#AskTheTaxWhiz: Further extension of deadlines, suspension of BIR audit
I have a small business in Quezon City with 10 branches in Luzon. In 2010, our company got audited by the Bureau of Internal Revenue (BIR) for the first time, but since it was only our second year, we still reported a loss and no tax payment. However, the BIR examiners who audited our books didn't believe us and gave an assessment which was 4 times bigger than our annual sales. To cut a long story short, we ended up paying under the table, much bigger than the amount on the official receipt.
Before the lockdown, we already received a letter of authority (LOA) for all our branches in Luzon. This has been a yearly harassment since 2010. We made a mistake and now we're paying the price of compromising in 2010. We're contemplating on closing down our business and declaring bankruptcy after the lockdown since we barely made any sales this year, but with all the BIR audits we have to deal with after the lockdown, we will end up borrowing money to settle our pending cases.
I know a lot of small businesses are experiencing the same – a yearly audit that ends with paying under the table. What should we do? Will the BIR audit continue immediately upon lifting of the "enhanced community quarantine" (ECQ)? We have no money to pay them. Please help us.
Here are 5 things you can do to get rid of your BIR problems:
- Centralize tax compliance with your head office by updating your BIR registration immediately after the lockdown. File BIR Form 1905 for each branch to remove all tax types in the registration
- Ask a professional tax expert to do a comprehensive tax audit or review of your BIR compliance from 2010 to present. This should give you a report which will present all violations and recommendations to reduce your tax assessment.
- Review your tax payments for 2019, and find out if you've earned significantly to increase your voluntary payments by 20% upon filing your annual income tax return. If possible, you can ask the BIR to consider this as basis for removing your company in the list of those audited yearly.
- If you have cash issues, you may opt to pay in installment. The tax code allows 50% initial payment and balance on or before October 15, but due to the lockdown this may be further extended.
- If you have a pending BIR audit, use this lockdown period to again review your tax compliance, especially the documents submitted to or required by the BIR. Best is to seek professional assistance from a tax expert (not necessarily a lawyer) who is experienced in handling BIR cases without compromises (or without paying under the table).
Revenue Memorandum Circular (RMC) No. 34-2020 suspends BIR audit and investigation starting March 16, 2020, until the lifting of the state of emergency and for 60 days thereafter, while filing of position papers, protest letters, and other correspondences will be due 30 days after the period of emergency. However, this means more aggressive and extensive assessment by BIR examiners since they will have to collect more taxes after the lockdown.
For tax assistance regarding BIR audits, you may email me at email@example.com.
I've read your article published on Rappler on April 4, 2020, before the extension of the ECQ until April 30, 2020. So, what happens now with all the BIR deadlines? The BIR has issued several circulars and I’m getting confused already. Honestly, paying taxes is the least among our concerns right now, but we just want to file and pay online on or before April 15, just to get rid of it in our to-do list after the lockdown. Will the BIR impose penalties if we amend or pay additional tax after? What if the extended deadlines fall on a holiday or non-working day?
The BIR further extended the deadlines for a period of 15 calendar days from the extended due dates enumerated in Revenue Regulations No. 7-2020. It is always best to check the latest circular or issuance to avoid confusion. You may also follow the official Facebook page of the BIR – Bureau of Internal Revenue Philippines.
RMC No. 37-2020 addresses these concerns. "Taxpayers who file their tax returns within the original deadline or prior to the extended deadline can amend their tax returns at any time on or before the extended due date. An amendment that will result [in] additional tax to be paid shall not be subject to corresponding penalties (surcharge, interest, and compromise penalties) if the same is done not later than the extended deadline."
If the new extended due dates fall on a holiday or a non-working day, then the submission and/or filing of tax returns shall be made on the next working day.
Ironically, working from home made some of us more productive. I am a certified public accountant working as a compliance officer for a family business. Reviewing our BIR files, I realized that our official receipts will expire on April 15. How can we apply for new authority to print (ATP)? Can we still use our receipts, assuming our company needs to issue receipts after April 15?
Based on RMC No. 41-2020, the filing of application for new ATP has been extended until May 13, 2020, or for 30 days after the lifting of the ECQ (if extended), whichever comes later, without penalties.
The use of expired receipts is also extended under RMC No. 41-2020, provided that those expired receipts shall be stamped "Emergency extension for use until May 13, 2020" (if the ECQ is extended, the date shall be the last day of the extension period).
Unlike before, the BIR has been very considerate in granting tax relief and extensions to taxpayers, in light of the ECQ.
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For inquiries, email firstname.lastname@example.org, call (02) 7622-7720, or follow TaxWhizPH on Facebook and Instagram. – Rappler.com
Mon Abrea is the co-chair of the Ease of Doing Business (EODB) Task Force on Paying Taxes. He was recognized as one of the 2017 Outstanding Young Persons of the World, 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), and an Asia CEO Young Leader because of his tax advocacy. Currently, he is the chairman and senior tax advisor of the Asian Consulting Group (ACG) and founding trustee of the Center for Strategic Reforms of the Philippines (CSR Philippines).