Delinquencies defined
Credit to Author: SHIRLEY TUAZON| Date: Mon, 22 Apr 2019 16:17:23 +0000
After Republic Act (RA) No. 11213, or the Tax Amnesty Act, was signed into law last Feb. 14, 2019, many expected the Bureau of Internal Revenue (BIR) to release the implementing rules, particularly the one addressing the uncertainty on the definition of delinquencies.
To recall, the law grants tax amnesty on delinquencies covering all national internal revenue taxes collected by the BIR as well as value-added tax (VAT) and excise taxes collected by the Bureau of Customs (BOC) for taxable year 2017 and prior years. However, neither the law nor the bills from both houses of Congress defined the term ‘delinquencies’.
The closest definition for delinquencies can be lifted from revenue memorandum order (RMO) No. 71-2010, which provides for the guidelines and procedures for the conversion of accounts receivables and delinquent accounts into the accounts receivables conversion system (ACRS) of the BIR. This rule does not necessarily apply to tax amnesty. Moreoever, without a definite pronouncement from the BIR, the application of the foregoing definition of a delinquent account can only be implied.
The explanation has come in the form of revenue regulations (RR) No. 4-2019, or the implementing rules and regulations of RA No. 11213 issued by the BIR on April 8, 2019. It states that a delinquent account shall pertain to a tax arising from the audit of the BIR that has been issued assessment notices, which have become final and executory due to the following instances:
Failure to pay the tax due on the prescribed due date provided in the final assessment notice (FAN)/formal letter of demand (FLD) and for which no valid protest, whether a request for reconsideration or reinvestigation, has been filed within 30 days from receipt thereof;
Failure to file an appeal to the court of tax appeal (CTA) or an administrative appeal before the commissioner of internal revenue (CIR) within 30 days from receipt of the decision denying the request for reinvestigation or reconsideration; or Failure to file an appeal to the CTA within 30 days from receipt of the decision of the CIR denying the taxpayer’s administrative appeal to the final decision of disputed assessment (FDDA).
Based on the foregoing, it appears that tax amnesty on delinquencies can only be availed of by taxpayers against whom an assessment has been considered final and executory. This means that these accounts are now subject to collection proceedings and there is no other remedy, administrative or judicial, available to the taxpayer.
Taxpayers with ongoing tax audit, including those who have unresolved protests and pending cases in court, cannot avail of benefits granted by the Tax Amnesty Act.
Further, the new rules did not include unpaid self-assessed taxes as a delinquent account unlike in RMO No. 71-2010. Thus, when a taxpayer files a return required by law but the corresponding or the correct tax stated therein is not paid, such taxpayer will not be entitled to the benefits of the tax amnesty.
The tax amnesty also covers all persons, whether natural or juridical, with internal revenue tax liabilities covering taxable year 2017 and prior years under any of the following instances:
Those with pending criminal cases with the Department of Justice (DOJ)/Prosecutor’s Office or the courts for tax evasion and other criminal offenses with or without assessments duly issued. The tax amnesty rate shall be 60 percent of the basic tax assessed
Those with final and executory judgment by the courts on or before the effectivity of RR No. 04-2019. The tax amnesty rate shall be 50 percent of the basic tax assessed
Withholding tax liabilities of withholding agents arising from their failure to remit withheld taxes. The tax amnesty rate shall be 100 percent of basic tax assessed
The other salient provisions of the implementing rules include the documentary requirements in availing of the tax amnesty. These are the 1) Tax Amnesty Return (TAR) or BIR Form No. 2118-DA); 2) Acceptance Payment Form (APF) or BIR Form No. 0621-DA duly validated by authorized agent banks (AABs) or stamped “received” accompanied by a bank deposit slip validated by the AABs or Revenue Official Receipt (ROC) issued by the Revenue Collection Officers (RCOs); 3) Certificate of Tax Delinquencies/Tax Liabilities issued by the concerned BIR offices; and 4) a copy of the FAN, FDDA, Preliminary Assessment Notice (PAN) or Notice of Informal Conference, when applicable.
RR No. 04-2019 also addressed cases where the delinquent taxes have been the subject of an application for compromise settlement on the grounds of doubtful validity of assessment or financial incapacity of the taxpayer, whether denied or pending. In applying the tax amnesty benefits, the amount to be paid shall be based on the net basic tax as certified by the BIR. It means that the tax amnesty rate shall be computed based on the applicable compromise settlement rate under Section 204 of the Tax Code and not on the basic tax liabilities stated in the assessment notices.
Upon confirmation that the taxpayer-applicant complied with the requirements under RR No. 4-2019, the BIR shall issue a Notice of Issuance of Authority to Cancel Assessment (NIATCA) within 15 calendar days from submission of the APF and TAR. An APF and TAR stamped “received” shall also be deemed as sufficient proof of availment of the benefits of the Tax Amnesty Act.
Qualified taxpayers who wish to avail of the lower tax payments under the Tax Amnesty Act must submit their application to the BIR within one year from the effectivity of RR No. 4-2019.
Given the simplified requirements and the time limit imposed by the BIR on the submission of documents, taxpayers should not let this opportunity to ease their tax burdens pass, especially concerning delinquencies. You never know when the next tax amnesty will be granted.
The author is a Manager with the Tax & Corporate Services division of Navarro Amper & Co., one of 11 practices that make up Deloitte Southeast Asia Ltd. Deloitte Southeast Asia Ltd is a member of Deloitte Touche Tohmatsu Limited, a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services.
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