How to file income tax returns

AS the April 15 filing deadline of income tax returns (ITRs) for taxable year 2013 draws near, taxpayers are advised to prepare as early as now rather than suffer the inconveniences encountered when trying to beat the deadline.

The tax season is the busiest time of the year, not only for accountants who prepare the ITRs, but also for all taxpayers (individual and corporate) who are obliged to file with the Bureau of Internal Revenue (BIR) on or before April 15 every year for income earned during the calendar year ending Dec. 31.

This is also the best time for us taxpayers to do our share in paying the right taxes. The BIR’s 2014 tax campaign theme sums up the basic steps that a taxpayer needs to follow to be able to comply with his/her obligation of paying correct taxes for our nation: “I LOVE THE PHILIPPINES, I Pay My Taxes Right. It’s as Easy as RFP (Register, File and Pay).”

Filing ITRs need not be a daunting task as long as you have your records in order and you follow the filing guidelines below:

1. Use of the new ITR forms. For this filing season, taxpayers are required to use the June 2013 enhanced version of the ITR as prescribed by Revenue Regulations No. (RR) 2-2014.

Except for some enhancements, the ITR forms remain the same for individuals earning purely compensation income (BIR Form 1700) and for self-employed individuals, estates and trusts (BIR Form 1701).

For corporations, partnerships, and other non-individual taxpayers, the forms to be used shall be BIR Form 1702-RT if taxable income for the year is subject only to the regular income tax rate; BIR Form 1702-EX if taxpayer is exempt under the Tax Code and other special laws, with no other taxable income; or BIR Form 1702-MX for taxpayers with mixed income subject to multiple income tax rates or with income subject to special/preferential rate.

2. Modes of preparation and filing. The continuous enhancement and development of electronic services (e-Services) by the BIR has brought about the use of Electronic BIR Forms (eBIRForms) as an additional mode of filing for non-eFPS (non-Electronic Filing and Payment System) taxpayers pursuant to Revenue Memorandum Order No. (RMO) 24-2013 in relation to Revenue Memorandum Circular No. (RMC) 61-2012.

Non-eFPS taxpayers now have the option to either prepare the ITRs manually through pre-printed forms/printed downloadable PDF/Excel forms available at the BIR Web site, or electronically through the eBIRForms Offline Package v4.1 (with Annual ITRs v2013 ENCS).

The advantage of using the eBIRForms Offline Package is its capability to automatically compute the taxes due as well as validate the information provided by the taxpayers. Thus, ITR preparation becomes a breeze for those who opt to do it electronically. Upon downloading the eBIRForms package from the BIR Web site, taxpayers are guided through the process by the detailed instructions that come with it.

After filling up the electronic ITR form, the taxpayer can validate, edit, submit, save, print and produce a final copy of the form. Submission of these forms will only be allowed after the form has been completed and validated. Once validated, the taxpayer may now submit online either through the e-Submission or eFPS facility of the BIR.

However, for the time being, online submission is not yet available for ITRs generated from the eBIRForms offline package. Hence, non-eFPS taxpayers are required to submit manually to the BIR the printed copy of the computer-generated ITR with the following specifications: folio size bondpaper (8.5” x 13”), portrait orientation/layout with the following margins: left, 0.146 inches; right, 0.148 inches; top, 0.14 inches; and bottom, 0.14 inches. The printed ITR forms should be originally signed by the taxpayer or his/her authorized representative pursuant to Bank Bulletin No. (BB) 2014-08 in relation to RMC 61-2012.

3. Modes of payment. Payment of the income tax may either be manual or electronic for non-eFPS taxpayers. Manual payment will be made through any Authorized Agent Bank (AAB) within the jurisdiction of their registered Revenue District Office (RDO) or the Revenue Collection Officers (RCOs), as applicable. On the other hand, electronic payment can be made via mobile phone through G-Cash for tax returns not exceeding P10,000 as prescribed by RMO 20-2005.

Payments with the AABs will be accepted until 5:00 p.m., April 1-15, to better serve the needs of the taxpayers during this income tax filing season. Two or more checks and/or a combination of cash and checks in paying for a single tax liability will be allowed pursuant to RR 16-2002.

For ITRs without payment, it shall be filed at the respective RDO having jurisdiction over the taxpayer.

4. Receiving rules of the ITR. Only three copies of the returns are allowed to be stamped “received” with the official BIR seal by all AABs. However, for those filing with BIR Revenue Region No. 2 (Cordillera Administrative Region), Revenue Region No. 7 (Quezon City) and Revenue Region No. 9 (San Pablo City), only two copies of the ITRs shall be received.

In the case of corporations and other juridical persons who are required to file with the Securities and Exchange Commission (SEC), two extra copies of the audited financial statements for filing with the SEC shall be stamped “received”. The BIR seal shall only be stamped on the page of the Audit Certificate, Balance Sheet and the Income Statement. Other pages of the financial statement and its attachments shall not be stamped.

To fully appreciate the filing process, early preparation is an advantage. As Alexander Graham Bell once said: “Before anything else, preparation is the key to success.”

The author is a senior at the Cebu branch of Punongbayan & Araullo’s tax advisory and compliance division. P&A is a member firm within Grant Thornton International Ltd.

source:  Businessworld