LAST MINUTE SURPRISES FOR APRIL 15

April 15 is only about three (3) weeks away and just like last year, when totally new income tax return (ITR) forms were suddenly released and mandated for use by the BIR, taxpayers once again received some last-minute surprises before this year's ITR filing deadline. 

Just this March, the BIR issued two (2) new revenue regulations (RRs) that prescribe new requirements for large and small taxpayers and both RRs will greatly impact on affected taxpayers during this year's ITR filing season. 

One of these regulations, RR 2-2015, involves the requirement for digitized submission of certificates of taxes withheld (CTWs) to be claimed as tax credit by large taxpayers against their income tax payable. This new requirement took effect last March 21, 2015.

While large taxpayers would normally welcome the submission of documents in digital format, this is not the case for RR 2-2015. With this new rule, large taxpayers will have to manually scan each of the hundreds and even thousands of certificates that they receive from customers, arrange each one of them with a specific file name format, and submit the files via DVD to the BIR. 

With this new requirement, BIR personnel will avoid receiving and stamping truckloads of CTWs during the filing season. However, the requirement for scanned files will definitely result to additional work and costs on the part of large taxpayers, not to mention the fact that they still need to maintain the hard copy of all those certificates in the event of BIR audit.   

Meanwhile, another new regulation, RR 5-2015, mandates certain types of taxpayers to file their returns using the BIR's eBIR forms facility. These include those with "No Payment" returns and One Time Transaction (ONETT) taxpayers, among others. Under this new rule, taxpayers who fail to comply will be imposed a penalty of P1,000 per return and additional civil penalty of 25% of the tax due. 

With this new regulation, the BIR hopes to facilitate the electronic submission of tax returns and minimize the manual filing at the BIR offices. However, while this is envisioned to make it more convenient for taxpayers to file their tax returns, the new regulation provides that it shall take effect immediately, despite the fact that the RR was only issued last March 17, 2015 (although an initial regulation, RR 6-2014, was already issued in 2014).

In both cases, the BIR mandated these new rules with less than a month to go before April 15. Many affected taxpayers are now at a loss on how to best comply with the new tax filing requirements, aside from encountering certain technical difficulties and raising certain practical issues along the way. 

Unfortunately, the BIR has confirmed that these new rules will already apply in time for the April 15 ITR filing for taxable year 2014. It is made even worse for affected individual taxpayers, who also need to file their 1st Quarter ITRs on April 15.

While it is important that the BIR is able to capture tax information in a timely and efficient manner, especially through electronic means, let us not forget that one of the most basic taxpayer rights is the right to be informed, assisted and heard. 

It is very important for for taxpayers to properly understand new tax rules with sufficient lead time for taxpayer education and cascade of information. This becomes even more important considering that public hearings are no longer conducted by the BIR prior to the issuance of new regulations, unlike before. 

Taxpayers should be given sufficient time to adjust their systems and processes so that they can best comply with the new tax filing requirements. The BIR should also have more than enough lead time to properly conduct a tax information campaign among taxpayers and hear out various taxpayer concerns.  

Given this, we need to appeal to the BIR to defer the implementation of these new regulations until after this April 15 tax filing season. At the very least, these should be made optional at this point, rather than mandatory.  

Otherwise, giving Filipino taxpayers less than a month before April 15 to prepare and comply with these new tax regulations is like setting them up for failure.