APRIL 4, 2013

NR # 3063B

Solon: New BIR revenue circular maybe rehash of old, controversial issuance
A House member today expressed reservation over Revenue Memorandum Circular 212013 recently issued by the Bureau of Internal Revenue as it could be a revival of an old BIR revenue regulation previously opposed by lawmakers, which requires the disclosure of additional detailed income information or supplemental income of taxpayers. Rep. Magtanggol Gunigundo (2nd District, Valenzuela City) vowed to scrutinize RMC 212013 to see if it is a rehash of the of the controversial Revenue Memorandum Circular 40-2011 issued by the BIR on September 05, 2011 which requires the disclosure of additional detailed income information of taxpayers. “I have yet to see the new regulation. If it’s the same with the old revenue regulation, then the BIR has a lot of explaining to do in the 16th Congress,” said Gunigundo, who was among those who staunchly opposed RMC 40-2011 because of legal, constitutional and security concerns. The House Deputy Majority Leader said “RMC 21-2013 maybe a rehash of an old revenue regulation that was the subject of a congressional inquiry in 2011 which resulted in a recall of the revenue regulation by the Finance Secretary.” During successive hearings on RMC 40-2011 two years ago, which was conducted by the House Committee on Ways and Means then chaired by Rep. Hermilando Mandanas (2nd District, Batangas), lawmakers criticized RMC 40-2011 as illegal, unconstitutional and violative of the Bank Secrecy Law. The committee conducted hearings on RMC 40-2011 on the basis of a letter of Gunigundo dated October 21, 2011, which states that there is no legal basis for RMC 40-2011 to stand since law is needed to carry out what the BIR wants under such memorandum circular. Gunigundo said RMC 40-2011 basically implements the Annual Information Return (AIR) that mandates the list up of passive income of taxpayers under Revenue Regulations 2-2011 that was already suspended on March 10, 2011 by Finance Secretary Cesar Purisima by way of Revenue Regulation 6-2011, through the efforts of the House Committee on Ways and Means. On Nov. 25, 2011, BIR Commissioner Kim Jacinto-Henares revoked RMC 40-2011 and issued in its place RMC 57-2011 which makes the disclosure of Supplemental Information optional for income tax filing covering and starting with calendar 2011, but makes it mandatory for income tax filing covering calendar 2012. These additional or supplemental information includes such income subjected to final tax (interest, royalties, prizes and other winnings; cash and property dividends; capital gains from the sale of stocks not traded on the stock exchange; and capital gains from the sale of real property),

income exempt from tax, and exclusions from gross income under Section 32(B) of the Tax Code. Then last March 1, 2013; Henares issued RMC 21-2013, which amends RMC 572011, entitled Revising BIR Forms 1700, 1701 and 1702. The amendment makes the disclosure of Supplemental Information under BIR Forms 1700 and 1701 optional on the part of the taxpayer for Income Tax Filing covering and starting with calendar year 2012, due for filing on or before April 15, 2013. It also renames BIR form 1702 as a November 2011 version. The new RMC 21-2013 also advised individual income tax filers using Forms 1700 and 1701 that for Income Tax Filing covering and starting calendar year 2013, the disclosures required under the Supplemental Information portion of the said forms will be mandatory. During previous hearings by the Committee on Ways and Means, Rep. Rufus Rodriguez (2nd District, Cagayan de Oro City) said RMC 57-2011 could lead to the prosecution of a taxpayer while Rep. Ma. Milagros Magsaysay (1st District, Zambales) said the BIR would be incriminating taxpayers by exacting additional information about their passive income in compliance with RMC 57-2011. “You can use this additional information as basis to go after taxpayers. You can harass taxpayers because you know this information about their income. That is witch hunting,” Magsaysay then said. On the last hearing of the Committee on Ways and Means on the matter, Senior Vice Chairman Rep. Giorgidi Aggabao (4th District, Isabela) reported that the Department of Finance (DOF) and the BIR agreed to make the implementation of RMC 57-2011 optional and with no presumptions for those not opting to fill up new BIR income tax forms. Agabbao said this was the outcome of the meeting between DOF and BIR officials with a group of lawmakers on December 7, 2011 to thresh out issues related to RMC 57-2011. Aggabao was named head of the House team that met with the DOF and BIR officials. The House contingent included Gunigundo, Rodriguez and Rep. Tomas Apacible (1st District, Batangas). “The DOF and BIR agreed to make the implementation of the RMC optional for 2011, with no presumptions created whatsoever for those not opting to fill up new forms. That is the final agreement which will be embodied in a revised RMC,” Aggabao then said. For his part, Gunigundo said Purisima agreed to come out with a new revenue regulation that will preserve and maintain optionality of passive income disclosure in income tax returns 1700, 1701 and 1702. BIR Form 1700 is for Individuals Earning Purely Compensation Income, 1701 is for SelfEmployed Individuals, Estates and trusts while 1702 is for Corporation, Partnership and Other Non-Individual Taxpayers. (30) rbb

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