Implementing P.D. No. 1740 and Presidential Directives Dated May 18 and July 20, 1981

August 11, 1981 REVENUE REGULATIONS NO. 17-81 SUBJECT : Presi dential Decree No. 17 40 Dated September 17, 1980, Presidential Directives Dated May 18 and July 20, 1981 Providing Tax Amnesty for Certain Violations of the Income Tax Law and the Prohibition to Investigate upon Voluntary Disclosure of Undeclared Income, Subject to Certain Conditions TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Purpose . These Regulations are hereby promulgated to implement the provisions of Presidential Decree No. 1740, Presidential Directives dated May 18 and July 20, 1981, condoning penalties for violations of the Income Tax Law and prohibiting investigation thereof. SECTION 2 . Coverage . Who may avail of the benefits under the provisions of the Decree . The following individuals who, for any or all of the taxable years 1974-1979, have failed to file a return or who filed erroneous, false or fraudulent return, may avail themselves of the benefits under the provisions of Presidential Decree No. 1740, by filing a return or amended return where one had been filed and accurately declaring therein his true and correct taxable income and pay the tax due thereon, less the income taxes already paid or assessed prior to September 17, 1980: aisa dc (a) resident citizens; (b) nonresident citizens; (c) resident aliens; and (d) estates or trusts. SECTION 3 . Cases not Covered by the Decree . The following cases involving violations of any of the provisions of Title II of the National Internal Revenue Code or noncompliance of any of the requirements thereof by any of the individuals mentioned in the preceding section are not covered by the decree: (a) Criminal cases already filed in Court or with the Fiscal's Office on or before September 17, 1980; (b) Income tax cases involving civil liability which are the subject of a pending criminal action in the Fiscal's Office or the Court prior to September 17, 1980; (c) Withholding tax at source liabilities provided for under Sections 53, 54 and Chapter XI of Title II of the National Internal Revenue Code; and (d) Deficiency income taxes assessed on or before September 17, 1980. For this purpose, the date of the assessment notice shall be deemed to be the date of assessment of the deficiency tax. SECTION 4 . Computation of Tax . The amount of amnesty tax to be paid pursuant to the Decree and the Presidential Directive dated July 20, 1981, shall be determined in the following manner: (a) No Income Tax Filed : In the case of a taxpayer who failed to file a return, the amnesty tax shall be computed on the correct undeclared taxable net income in accordance with the rates prescribed under Section 21 of the Tax Code, or other pertinent Sections of the said Code. The said tax must not, however, be less than the percentages provided hereunder of the undeclared income and/or overclaimed costs deductions or exemptions and in no case less than P1,000.00. cdt Not exceeding P250,000.00 15% Exceeding P250,000.00 but not exceeding P500,000.00 20% Exceeding P500,000.00 but not exceeding P750,000.00 25% Exceeding P750,000.00 but not exceeding P1,000,000.00 30% ILLUSTRATION: (1) Undeclared Taxable Net Income P10,000.00 Tax Due (Sec. 21) P880.00 15% Amnesty Tax on P10,000.00 P1,500.00 Taxpayer has to pay P1,500.00 which is 15% of P10,000, since it is higher than the tax due under Sec. 21. (2) Undeclared Taxable Net Income P40,000.00 Tax Due (Sec. 21) P9,480.00 15% Amnesty Tax on P40,000.00 P6,000.00 Taxpayer has to pay P9,480.00, since it is higher than P6,000.00 which is the 15% tax on P40,000.00. (b) Income Tax Return Filed : In the case of a taxpayer who amends his return previously filed, the balance of the tax after deducting the following taxes, exclusive of penalties should be paid: (1) Amount of income tax due per original return; (2) Deficiency income tax with assessment notice issued on or before September 17, 1980 whether paid or still unpaid. In no case shall the amount of the balance be less than the amount determined as payable under paragraph (a) hereof. ILLUSTRATION : Net Taxable Income (Per ITR Filed) P10,000.00 Net Taxable Income (Per Amnesty Return Filed) P15,000.00 Tax Due (Sec. 21) P 1,760.00 Less: Previous Payment (Per ITR Filed) 880.00 Balance P 880.00 15% Tax on P5,000.00 (undeclared income) P 750.00 However, pursuant to Presidential Directive dated July 20, 1981, taxpayer has to pay the minimum amount of P1,000.00 and not the balance of P880.00 to be entitled to the immunity. (c) Income Tax Return and Amnesty Returns Filed Prior to July 20, 1981 : A taxpayer who has already filed an amnesty tax return, either as an original return or as an amended return and paid the tax not in accordance with paragraphs (a) or (b) of this Section, shall file an amended amnesty tax return in order to be entitled to the immunities provided for under Section 7 of these Regulations. ILLUSTRATION : Net Taxable Income (Per ITR) P10,000.00 Tax Due (Sec. 21) P 880.00 Net Taxable Income Per Amnesty Return Filed before July 20, 1981 P15,000.00 Tax Due (Sec. 21) P 1,760.00 Less: 1st Payment (Per ITR) P 880.00 P 880.00 Total P1,760.00 Net Taxable Income Per Amended Amnesty Return P20,000.00 Tax Due (Sec. 21) P 2,880.00 Less: 1st & 2nd Payment P 1,760.00 Balance of Tax Due P1,120.00 ======= 15% Tax on P10,000.00 (Total undeclared on 1st and 2nd Amnesty Return) P1,500.00 Taxpayer has to pay P1,120.00 considering that the total amnesty payments (P880.00 + P1,120.00) exceeds the 15% amnesty tax of P1,500.00. SECTION 5 . Filing of Return . (a) Form and manner of filing the return . (1) A taxpayer who failed to file a return shall file his declaration in the regular income tax return: BIR Form No. 1701 or 1701A