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Tuesday, June 27, 2006
Tax notes: On carrying over excess income tax
Pursuant to Section 76 of the Tax Code, a taxpayer’s excess tax credits in a taxable year may be refunded or issued a tax credit certificate or carried over and credited against tax liabilities in the succeeding quarters.
By express mandate of Section 76, once the option to carry-over has been made, such option is irrevocable for that taxable period, and no application for cash refund or issuance of tax credit certificate shall be allowed thereafter. (Shell Services International Sendritian Berhad v. Commissioner of Internal Revenue, CTA Case 6658 dated March 5, 2006; Asian Transmission Corporation v. Commissioner of Internal Revenue, CTA Case 6648 dated March 20, 2006).
Hence, even if the taxpayer checked the refund or tax credit portion in its return but subsequently carried over the excess tax to the next taxable year, the taxpayer shall be deemed to have opted to carry-over and shall not be allowed to secure a refund of said excess tax.
The prohibition applies even if the taxes remain unutilized or the taxpayer claims to have committed a mistake when he carried over the amount intended to be refunded. (Source: Punongbayan & Araullo)
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