#AskTheTaxWhiz: Income tax return filing questions

Dear Mr. Tax Whiz,

The April 15 deadline for the Income Tax Return (ITR) filing has passed already, yet many tax questions remained unanswered, especially on the Bureau of Internal Revenue’s (BIR) several issuances leading to the ITR filing.

The most recent is RMC 19-2015 and the BIR’s list of issues and concerns related to the implementation of the electronic Filing and Payment System (eFPS) or eBIRForms for filing the ITR for taxable year 2014. But it appears to be a mere consolidation of all previously issued BIR circulars in a Q&A format. 

Not that we don’t appreciate it, but a tax agent like me helping several small taxpayers cannot simply find the answers to seemingly endless questions we have for all our taxpayer-clients.

We tried calling BIR offices and even visiting some Revenue District Offices (RDOs), but even my colleagues got frustrated as BIR personnel are not accommodating, or probably stressed already with so many taxpayers complaining. Some are even bullying or blaming us for not knowing what to do and for filing only now. But how do we file earlier when they have been issuing regulations one after the other since last year?

Inasmuch as we wanted to comply with all the overly confusing requirements especially for the micro, small, and medium enterprises (MSMEs), which are supposedly not covered by the new electronic platform of BIR, we remained astounded by the idea of being penalized despite our efforts to comply.

We are grateful to tax experts and advocates like you and Lingkod Tax Management Association of the Philippines (TMAP) for extending free assistance services to taxpayers especially the MSMEs. 

But I hope it’s not too much to ask if you can kindly clarify the following tax concerns of our taxpayer-clients:

1. I have 2 rooms being rented out to students in our area for P2,000 ($45.02) each. If my gross receipts/income for 2014 is P48,000 ($1080.59), am I still required to file my ITR? If yes, how much do I need to pay? Am I supposed to pay monthly VAT or percentage tax?
2. I moved to another company last quarter of last year. My new employer reminded me to file my 2014 ITR. I have never filed an ITR in my entire career as I have always been a full time employee with no other sources of income. I called the BIR last week and I was told that manual filing is no longer allowed, as the bureau pushes for e-filing. And so I asked help from an accountant in preparing my first-ever ITR, and to my surprise, I was advised that I need to pay additional taxes to BIR. First, can I just file manually? How? What if I don’t have cash right now, can I pay in installment?
3. I have a Barangay Micro Business Enterprise (BMBE) certification. Am I still required to file 2014 ITR even if I am exempted from income tax? Which BIR form will I use?
4. We have a drug testing laboratory registered under my name with a gross income of P50,000 ($1125.99). We were advised to file our “No Payment” return online. My daughter tried to file it online but was advised through BIR website to “visit RDO for account activation.” What does that mean? Are we really required to file ITR?
5. I was employed until September 2014 before I was taken in as a consultant in a Business Process Outsourcing (BPO) company.  I have registered in November 2014 but I have not received any income yet. Am I required to file 2014 ITR? What BIR form do I have to use?

Sincerely,

Tax agent (Name withheld)

Dear Tax agent,

Thank you for your questions on behalf of your taxpayer-clients.

I hope the following responses would be of help:

1. No. You are not required to file 2014 ITR since your gross receipts/income is below your personal exemption as individual taxpayer amounting to P50,000 ($1,126.40). Also, as a marginal income earner with gross receipts/income below P100,000 ($2252.86), you are exempted from Value Added Tax (VAT) or percentage tax.
2. Yes. You have to proceed to any accredited agent banks (AABs) of the RDO where you are registered, and file or pay your 2014 ITR manually. Yes. Taxpayers can pay 50% of the tax due on April 15 and pay the balance on or before July 15.
3. Yes. If you are a sole proprietor, you need to use eBIR Form 1701, print it, and file to your RDO. If you have registered a corporation, you may use eBIR Form 1702-EX. You need to re-submit it electronically on or before June 15, 2015.
4. Your gross income does not exceed your personal exemption amounting to P50,000 ($1126.27). That means you are not required to file ITR. For those required to electronically file, they are supposed to register first and visit their RDO or BIR office to activate their account. But again, you do not need to do this as you are not required to file ITR. (Editor’s note: The BIR extended the deadline for electronically filed “No Payment” ITRs to June 15, but the April 15 deadline for the manual filing for “No Payment” ITRs will still be in effect. READ: BIR extends deadline for e-filing of tax returns to June 15)
5. Yes. You are required to file eBIR Form 1701 as mixed income earner.  Although you do not have business income yet, you need to consolidate your compensation income and “zero” business income.

For more tax inquiries, please call us at +632 622 7720 or email us at consult@acg.ph.

Got a question about taxes? #AskTheTaxWhiz! Tweet @rapplerdotcom or email us at business@rappler.com. – Rappler.com

Mon Abrea is a former BIR examiner and an advocate of genuine tax reform. He serves as chief strategy officer of the country’s first social consulting enterprise, the Abrea Consulting Group, which offers strategic finance and tax advisory services to businesses and professionals. Mon’s tax handbook, Got a Question About Taxes? Ask the Tax Whiz! is now available in bookstores nationwide. Follow Mon on Twitter: @askthetaxwhiz or visit his group’s Facebook page. You may also email him at consult@acg.ph.

$1 = P44.39

ITR filing image from Shutterstock