in the case of a resident citizen, resident alien and estate or trust; or BIR Form No. 1701C in the case of a non-resident citizen, for each of the years for which no return had been filed. (2) Where a return had previously been filed, the taxpayers mentioned in Sec. 2 hereof, shall file an amended return (BIR Form No. 1745G) stating therein their undeclared income and overclaimed deductions and/or exemptions, except that in the case of a non-resident citizen, he shall file his declaration under BIR Form No. 1745G-1; (3) An individual who derived capital gains from sale or other disposition of real property on or after September 7, 1979, but failed to report the same, shall file his declaration in the regular capital gains tax return (BIR Form No. 1701E). Where a return had previously been filed, the taxpayer shall file an amended return (BIR Form No. 1745G-I) stating therein his understated selling price and/or overclaimed costs or deductions. (b) When and where to file the return . The return or the amended return in the prescribed form required under these Regulations shall be filed in duplicate on or before August 31, 1981 with the Revenue District Officer, Collection Agent or duly authorized Treasurer of the Municipality where the taxpayer has his legal residence or principal place of business, or in the Office of the Commissioner of Internal Revenue if the taxpayer has no legal residence or place of business in the Philippines. (c) Amnesty returns, whether original or amended returns must be filed simultaneously with the statement of assets, liabilities and networth required by Presidential Decree No. 1740. No amended or original return shall be accepted without the required statement of assets, liabilities and networth. This requirement does not apply to the following: cd i (1) An individual whose assets and/or properties is less than P50,000.00 as of December 31, 1979; (2) Public officers or government employees who are required to file statement of assets, liabilities and networth under Republic Act No. 3019 otherwise known as the "Anti-Graft and Corrupt Practices Act" as amended by Presidential Decree Nos. 677 and 1288. SECTION 6 . Time for Payment of Tax . The tax due as disclosed by the taxpayer in his return/returns must be paid at the time of the filing thereof. If the total tax due exceeds P50,000.00, the same shall be paid in accordance with the following schedule: (a) If the total amount due exceeds P50,000.00 but does not exceed P100,000.00, the tax may be paid in two equal installments, the first installment to be paid at the time of the filing of the return and the second installment on or before November 2, 1981. (b) If the total amount due exceeds P100,000.00 but does not exceed P300,000.00, the tax may be paid in three equal installments, as follows: (1) The first installment shall be paid at the time of filing of the return; (2) The second installment shall be paid on or before November 2, 1981; and (3) The third installment shall be paid on or before February 15, 1982. (c) In meritorious cases where the total amount due exceeds P300,000.00, the Commissioner of Internal Revenue or the Revenue Regional Director may, upon proper application, allow the taxpayer to pay the P300,000,000 in accordance with the immediately preceding schedule and the amount in excess thereof in equal monthly installments beginning May 16, 1982, up to but not later than August 15, 1982. SECTION 7 . Immunity . Any individual who voluntarily files an amnesty return under these Regulations and pays the income tax due thereon shall be immune from the penalties, civil or criminal, imposed under the National Internal Revenue Code, arising from failure to file the return and pay the correct income tax corresponding to the taxable years for which an amnesty return or amended amnesty return was filed for any of the taxable years 1974 to 1979. Likewise, the Commissioner of Internal Revenue or his duly authorized representative is prohibited from conducting an investigation on the amnesty returns filed, except upon lawful order of the Court. These immunities, however, shall only apply if the amnesty tax paid shall not be less than the tax percentages provided for under Section 4 hereof. SECTION 8 . Penalty for Filing False or Fraudulent Return, Amended Return or Amended Amnesty Return . Any individual who is subsequently found to have willfully filed a false or fraudulent return, amended return or amended amnesty return required under these Regulations for any of the taxable years 1974 to 1979 shall be punished by a fine of not more than two thousand pesos or by imprisonment of not more than six months, or both. aisa dc SECTION 9 . All amnesty returns filed together with the statement of assets, liabilities and networth shall be classified, segregated and batched in the following categories: (a) Those with yearly amnesty tax payment not exceeding P10,000.00; (b) Those with yearly amnesty tax payment exceeding P10,000.00 but not over P50,000.00; and (c) Those with yearly amnesty tax payment exceeding P50,000.00. All amnesty returns shall be kept in a separate file of the Bureau of Internal Revenue, after the tax due thereon shall have been fully paid. The provisions of Sec. 81 of the National Internal Revenue Code, as amended, prescribing the manner and disposition of income tax returns and publication of lists shall not apply to the aforesaid returns. SECTION 10 . Repealing Clause . These Regulations supersedes Revenue Regulations Nos. 9-80 dated November 12, 1980, 9A-80 dated February 26, 1981 and 12-81 dated May 29, 1981. cd i SECTION 11 . Effectivity . The provisions of these Regulations shall take effect immediately. CESAR VIRATA Minister of Finance Recommended by: RUBEN B. ANCHETA Acting Commissioner