the end of such month, except the taxes withheld during the 3rd month of the quarter which may be remitted not later than the last day of the month after the close of the quarter. The remittance statement shall be submitted in duplicate. The monthly remittance requirement is not applicable to final withholding taxes. B. Receipt and Transmittal of Returns . 1. Collection Agent The withholding tax returns shall be filed with and received by the Revenue Collection Agent in the city or municipality where the place of business or office of the withholding agent is located. (a) Receipt and transmittal . In receiving and transmitting returns, the following steps shall be observed in order to insure the completeness and transmittal of returns on time, which are vital to the processing thereof. (1) Quarterly Returns (BIR Form No . 1743A & 1743C) a) Check if the blanks are properly filled-up paying particular attention to: i. Name, address, and taxpayer account number of withholding agent; ii. Quarter ending for which the return is filed; iii. Total amount paid for the quarter and the corresponding confirmation receipt, or revenue official receipt number, date and amount paid, and if the return shows monthly remittances, the Confirmation Receipt Number, date of payment and amount paid for each month; and iv. That the return is signed by or for the withholding agent. b) Stamp clearly the date of receipt in the proper space on both original, duplicate and triplicate copies of the return. c) Retain original and triplicate copies and give the duplicate to the withholding agent. d) Transmit both the original and triplicate returns received (perfect and imperfect) to the Revenue District Officer which has jurisdiction over your office not later than five (5) working days after the last day of filing. The transmittal letter shall be accompanied by an alphabetical list of the returns. (2) Annual Returns (BIR Form No . 1743B & 1743D) a) Check the completeness of the return paying particular attention to i. Name, address and taxpayer account number of the withholding agent; ii. The year for which the return is filed; iii. The signature of the payor; and iv. That columns 1, 2, 3, 4 & 5 of Sections A & B therefore are properly filled-up by the withholding agent. b) Stamp clearly the date of receipt in the proper space on both original, duplicate and triplicate copies of the return; c) Retain original and duplicate copies of BIR Form No. 1743B and 1743D and return the triplicate copy to the withholding agent; and d) Transmit both original and duplicate returns received (perfect and imperfect) to the Revenue District Officer not later than five (5) working days after the last day of filing. The transmittal shall be covered by an alphabetical list by name of withholding agent, and showing the year of return. 2. Revenue District Officer As the direct supervisor of the Collection Agents and Cash Clerks in his district, the Revenue District Officer shall keep a close watch on the receipt and transmittal of the returns. For this purpose, he is hereby required to: (a) Keep separate file covering receipt and transmittal of quarterly (BIR Form No. 1743A and 1743C) and annual returns (BIR Form No. 1743B and 1743D). These files shall be made available for inspection at any time; (b) Establish a system of call-ups to the Collection Agents and Cash Clerks in his District, specifically to develop transmittal of returns on time; and (c) Supervise closely the processing of returns by his personnel as follows: A. Quarterly returns (BIR Form No . 1743A and 1743C) 1. Check completeness of return. 2. Audit the quarterly returns as to: a) Correctness of rate of tax for each payment; b) Tax due against tax paid; and c) Date of payment. In case of late payment, compute ad valorem penalties. 3. Sort and segregate the returns into perfect and imperfect categories. Imperfect returns are those which lack any of the information referred to in items i, ii, iii, and iv of B(a) (1) (a) hereof. 4. Post in the corresponding withholding agent's record of remittances and annual returns the following data based on audited perfect quarterly returns (please see Annex "A"). cdt i. Amount of taxes withheld quarterly; and ii. Amount assessed, if any, under Column "Remarks". 