Let's Talk Tax

2019 ITR filing reminders

Summer is here! As the school break starts, everyone is excited to plan where to spend their holidays. But before gearing up for the vacation, corporate taxpayers adopting calendar taxable year and individual taxpayers can’t think of enjoying summer yet until the April 15 annual income tax return (ITR) deadline passes.

As the deadline draws closer, here are some reminders for the ITR filing:

1. BE MINDFUL OF THE APRIL 15 DEADLINE
As expected, there have already been news reports saying that the Bureau of Internal Revenue (BIR) will not extend the upcoming April 15 income tax deadline. The BIR has been warning taxpayers to file their income tax returns earlier to avoid penalties for late filing. The penalties for late filing include a 25% surcharge of the tax due plus 12% interest per annum (from the payment deadline until the amount is fully paid), and a corresponding compromise penalty, on top of the income tax due.

So, for the taxpayers, April 15 this year is a crucial day that should not be missed.

2. USE THE CORRECT VERSION OF ITR
As of writing, all new/revised versions of annual ITRs (BIR Form No. 1700 for individuals earning purely compensation income, BIR Form No. 1701 for individuals under graduated income tax rates availing of itemized deductions including mixed income earners, BIR Form No. 1701A for individuals earning income purely from business/profession under graduated income tax rates availing of Optional Standard Deduction or those who opted to avail of the 8% flat income tax rate, and BIR Forms No. 1702-RT/EX/MX for corporations, partnerships and non-individuals exempt from tax and subject to regular tax rate, respectively) have been released by the BIR.

For the individual ITRs, the revised version of BIR Form No. 1701 and the new BIR Form No. 1701A are already available in eBIR Forms package v7.4.1, but are not yet available in the electronic Filing and Payment System (eFPS). Thus, the BIR advised eFPS filers to file using the eBIRForm facility and pay manually through AABs. BIR form No. 1700, on the other hand, is not yet available in the eBIRForms facility. Hence, this shall be filed and paid manually.

For corporate ITRs, all new versions of the ITRs are not yet available in the eFPS and eBIRForms facility. Thus, the BIR advised the eFPS and eBIRForm filers to use the existing/old version available in the eFPS and eBIRForms package. However, taxpayers filing 1702-MX who opted for optional standard deduction as their method of deduction shall use the manual return and pay manually.

For the detailed guidelines on the filing and payment of annual ITRs, taxpayers may refer to Revenue Memorandum Circulars No. 41-2019, 37-2019, 19-2019, and 17-2019.

3. FILE AT THE PROPER VENUE
Under the rules, wrong venue filing or filing of tax returns at a different Revenue District Office (RDO) than where they are registered, is subject to a penalty of P1,000 per return and a 25% surcharge of the tax due to be paid. The P1,000 penalty may be nominal, but the 25% surcharge could mean millions to some taxpayers depending on the amount of tax due.

Hence, taxpayers, especially individuals, are recommended to verify first with the BIR and check which RDO they are registered at before proceeding to the nearest Authorized Agent Bank (AAB) or RDO to file their annual ITR.

Wrong venue filing also includes a situation wherein taxpayers, who are mandatorily required to file their returns through eFPS or eBIRForms, erroneously file their tax returns manually.

4. KEEP ABREAST OF BIR ADVISORIES
At this time of the ITR filing season, it is not uncommon for taxpayers to encounter downtime or traffic in the eFPS facility due to network congestion.

There have been certain instances in the past wherein a taxpayer tried to file an ITR on the morning of April 15 only to find himself in front of the computer the whole day and until midnight without successfully filing the ITR. This is why taxpayers are advised to file their tax returns early to avoid this kind of inconvenience.

Nonetheless, taxpayers should be alert about BIR advisories, wherein the BIR makes announcements about work-around procedures in case of problems in the eFPS facility.

5. COMPUTE YOUR INCOME TAX DUE CAREFULLY
When computing for the income tax due, taxpayers should always practice due diligence. Even though a taxpayer can amend an ITR to correct a mistake, that mistake may incur large cost depending on its significance. This is because in the event that the tax payable per amended ITR is higher than what is remitted in the filed original ITR, a 25% surcharge, 12% interest per annum, and compromise penalty shall be imposed based on the additional tax to be paid per amended return. Better be safe than sorry.

With just a few days left before the deadline, I hope everyone can successfully file their ITRs on time and have a meaningful Holy Week with no worries. Fingers-crossed!

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Juvy de Jesus is a manager from the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd. For comments and inquiries, please email

 

As published in BusinessWorld, dated 09 April 2019