Prescribing the Procedures in the Receipt, Transmittal and Processing of Withholding Tax Returns

November 28, 1983 REVENUE MEMORANDUM ORDER NO. 41-83 SUBJECT : Prescribing the Procedures in the Receipt, Transmittal and Processing of Withholding Tax Returns TO : All Internal Revenue Officers and Others Concerned I. OBJECTIVE - To achieve an effective system in the receipt, transmittal and processing of withholding tax returns and other prescribed declarations. II. COVERAGE - The returns and declarations covered by this Order are: TYPE OF RETURN DUE DATES A. WITHHOLDING TAX ON COMPENSATION Monthly Remittance W-1A Not later than Statement Feb. 10, March 10 - 1st quarter May 10, June 10 - 2nd quarter Aug. 10, Sept. 10 - 3rd quarter Nov. 10, Dec. 10 - 4th quarter Quarterly Return W-1 Not later than April 25 - 1st qtr. July 25 - 2nd qtr. Oct. 25 - 3rd qtr. Jan. 25 - 4th qtr. Annual Return W-3 Not later than Jan. 31 of the following year B. EXPANDED WITHHOLDING TAX Monthly Remittance 1743A-1 Not later than Statement Feb. 20, March 20 - 1st quarter May 20, June 20 - 2nd quarter Aug. 20, Sept. 20 - 3rd quarter Nov. 20, Dec. 20 - 4th quarter Quarterly Return 1743A Not later than April 30 - 1st qtr. July 31 - 2nd qtr. Oct. 31 - 3rd qtr. Jan. 31 - 4th qtr. Annual Return 1743-B Not later than Mar. 1 of the following year C. FINAL WITHHOLDING TAX Quarterly Return 1743C Not later than 1745 April 25 - 1st qtr. July 25 - 2nd qtr. Oct. 25 - 3rd qtr. Jan. 25 - 4th qtr. Annual Return 1743D Not later than Jan. 31 1745A of the following year D. WITHHOLDING TAX ON GOV'T. MONEY PAYMENTS Monthly Return 7.50A Not later than the 10th day of the following month. E. OTHER DECLARATIONS Employer's Withholding W-4 For employees, 5 days Exemption Certificate from commencement and Employer's Compen- of employment/10 sation Payment Certificate days from change of exemptions. For employers, within 30 days from receipt. Application for W-5 10 days from becoming Registration as Withholding withholding agent. Agent 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 Revenue District Officer (RDO) or Collection Agent (CA) or Authorized Municipal Treasurer (AMT) of locality where 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 a branch duly registered as WA. cd i B. Mandatory Acceptance of Taxes Withheld . - Remittance of taxes withheld shall be accepted even if the return is "imperfect" or the amount to be remitted is less than the amount declared on the return or less than the amount due upon application of the correct rate of tax. An "imperfect return" refers to any of the following - * return on which the identification number and/or tax account number of the WA is not indicated; * wrong type of return for the tax remitted. e.g., when W-1 is being used for expanded withholding tax; * annual return (W-3, 1743B and 1743D) without the attachment of the alpha list of employees or list of income recipients with corresponding TAN of each employee or payee and/or if any of the payments indicated are incomplete as to amount, date of payment and confirmation receipt (CR) or revenue official receipt (ROR) number; * monthly 7.50A return without list of payees; * unsigned return. IV. DUTIES AND RESPONSIBILITIES - A. Collection Agent. - 1. Receives all kinds of returns (whether taxable or exempt) and other declarations and stamps date of receipt on the proper space on all 3 copies. 2. Checks if the return is properly accomplished paying particular attention to: * name, address taxpayer account number and identification number of the WA, and TAN of employees or payees if an annual return (W-3, 1743B and 1743D) or monthly 7.50A return; * month or quarter and year for which the return is filed; and * signature of the withholding agent or his authorized office. 3. Segregates imperfect returns. 4. Issues Payment Order (PO) for the amount declared on the return in places where payment thru banks is prescribed, or Revenue Official Receipt where there are no authorized agent banks for taxable returns. Releases immediately to WA his copy of exempt return. cd 5. Indicates the amount paid, date of payment, PO number and Confirmation Receipt Number or ROR number on all copies of the return. DO NOT RELEASE the WA's copy of the return until after the confirmation receipt is presented. 6. Retains original and triplicate of the return and releases duplicate to the WA after the CR has been presented by the WA and the required information of amount paid, date and number of the CR or ROR has been duly indicated on the return. 7. Sorts and batches by type of return in 50's or less. Accomplishes separate transmittal sheet (W-6) in five (5) copies for each batch of return. INDICATES THE CORRESPONDING ID NO. OF EACH WA ON THE W-6. IMPERFECT RETURNS SHOULD BE BATCHED SEPARATELY. If the return is imperfect because the ID no. of WA is not indicated, use the name of WA in transmitting the return. 8. Segregates out-of-city or municipality and out-of-district returns, batches and transmits same under separate W-6 to Revenue District Officer. 9. Totals taxes indicated as remitted on all returns in each batch. 10. Numbers batches of WTRs consecutively per type of return for the entire taxable year. For example, if there are 4 batches of returns of W-1 for 4 quarters of 1983, the number will be from W-1-01-83 to W-1-012-83. A logbook should be maintained for this purpose, allocating appropriate pages for each type of return. 11. Transmits all batches of WTRs (both original and triplicate copies) to RDO not later than 3 working days after the last filing date, whether perfect or imperfect. 12. Requires the attachment of a copy of the imperfect return to the perfected return being refiled after the 3-day period. B. Revenue District Officer. - 1. Checks regularly the availability of returns in every Collection Office, particularly the type of return needed for a certain filing date. 2. Assigns Revenue Examiners to assist Collection Agents, in the receipt and transmittal of returns on a need basis. 