ITR rules changed; better prepare early

WITH the tax code having been amended to streamline the system and bring in more revenue, we regular do-it-yourself taxpayers better start earlier than usual our preparation for the filing of income tax returns before the April 15 deadline.

Starting my preparation last week, I was disturbed to find some changes that many taxpayers who cannot afford an accountant or such tax-savvy assistant may take time to understand.

I’ve learned for instance that the Form 1701 that I as a Self-Employed Individual have been using these many years is no longer acceptable. Taxpayers who fall under this category will have to study early the new form, and its requirements, to avoid stressful confusion in the rush days close to the deadline.

My Regional District Office No. 39 in Quezon City said the new form was actually not necessary, that the taxpayer could just go to the Bureau of Internal Revenue website <bir.gov.ph> and file his ITR online.

That sounded okay, except that I found the BIR’s own website had not been updated and therefore not yet usable for the purpose. I don’t know how it is with different categories of individual, corporate and other taxpayers.

To save time and avoid the traffic seeking information, I called phone numbers listed on the BIR website under RDO-39, but the numbers were either busy or not being answered at all. Why install and list phone numbers, and pay for them, when they are useless?

Despite doctor’s advice for this senior citizen to avoid driving in Manila traffic, I went to the BIR main office for help. Its education and information office no longer had Form 1701, saying it has been replaced by Form 1701A. Funny, but the BIR website did not have that information.

The BIR main office also did not have Form 1701A ready for distribution, so the staff went to their files and kindly printed several copies for me. Thanks. I hope they will do that for others similarly situated who go to them.

How soon can BIR, already working overtime, upload on its website in orderly fashion all the implementing guidelines and the new forms arising from recent amendatory legislation, including the Tax Reform for Acceleration and Inclusion (TRAIN) Act?

Suggesting that I file my ITR online right then, the BIR staff lent me a computer. But I gave up upon encountering errors in their data base: Samples: I am still an employee, I am single, etc. It will take me forever combing through and correcting the BIR data. I have other important things to do.

I understand that the so-called online ITR filing is not totally electronic. After the form is accomplished and validated by the BIR, the taxpayer still has to go to an authorized bank to pay.

The staff volunteered the information that seniors are allowed to file ITRs manually. I wonder what the rationale is, and if the exception is official and written in the books. But whatever the reason for it, I welcome it.

• Can one get refunds of excess taxes?

THERE is actually some good news for taxpayers who, like me, want simplicity and clarity of procedure and a lowering of tax rates.

The BIR website still did not have Form 1701A as of last Friday, but here are some features of that new form that has replaced Form 1701 for “Annual Income Tax For Individuals Earning Purely Compensation Income (Including Non-Business/Non-Profession Related Income)”:

• Instead of the old form’s staggering 12 pages, Form 1701A has only two pages printed on both sides of one sheet! At least, that saves on cost of printing and reduces the psychological intimidation of DIY taxpayers like me. (I don’t know about the forms for other taxpayers.)

• There are now two options as to tax rates: (1) Graduated rates with the Optional Standard Deduction, which used to be 40 percent; and (2) 8 percent for those with gross sales/receipts and other nonoperating income that does not exceed P3 million. Better ask a tax expert to explain that.

Among the reasons why some individuals regularly receiving professional fees from the same source have noticed bigger take-home pay for the same services is that the withholding tax rate has been reduced to 10 percent for those whose gross annual fees total less than P720,000.

The higher withholding tax rates of the past have resulted in many cases of deductions surpassing the total tax due when finally computed. The excess tax withheld is to be recovered, theoretically, through a refund, a tax credit for the following year ’s payments, or via a Tax Credit Certificate.

I asked the BIR staff how I could get a refund of excess tax withheld at least for the past two taxable years. As shown in my past ITRs, the tax withheld from me at source for 2016 and 2017 exceeded the resulting tax due at the time I filed my ITRs for those years.

Their answer was that I should write the BIR Commissioner asking for a refund, if that was the option I indicated on my ITR at the time I filed it. I said never mind. (I don’t have the staying power of a Juan Ponce Enrile or the leverage of a Palace functionary.)

I have heard too many horror stories of taxpayers who had made the mistake of asking for refunds. Grizzled friends claim that refund requests are an invitation to endless audits whose sole purpose seems to be to prove that the individual is a tax cheat and not a victim of overcharging.

* * * ADVISORY: Postscripts are archived at manilamail.com. Author is on Twitter as @FDPascual. Email feedback to fdp333@yahoo.com