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Tuesday, June 20, 2006
Tax notes: Claim for refund by agents of excess withholding tax
A withholding agent who has over withheld taxes has the legal capacity to claim refund of the excess payments or bring action to recover any tax overpayment.
A withholding agent is regarded as a taxpayer as provided in Section 309 (3) [now 204 (C)] of the National Internal Revenue Code (NIRC) and is, therefore, authorized to file a claim for refund and suit to recover a tax overpayment. (Smart Communications Inc. versus Commissioner of Internal Revenue, CTA Case No. 6782, Feb. 23, 2006).
Under Section 309(3) of the NIRC, no credit or refund of taxes or penalties is allowed unless the taxpayer files, in writing, before the Commissioner of Internal Revenue a claim for credit or refund within two years after the payment of tax.
A withholding agent is treated as a taxpayer in view of his or her direct and independent liability under the withholding tax system.
As an agent of the government, a withholding agent collects and withholds tax for the government.
As an agent of the taxpayer, he or she is responsible for the filing of the necessary income tax return, and the actual payment of the tax, which includes the authority to file a claim for refund and bring an action for recovery of such claim. (Source: Punongbayan & Araullo)
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