3. Sees to it that the returns are transmitted by the Collection Agent not later than 3 days after the last filing date. To avoid delay, the return should be personally collected. 4. Acknowledges receipt of returns on proper space on all copies of W-6 and gives back 5th copy to CA. 5. Counts and determines if the number of returns transmitted by the Collection Agents corresponds to the ID numbers of WA stated on the transmittal sheet. Makes the proper notation in case of discrepancy on the 4 copies of W-6. casia 6. Transmits the returns (both original and triplicate copies) using 1st, 2nd and 3rd of W-6 directly to the WTD not later than 5 working days from the date of receipt of the returns from Collection Agents. Do not disturb transmittal by CA except to correct an error or note down discrepancy in the number of returns even in the case of imperfect returns. 7. Totals taxes collected under all W-6 by type of withholding tax for reporting purposes. 8. Sends 4th copy of the covering W-6 to Regional Director not later than 5 days from date of receipt. 9. Processes W-4. preaudits W-4 - upon receipt and indicates total exemption on the upper left hand corner; numbers consecutively preaudited certificates; communicates to employer, copy furnished employee, any changes or corrections in exemptions; transmits original to WTD not later than thirty (30) days from date of receipt. 10. Reports the following to Regional Director not later than tenth (10th) day of the second month after the end of each quarter. the number of returns transmitted to the WTD per type of returns; number of newly registered withholding agents; amount of collections per type of withholding tax; number of preaudited and transmitted W-4s. 11. Processes W-5 and assigns to applicant an ID number, which will correspond to his district and region, and transmits the original to WTD not later than 10 days from date of registration. For example: 23-4A-0001 for W-A where principal place of business is in Binondo, Manila. If the applicant is a transferee from another district, the application shall be approved only upon presentation of a letter from the former district that its registration has already been cancelled. C. Revenue Regional Director . - 1. Coordinates and monitors the prompt transmittal of returns to the Withholding Tax Division. 2. Takes immediate action on cases of non-transmittal by RDO's and reports delinquencies to the Commissioner through WTD. 3. Sees to it that WTR forms are readily available in every RDO. 4. Maintains control record of W-6s received from RDOs. 5. Reports collection per type of withholding tax and per revenue district office to the Commissioner thru WTD not later than the 20th day of the second month after each quarter. D. Withholding Tax Division . - 1. Acknowledges receipt of returns on proper space of W-6 and sends back 3rd copy to RDO. 2. Preaudits monthly and quarterly returns as to - monthly and quarterly tax due against tax remittances. due date against date of remittance. correctness of rate of tax applied. 3. Preaudits annual returns as to - completeness of return - Name, TAN and ID of WA total tax due against total tax remittances. attachment of alpha list of employees or list income recipients. TAN of payees or employees. filing date against date return was filed. 4. Transmits returns (monthly, quarterly and annual) to RISSI immediately but not later than twenty (20) days from receipt of WTRs from field offices using 1st and 2nd copies of W-6 as transmittal documents. 5. Issues assessment notices for the collection of - underremitted and/or unremitted tax withheld plus ad valorem penalties. ad valorem penalties for non-filing and late filing of returns. Credits appropriate field offices with assessment collection by preparing separate Form 40's for each revenue region. 6. Applies sanctions on WAs who file returns out of city or municipality or out of district in violation of Sections 54 and 93, NIRC. cd i 7. Coordinates the follow-up of cases referred to field offices for action. 8. Follows up transmittal of WTRs. 9. Forwards triplicate of WTR to RDO. 10. Distributes computer reports received from RISSI to users. E. Revenue Information System Services, Inc. (RISSI) . - 1. Acknowledges receipt of returns on proper space of W-6 and sends back duplicate copy to WTD. 2. Prepares the following lists per type of withholding tax specifying WA's name, address, ID no. by RDO: Frequencies Monthly Quarterly Annually 1. Late WTRs / / / 2. Non-remittance / / / 3. Underremittance / / / 4. Late remittance / / / 5. Imperfect returns / / / 6. Non-filer / / / The above listings should be submitted to WTD, with the corresponding WTRs, on the following dates: Monthly List - within 30 days - from dates of Quarterly List - within 45 days - receipt of returns Annual List - within 90 days - from the WTD 3. Processes other declarations - A Captures from W-4: names of qualified dependent children and dates of birth. names and dates of birth of qualified dependents for heads of family. B determines qualified dependents for the taxable year. C Matches exemptions of employees claimed in ITR with W-4. D Matches tax credit claimed in ITR of employees and income recipients against certificates of taxes withheld (W-2 and 1743) and against credits in alpha list or annual list. E Consolidates compensation income of husband and wife who filed separate returns. 4. Provides an updated master list of WA per RDO on a quarterly basis. V. EFFECTIVITY . - This Order shall take effect January 2, 1984 and repeals or amends Orders or portions thereof inconsistent therewith. RUBEN B. ANCHETA Acting Commissioner