#AskTheTaxWhiz: What if my employer doesn’t pay my income taxes?

Mon Abrea
#AskTheTaxWhiz: What if my employer doesn’t pay my income taxes?
A graphic designer's employer doesn’t withhold his taxes. He wonders if that makes him liable for tax evasion.

Dear Mr. Tax Whiz:

I just read your article in
Entrepreneur Philippines about the guide for professionals in paying their taxes. It’s so timely!

Here’s my story. I’m a graphic designer. I was employed for 9 months in an advertising company that doesn’t pay taxes for their employees. I was earning P 20,000 every month during my stay there – no deductions, no tax, no government-mandated benefits. And for the whole 9 months, I didn’t pay my income tax.

I am now employed in a different company and my employer is now paying my taxes. But please give some clarifications:

1. Is it okay for me not to bother it anymore since it was my employer’s responsibility to pay for my taxes?

2. Am I liable for tax evasion for not paying my taxes? In case the BIR would tell me to pay my taxes, would my employer still be liable even they didn’t deduct the taxes that they should have?

Thank you for making an article like this. It  gives us insights regarding our tax concerns. I also hope there is some sort of remedy in helping us avoid the same mistake and start anew without worries.

As Benjamin Franklin said, “Being ignorant is not so much a shame, as being unwilling to learn.”

Tom


***

Dear Tom:

Thank you for giving time reading my articles. It is my consolation, knowing that there are readers like you who find my articles useful for their tax concerns.

Now, let me give clarifications to your concerns.

First, it is true that your previous employer is generally responsible for the withholding and remittance of the correct amount of tax required by deducting and withholding from your salary. However, if your employer refused or failed to withhold taxes on your salary, you are obliged to file and pay your income tax.

Second, tax evasion is an illegal practice wherein a person, organization, or corporation intentionally avoids paying his true tax liability. Since you already know that the company doesn’t withhold tax, you are guilty of not paying your taxes.

Your employer’s failure to comply with the provisions relative to withholding taxes on compensation is subject to applicable penalties for non-compliance.

And, finally, there is definitely a remedy to avoid the taxpayers’ negligence of paying their taxes.

As part of our commitment to educate and assist the fast-growing MSMEs, professionals and entrepreneurs in the country, we have launched the Philippine Tax Academy (PTA).

This is a program of the Abrea Consulting Group (ACG), which offers certificate courses in in-house accounting to fellow accountants, and tax seminars to managers and owners of businesses, and a management training program for our tax consultants/advocates.

It is really good to know we are helping you, and a lot of confused taxpayers out there. May you enjoy a tax-free lifestyle! – Rappler.com

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

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