Question & AnswerQ&A (BIR REVENUE MEMORANDUM CIRCULAR NO. 21-2010)
Under Section 80 (A) of the National Internal Revenue Code, the employer is liable for withholding and remitting the correct amount of tax required to be deducted from their employees' compensation.
The employer must perform the year-end adjustment on or before the end of the calendar year but prior to the payment of the last payroll period and refund any excess withholding tax to employees not later than January 25 of the succeeding year, as per Section 79(H) of the Tax Code.
The six violations are: 1) Non-withholding of tax, 2) Underwithholding, 3) Non-remittance, 4) Underremittance, 5) Late remittance, and 6) Failure to refund excess taxes withheld.
Section 248 imposes a penalty equivalent to 25% of the amount due for failure to file a return and pay tax on time; if willful neglect or fraudulent return is involved, the penalty is 50% of the tax or deficiency tax.
Section 249 imposes an interest rate of 20% per annum on any unpaid amount of tax from the prescribed payment date until fully paid.
Section 251 imposes a penalty equal to the total amount of tax not withheld, not accounted for, or not remitted, in addition to other penalties.
Section 252 provides a penalty equal to the total amount of refunds which was not refunded to employees resulting from the excess withholding.
Section 255 provides a fine of not less than PHP 10,000 and imprisonment of not less than one year but not more than ten years upon conviction.
Under Section 256, the corporation faces a fine of not less than PHP 50,000 but not more than PHP 100,000 for each act or omission, in addition to penalties imposed on responsible officers.
Section 272 provides for a fine between PHP 5,000 and PHP 50,000, imprisonment from six months and one day up to two years, or both upon conviction for each violation.