5. Take immediate action on imperfect quarterly returns by informing and requesting the withholding agent concerned to supply the necessary information or adjustment (Suggested Form Letters are enclosed). 6. Transmit perfect returns and those which have been duly cured of defects or omissions to the Chief, Withholding Tax Division not later than the 30th day of the month following the last filing date of the quarters. In case the audit will result in a deficiency assessment or demand for the payment of a penalty, the assessment should be entered in Form 40, and such fact should be noted on the return to avoid duplication of action. B. Annual Returns (BIR Form No . 1743B and D) . 1. Check the completeness of the return. 2. Audit the annual returns as to: a) Correctness of tax rate per kind of payment; b) Correctness of total quarterly remittances against tax withheld for the year; and c) Dates of remittances against due dates. 3. Sort and segregate the returns into perfect and imperfect categories. Imperfect returns are those which lack any of the information referred to in items i, ii, iii, and iv of B(2) (a) hereof, or where the total of Section A does not tally with the total of Section B of the return. 4. Post in the corresponding withholding agent's index card the total amount of taxes withheld, remitted based on audited perfect and perfected annual returns. 5. Transmit posted perfect annual returns to the Chief, Withholding Tax Division within five (5) working days after receipt from the Revenue Collection Agent. The transmittal shall be covered by an alphabetical list by withholding agent and showing the year of returns. 6. Take appropriate action on the imperfect returns by informing and requesting the withholding agent concerned to supply the necessary information or adjust or correct discrepancies found in audit of the return. (Suggested Form Letters are enclosed). 7. Transmit the annual returns which have been duly cured of the omissions or discrepancies to the Chief, Withholding Tax Division covered by an alphabetical list of the returns not later than Feb. 28 for final withholding tax (1743D) and March 31 for creditable withholding tax (1743B). 3. Regional Director In general, the Regional Director shall see to it that the instructions in this Revenue Memorandum Order are properly carried out by his Revenue District Officers, Collection Agents and Cash Clerks. The value of the withholding tax system as a collection method and the efficacy of Section 30(m) of the Tax Code, will greatly depend upon the efficiency in bringing in the returns for processing. cd He should establish a monitoring system to enable him to know if perfect and perfected quarterly and annual returns are transmitted on time to the Withholding Tax Division, whether or not the prescribed action is being taken on imperfect returns, and the extent of backlog of returns, if any. 4. Withholding Tax Division (1) The Withholding Tax Division shall process the returns as follows: a) Review the audit of quarterly and annual returns. b) Post in the record of remittances and annual return's card, the amount of taxes withheld and paid quarterly and the total amount of tax withheld and remitted. c) Take appropriate action on imperfect returns. d) Transmit to the Revenue Service Chief (Data Processing) posted audited perfect annual returns for processing. 5. Data Processing Center The Data Processing Center shall: a) Match the remittances per return with the official receipts. b) Prepare the following master lists: (1) Master list per revenue district offices in two (2) copies showing the following information (1743B): (a) Name, address and taxpayer account number of payee; (b) Name and address of withholding agent; (c) Nature of income; and (d) Tax for year covered. (2) Similar master list as in No. 1, showing the same information abstracted from 1743D. (3) Master list of taxes withheld, remitted and credited which shall show the following (1743A): a) Name and address of withholding agent; b) Remittances by quarter based on receipts; c) Total taxes withheld credited per BIR Form 1743B lists; and d) Discrepancy between (b) and (c). (4) Similar master list as in No. 3, showing the same information abstracted from 1743D. These Master lists shall be completed and transmitted to the Withholding Tax Division and the Revenue District Offices not later than July 31 of each taxable year. Effectivity. This Order shall take effect