Ease of tax filing and payment during community quarantine

The COVID-19 crisis has been sweeping the globe, affecting Filipinos everywhere. To finance public initiatives and to control the pandemic, the government is increasing its efforts to raise revenue despite the difficulties brought about by quarantine restrictions.

For taxpayers using the calendar year, April 15 of every year marks the deadline for filing the Annual Income Tax Return (AITR) and paying the corresponding tax. However, in March, due to the state of public health emergency, the government declared certain areas under various types of community quarantine. The declaration required many citizens to stay at home, and travel was restricted to within affected areas. Taxpayers were unable to prepare the documents needed to file their AITR and pay their taxes, prompting the Bureau of Internal Revenue (BIR) to delay filing and payment deadlines.

The BIR has issued numerous regulations and circulars extending the deadlines for filing and paying affected taxes. The latest regulation is Revenue Regulations (RR) No. 12-2020, which sets the deadline for filing and paying the AITR for 2019 to June 14. Since the deadline falls on a Sunday, taxpayers are given until June 15 to finally settle their tax payments.

ACCESSIBLE FILING AND PAYMENT OF TAXES
The limited means of travel and access to transportation during the community quarantines has made it difficult for taxpayers to comply with filing and payment deadlines. The revenue laws and rules proved to be stringent in requiring the physical submission of certain documents to the BIR. Responding to the clamor of taxpayers, the BIR issued Revenue Memorandum Circular (RMC) No. 49-2020, which provides additional options for accepting and processing the filed 2019 Income Tax Returns (ITR) and the required attachments. RMC No. 49-2020 allows taxpayers to submit their 2019 ITRs and required attachments to the nearest Revenue Collection Officers (RCOs), notwithstanding Revenue District Office (RDO) jurisdiction, or online through eAFs.

The RCOs shall stamp the submitted returns as “Received.” For electronically filed ITRs, the RCO shall accept and stamp as “Received” only the copies of the Filing Reference Number generated from the eFPS/E-mail Confirmation from the eBIR Forms Systems, as well as the Financial statements.

Taxpayers may also choose to submit a PDF of their filed ITR and the required attachments online through the BIR’s eAFs system. The taxpayer may access the online facility by visiting bir.gov.ph, and then clicking on the eAFS icon. The eAFS will acknowledge successful submission by issuing a system-generated Transaction Reference Number and by e-mailing the system user. The transaction reference number shall serve as the taxpayer’s proof of submission in lieu of the manual “Received” stamp.

The BIR recognizes the importance of the accessibility of payment facilities to taxpayers. To address the need for better access to various payment facilities, the BIR also issued RMC No. 48-2020, which was further clarified by RMC 56-2020, effective until June 14, 2020.

The RMC provides that taxpayers may file their tax return and pay taxes (a) at the nearest Authorized Agent Bank (AAB), notwithstanding RDO jurisdiction; or (b) to the concerned RCOs of the nearest RDO, even in areas where there are AABs; or (c) file through the eBIRForms Facility and use the various payment options.

For payment through RCOs in the RDO, cash payments should not exceed P20,000. Check payments do not have a limitation in amount. Check payments, however, must be made payable to the Bureau of Internal Revenue. It is no longer required to include the “IFO Name and TIN of Taxpayer”; the name and branch of the AAB is, likewise, no longer required.

Taxpayers filing through the eBIRForms facility may use any of the following payment options: (a) over-the-counter payment through the AABs; (b) RCOs of the nearest RDOs even in areas where there are AABs; (c) Electronic or online payments through Land Bank, Development Bank of the Philippines, Union Bank, and mobile payment (i.e., GCash or PayMaya).

A SOUND TAX SYSTEM DURING THE PANDEMIC
One of the attributes of a sound tax system is administrative feasibility. It means that the tax system should be “capable of being effectively administered and enforced with the least inconvenience to the taxpayer (Diaz v. Secretary of Finance, 669 Phil. 371, 393 [2011]).” In line with this, the BIR issued the RRs and RMCs previously discussed to make the payment of taxes during the pandemic accessible and flexible. Taxpayers will not be considered delinquent for filing in a wrong venue, even if they file outside their RDO. These issuances extend leniency in filing and paying taxes, but taxpayers have until June 14 to maximize the convenience offered by the BIR. After this, taxpayers should follow pre-pandemic tax laws and regulations.

Under pre-pandemic tax rules, filing and paying taxes at an RDO different from where the taxpayer is registered is the same as nonfiling or late filing, if later filed in the correct venue. In other words, the taxpayer becomes delinquent. Nonfiling or late filing is subject to penalties, surcharges, and interests under the laws and regulations. During the community quarantine, however, the government recognized that it should balance fiscal adequacy and the need to ensure taxpayer safety. Thus, the government gives taxpayers an option to file through the nearest RCO or online through the eFPs system and to pay through the nearest AABs, RCOs, or even e-payment facilities. These payment options will not make the taxpayer delinquent if they follow the guidelines in the RMCs and RRs mentioned.

THE NEED TO COLLECT TAXES DURING QUARANTINE
To conclude, this is how the government addresses taxpayer issues on access to filing and paying taxes. These measures adhere to the principles of a sound tax system, as well as help the government collect taxes despite the community quarantines. As taxpayers, we should take this as an opportunity to comply with our obligation to file and pay our taxes. However, the government should also consider assessing its system and make tax filing and payment accessible even after the pandemic. Taxpayers have been clamoring to pay through the nearest AABs and not be bounded by RDO jurisdiction. It would surely help taxpayers if interim measures to make tax filing and payment accessible can be adopted permanently.

Taxation is the power of the sovereign to raise revenue to defray the necessary expenses of government. The power of taxation is essential, as the government can neither exist nor endure without taxation. Taxes are the lifeblood of the government, and their prompt and certain availability is an imperative. During these times, taxpayers who have the obligation and capability to pay their taxes should do so through accessible and safe options provided by the government.

As the government’s ability to serve and protect the people largely depends on taxes, it is especially during crises that taxes are needed to serve, protect, and support the Filipino people.

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.

Mark Ebenezer A. Bernardo is an associate of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

As published in BusinessWorld, dated 09 June 2020