May 15 marks the last day of the extended enhanced community quarantine (ECQ) for most parts of the country, including the National Capital Region. In spite of the continuing increase in the number of new COVID-19 cases being reported each day, the government has decided to relax restrictions in certain parts of the country in hopes of gradually getting the economy going again after a two-month lockdown.
Under the modified ECQ or MECQ, certain industries or business sectors have been allowed to partially reopen, where only a maximum of 50% of each business’s workforce will be permitted to work on-site. Included among these sectors are those providing office administrative support and accounting services.
Technically, areas under MECQ are still under quarantine; therefore, many taxpayers expect a further extension of tax filing and payment deadlines. In Revenue Regulations (RR) No. 11-2020, there is a provision stating that, in case of another quarantine extension, the extended tax filing and payment deadlines enumerated shall further be extended by 15 calendar days.
However, the tables have turned when the Bureau of Internal Revenue (BIR), in a recently published news article, commented that no further extension of tax deadlines will be granted and that an amendatory regulation will be released to repeal the provision granting an additional extension under RR No. 11-2020.
With the varying community quarantine phases and their corresponding restrictions being implemented across the country, taxpayers are facing challenges, more than ever, in fulfilling their tax obligations. Although the BIR has granted two months’ worth of extensions for certain tax filings, not all entities were able to ensure the continuity of their bookkeeping for the affected tax reporting periods. In addition, there are taxpayers who have put their year-end financial audits on hold during the lockdown. The circumstances brought on by the pandemic really came as a big surprise, and not everyone was prepared to deal with the consequences.
The previous extensions for filing deadlines for two months at most, and the non-extension under the MECQ, have resulted in most due dates happening in rapid succession. The due dates for May tax returns were also not extended and will fall due within the same period. This situation leaves the taxpayers who can only start working upon the lifting of the ECQ with very limited time to complete the backlogs on their accounting records, as well as to finalize the amounts to be reported in their tax returns. As if these tasks are not burdensome enough, there is also the issue of mobility and transportation in order for people to easily report to work and do the necessary filing or submission with the BIR while under ECQ or MECQ.
It is a good thing, though, that the BIR is doing its part in finding ways to lessen the burden of the taxpayers during these challenging times. Previously, the BIR issued Revenue Memorandum Circular (RMC) No. 43-2020, which allows taxpayers to pay their internal revenue taxes at any Authorized Agent Bank (AABs) nearest them, regardless of the Revenue District Office (RDO) jurisdiction, during the ECQ period. The filing and payment of tax returns may also be done through the concerned Revenue Collection Officers of the nearest RDO, even in areas where there are AABs. To facilitate check payments, the RMC provides that checks shall be made payable only to the Bureau of Internal Revenue, without the need to indicate the name of the receiving AAB Branch. This also allows for the flexibility of taxpayers to pay through any bank that is open. Nevertheless, it is still prudent for taxpayers to verify with the AAB to avoid conflicts upon filing and paying tax returns.
In another effort to ease the process of filing and paying taxes, BIR Revenue Region No. 6 spearheaded a project called “BIR Mobile 2020,” which provides a door-to-door filing and payment service to taxpayers via appointment. This initiative is very helpful for taxpayers in meeting their tax obligations not just promptly and conveniently, but also in a way that is much less threatening to taxpayers’ health and safety. Here’s hoping that more tax offices throughout the country follow suit, and that the BIR keeps this project rolling for as long as the taxpayers need such services.
Despite the very strict timeline for taxpayers to work on their tax returns, it is very important to ensure that the amounts reported are correct and complete to avoid penalties. It is equally of great importance to keep track of the filing due dates, especially now where filing due dates come almost weekly, to ensure that no deadline is missed.
It is truly in the most challenging times that highlight the importance of planning, as well as of being flexible enough to adapt to sudden and drastic changes. Indeed, this year has taken the tax return filing to a whole new level of extraordinary. However, with proper planning and efficient execution, taxpayers should be capable of overcoming the obstacles that lie ahead.
We often say, “a little preparation can go a long way.” If that is so, then we could just imagine what more of an advantage it would be if we were better and earlier prepared.
Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
Arianne Cyril L. Mandac is a tax manager of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.