immediately. (SGD.) RUBEN B. ANCHETA Actg . Commissioner of Internal Revenue ANNEX A-1 RECORD OF INVESTIGATIONS For the Month of _______________ REVENUE EXAMINER ________________ CODE NO. ___________ REVENUE DISTRICT NO. ____ REVENUE REGION NO. _____ INCOME TAX Attested: CERTIFIED CORRECT: ________________________ __________________________ Group Supervisor Revenue Examiner ________________________ Revenue District Officer * Percentage Ratio of Deficiency Tax to Tax Due Per Return ANNEX A-2 RECORD OF INVESTIGATIONS For the Month of _______________ REVENUE EXAMINER ________________ CODE NO. ___________ REVENUE DISTRICT NO. ____ REVENUE REGION NO. _____ BUSINESS TAX Attested: CERTIFIED CORRECT: ________________________ __________________________ Group Supervisor Revenue Examiner ________________________ Revenue District Officer * Percentage Ratio of Deficiency Tax to Tax Due Per Return ANNEX A-3 RECORD OF INVESTIGATIONS For the Month of _______________ REVENUE EXAMINER ________________ CODE NO. ___________ REVENUE DISTRICT NO. ____ REVENUE REGION NO. _____ TRANSFER TAX Attested: CERTIFIED CORRECT: ________________________ __________________________ Group Supervisor Revenue Examiner ________________________ Revenue District Officer * Percentage Ratio of Deficiency Tax to Tax Due Per Return ANNEX B MONTHLY REMITTANCE STATEMENT OF CREDITABLE INCOME TAX WITHHELD AT SOURCE _____________________________ ___________________________ NAME OF WITHHOLDING AGENT TAN OF WITHHOLDING AGENT _____________________________ ADDRESS : TAX : AMOUNT OF : INCOME PAYMENT : : INCOME SUBJECT : AMOUNT OF : RATE : TO TAX : TAX WITHHELD _______________ :_________ : _____________ : ___________ _______________ :_________ : _____________ : ___________ _______________ :_________ : _____________ : ___________ _______________ :_________ : _____________ : ___________ _______________ :_________ : _____________ : ___________ TOTAL AMOUNT DUE : =============================================================== _____________________________________ WITHHOLDING AGENT/REPRESENTATIVE _____________________________ NAME OF WITHHOLDING AGENT _________________________ ADDRESS ________________ TAN ________________ I.O. WITHHOLDING TAX AT SOURCE RECORD OF REMITTANCES AND ANNUAL RETURN ------------------------------------ YEAR : 1ST QTR. : 2ND QTR. : 3RD QTR. : 4TH QTR. :FINAL RETURN ------------------------------------ ____________ :________ : __________ :_________ : ________ : ____________ REMARKS :________ : __________ :_________ : ________ : ____________ :________ : __________ :_________ : ________ : ____________ REMARKS :________ : __________ :_________ : ________ : ____________ :________ : __________ :_________ : ________ : ____________ REMARKS :________ : __________ :_________ : ________ : ____________ :________ : __________ :_________ : ________ : ____________ REMARKS :________ : __________ :_________ : ________ : ____________ :________ : __________ :_________ : ________ : ____________ REMARKS :________ : __________ :_________ : ________ : ____________ :________ : __________ :_________ : ________ : ____________ WITHHOLDING TAX DIVISION Withholding Tax at Source Section Office Computation Sheet TAN _____________ ____________________ ____________________ ____________________ ___________ Quarter For the month of _______________ : Basic Tax P __________ 5% Surcharge __________ 14% Interest per annum __________ Compromise __________ TOTAL P __________ For the month of _______________ : Basic Tax P __________ 5% Surcharge __________ 14% Interest per annum __________ Compromise __________ TOTAL P __________ For the month of ____________________ : Basic Tax P __________ 5% Surcharge __________ 14% Interest per annum __________ Compromise __________ TOTAL P __________ S u m m a r y Basic Tax P __________ Surcharge 5% P __________ 25% P __________ Interest P __________ Compromise P __________ GRAND TOTAL P __________ Audited and Computed By: ______________ Date: ______________ REPUBLIKA NG PILIPINAS Kagawaran ng Pananalapi KAWANIHAN NG RENTAS INTERNAS Lungsod ng Quezon Sir/Madam: Records show that you failed to state on your BIR Form 1743B the Tax Account Numbers of _____________________ payees from whom taxes were withheld by you in 19_____, in violation of Section 4(c) of Revenue Regulations 13-78, a s supplemented by Revenue Regulations 6-7 9, which is penalized under