THE Bureau of Internal Revenue (BIR) has issued a reminder to all employers to comply with their withholding tax obligations.
These include the collection and remittance of withholding taxes, as well as performance of yearend adjustments and refund of excess withholding taxes on compensation of their employees.
Pursuant to Revenue Memorandum Circular (RMC) 21-2010, non-compliance with these obligations would result in the following violations of the employer/withholding agent:
1. Non-withholding (when there is failure to withhold the tax on the taxable income of the employee);
2. Under-withholding (when employer fails to correctly withhold the tax which should be equal to the tax due of the employee for the taxable year);
3. Non-remittance (when the employer fails to remit the total amount withheld);
4. Under-remittance (when employer fails to correctly remit the total amount withheld or when the total amount of remittance is lesser than the total amount withheld);
5. Late remittance (when employer remits the correct amount withheld beyond the prescribed due date);
6. Failure to refund excess taxes withheld (when the employer fails/refuses to refund excess taxes withheld to its employees).
RMC 21-2010 also reiterates the applicable penalties for non-compliance with the withholding tax obligations. Depending on the violation, the penalties may vary from the collection of surcharge, interest and in certain cases, to compromise penalty in lieu of criminal liability. (Source: Punongbayan & Araullo)