By Atty. Josephrally Chavez Jr.
In life, there are only two (2) things which are certain, death and taxes. And above all, almost everything of something, if not something of everything has tax consequence. But is there really an escape to pay taxes? Under the Civil Code of Philippines, it provides for the sources of an obligation. Among others, an obligation exists because the law says so. Such an obligation is a juridical necessity to give, to do or not to do. Corollary, the fact that one is bound by an obligation, adherence must be made with respect to the period. In layman’s term, that is the due date or deadline.
This column will focus on the obligation of the individual taxpayers to file their annual income tax return. While the wish of the mind and the desire of the heart is tax exemption, full exemption whenever applicable, the filing of the income tax return is another. To simplify, its all about 5 W’s and 1 H, the What?, When?, Who?, Where?, Why?, and How?
What is an income tax return? It is a BIR form either in paper or electronic form containing the taxpayer’s profile and information, total gross sales, receipts or income from compensation for services rendered, conduct of trade or business or the exercise of a profession, except income subject to final tax, the allowable deductions, the taxable income, the income tax due and payable of the said taxpayer.
When is the deadline for filing income tax return? The return must be filed on or before the fifteenth (15th) day of April of each year covering income for the preceding taxable year. SIMPLY PUT, it is on April 15, following the close of the taxable year. E.g. If the taxable year is 2020, the return must be filed on or before 15th day of April 2021. Parenthetically, the BIR Commissioner may, in meritorious cases, grant reasonable extension of time for filing the income tax return.
Who are required to file the income tax return? Every resident citizen, non-resident citizen, resident alien, non-resident alien engaged in trade or business, citizen of the Philippines and any alien individual engaged in business or practice of profession within the Philippines regardless of the amount of gross income and individual deriving compensation concurrently from two or more employers at any time during the taxable year and married individuals who do not derive income purely from compensation.
Who are exempt or not required to file income tax return? An individual whose taxable income does not exceed P250,000.00, pure compensation income earner, one whose sole income has been subjected to final withholding tax and the minimum wage earner.
Where to file the income tax return? Except where the BIR Commissioner otherwise permits, it shall be filed with an authorized agent bank, Revenue District Officer, Collection Agent or duly authorized Treasurer of the city or municipality in which such person has his legal residence or principal place of business in the Philippines, or if there be no legal residence or place of business in the Philippines, with the Office of the Commissioner. Above all, the taxpayer must file his income tax return where he is registered. The exception is via eFPS or eBIRForms platform.
How to file the income tax return? Under the “pay-as-you-file” system, the total amount of tax imposed by the National Internal Revenue Code must be paid at the time the income tax return is filed. The income tax return can be filed manually or electronically.
How to pay the income taxes due? It can be done either manually or ePay/online. [RMO 42-2020]
How to file the income tax return manually? Either using the pre-printed BIR form or via eBIRForms, pay and file the income tax due. The use of eBIRForms is not mandatory. Only taxpayers which are covered by RR No. 6-2014 are required or mandated to file electronically. Likewise, MSME or Micro Small Medium Enterprise, Senior Citizen or Person with Disabilities may still avail of manual filing.
How to file the income tax return electronically? First, the taxpayer must enroll for the use of the online eFPS or eBIRForms system as detailed under RMO 24-2013 by accessing the BIR website www.bir.gov.ph, complete the Enrollment Page Form then click the SUBMIT button. Second, download the Offline eBIRForms Package, install, select the form and fill-up the data of the return, validate and/or edit then click final copy. Third, go online and then SUBMIT the accomplished income tax return to eFPS or online eBIRForms. Finally, there will appear a Filing Reference Number (FRN) for this purpose as acknowledgment of its receipt. In cases where attachments are required, the printed copy of the income tax return with Filing Reference Number (FRN) Page and the necessary attachments must be submitted to the concerned RDO, LTDO or LT Office within 15 days therof.
eBIRForms simply means the Electronic Bureau of Internal Revenue Forms facility where the submitting and filing of all tax returns are done electronically. RR No. 5-2015 provides for the imposition of penalties for failure to file returns under electronic platform of the BIR by taxpayers covered by eFPS and eBIRForms. As to individuals, RR 6-2009 provides that the top 5,000 individual taxpayers are mandated to enroll, file, and pay tax returns using the eFPS (Electronic Filing Payment System). Finally, a penalty of P1,000.00 will be imposed for failure to file the income tax return using eFPS or eBIRForms tantamount wrong venue filing plus civil penalties of 25% of the amount due in accordance with Section 248 (A) of the Tax Code. Late payment of the income tax due will incur 12% interest per annum, and a compromise penalty, on top of the income tax due.
How to pay the income taxes due if the filing is done electronically? Once the FINAL COPY is clicked, this copy is for submission to the BIR. For taxpayers enrolled with eBIRForms, type username and password for the income tax return to be eFiled and an email notification will be generated as proof that the return has been duly received by the BIR. Then proceed to ePay/online payment or manually pay the income taxes due. For taxpayers not enrolled with eBIRForms, after completing the the income tax returns Offline eBIRForms and click the FINAL COPY, the system will ask if the filing will be online. The ePay of the BIR provides ePayment Channels of Authorized Agent Banks that taxpayers can access for the electronic payment of their income tax dues. ePayment Channels accept tax payments through the use of either online, credit, debit, prepaid cards and mobile payments.
How to pay the income taxes due if the filing is done manually? In paying the income tax due for the returns using eBIRForms, simply present to the Authorized Agent Bank the printed copy of the income tax return duly signed and the Email notification of successful e-Filing, then pay the income tax due. If not via eBIRForms, use the manual return and pay accordingly. RR 16-2002 provides for the modes of payment to Authorized Agent Banks. It includes: Over-the-counter cash payment not exceeding P10,000.00, bank debit system or check payment system.
Is installment of payment allowed? Yes. When the tax due is in excess of P2,000.00, the taxpayer may elect to pay the tax in two (2) equal installments, in which case, the first installment must be paid at the time the return is filed and the second installment on or before October 15 following the close of the calendar year, otherwise the whole amount of the tax unpaid becomes due and payable together with the delinquency penalties.
SIMPLY PUT and as to WHY pay taxes? It is the lifeblood of the nation. Without taxes, no government can survive. That is why, despite natural reluctance to surrender a very very hard earned income, everyone must contribute in giving life to the government. And in return, WE can expect both tangible and intangible benefits not only in enhancing and improving the life of the Filipino people but ancillary to it is the time-honored principle of due process and equal protection and the real wish of the mind and desire of the heart, Justice and Progress or simply JP. [This Article is dedicated to my good friend JP who is set to undergo a quintuple by-pass operation at the Philippine Hear Center this 6 March 2021. All my and our prayers to you my good friend! As it is written: Trust in the Lord with all your heart and lean not on your own understanding, in all your ways submit to him, and he will make your paths straight. God is a rewarder of those who diligently seek Him. Finally, the Lord is a God of justice, blessed are those who wait for him. As I too, believe in God, I am confident that we can still play tennis (singles) after this!]