Section 337 of the Tax Code, as amended. casia In view thereof, it is suggested that you pay the amount of P___________ as compromise payment in extra-judicial settlement not later than ________________________ 19____ in order that this case may be closed. Please present the attached assessment notice at the time of payment to our Revenue Collection Agent assigned in your locality. Very truly yours, Acting Commissioner of Internal Revenue By: MANUEL M. SAN DIEGO Chief, Withholding Tax Division TAN: 1516-149-0 Republic of the Philippines Ministry of Finance BUREAU OF INTERNAL REVENUE Quezon City In reply, refer to Code No. _____ Gentlemen/Sir: Attention: _____________ Please be informed that your BIR Form _________ for __________ cannot be processed because of discrepancies, incomplete information, and/or lack of prescribed attachments. Please refer to box marked x: [ ] 1. The total in Column 3, Section A does not tally with the amount shown in Column 5, Section B; [ ] 2. Record of remittances (Section A) of income tax withheld on income payments does not show the following information: cd i [ ] (a) RTR/ROR No. of remittances; [ ] (b) Date of remittances; [ ] (c) Monthly breakdown of taxes withheld; [ ] (d) Breakdown of remittances if said remittances include other taxes withheld such as those on salaries, wages, bonuses, etc.; [ ] 3. The list of payees and income payments (Section B) does not show the following information: [ ] (a) Name of payee/payees; [ ] (b) Taxpayer account number (TAN) of each payee; [ ] (c) Nature of payment; [ ] (d) Gross amount received by each payee during the year; [ ] (e) Total taxes withheld from each payee during the year; [ ] 4. Tax is underwithheld on income payments made to the following payees: [ ] 5. Form submitted is not signed and certified by a responsible official; [ ] 6. Your taxpayer account number (TAN) is not indicated in the form submitted; and [ ] 7. Others. It is requested that the required information, explanation, and/or documents be furnished this Office within ten (10) days from receipt hereof. Otherwise, we may assess you ad valorem and penal liabilities for unexplained discrepancies. Very truly yours, Acting Commissioner of Internal Revenue TAN: By: BERNARDO A. FRIANEZA Asst. Chief, Withholding Tax Division TAN: ___O-C1329-A-9 REPUBLIKA NG PILIPINAS Kagawaran ng Pananalapi KAWANIHAN NG RENTAS INTERNAS Lungsod ng Quezon ___________________ ___________________ ___________________ Sir/Madam: Records show that your quarterly-annual return (BIR Form 1743A/1743B) for the quarter/year ________________ was filed on ___________________, 19____ only, in violation of Section 3/4, and penalized under Section 6, of Revenue Regulations 13-78, as supplemented by Revenue Regulations 6-79. cd i In view thereof, it is suggested that you pay the amount of _________________________ as compromise payment in extra-judicial settlement thereof not later than _____________, 19__________ in order that this case may be closed. Please present the attached assessment notice at the time of payment to our Revenue Collection Agent assigned in your locality. Very truly yours, Acting Commissioner of Internal Revenue By: VICTOR A. DEOFERIO, JR. Revenue Service Chief (Assessment) TAN: D1616-B0731-A-9 REPUBLIKA NG PILIPINAS Kagawaran ng Pananalapi KAWANIHAN NG RENTAS INTERNAS Lungsod ng Quezon ___________________ ___________________ ___________________ Gentlemen/Sir: The audit of your return (BIR Form _______ ) for the quarter ending _____________________, shows that the total taxes withheld and paid is P___________, or an average amount of P500.00 a month. Under Section 3, Revenue Regulations 13-78, as supplemented by Revenue Regulations 6-79, if the taxes withheld during the month amount to P500.00 or more, the same shall be paid within 20 days after the end of such month except taxes withheld for the last month of the quarter which, regardless of amount, may be paid on or before the last day of the month following the end of the quarter. In view thereof, please submit a breakdown of taxes withheld for the 1st and 2nd months of the quarter in order that we can determine if the prescribed monthly remittance has been made. cdasia Very truly yours, Acting Commissioner of Internal Revenue TAN: By: MANUEL M. SAN DIEGO Chief, Withholding Tax Division TAN: 1516-149-0 In reply, please be quote: