Gov’t workers appeal Supreme Court ruling on BIR plan to collect fringe benefits tax

A UNION of government employees yesterday asked the Supreme Court to reconsider its earlier denial of a union petition opposing the taxation of civil servants’ fringe benefits.
The court on July 3 upheld Revenue Memorandum Order (RMO) 23-2014 issued by the Bureau of Internal Revenue (BIR), which states that allowances, benefits and other benefits granted by government agencies are subjected to tax. The court in effect denied the petition filed led by the Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE).
In a motion for reconsideration filed Wednesday, the union asked the SC to declare “that the allowances and benefits enumerated in assailed Revenue Memorandum Order 23-2014 as fringe benefits not be subject to tax.”
It also asked the SC, in its “exercise of its equity and jurisdiction,” to refer the issue to the Court of Tax Appeals, should it need documentary proof to determine whether the allowances and benefits are in “nature of fringe benefits and not subject to tax.”
It also asked for the tax not to be imposed until a final determination is reached.
“These are benefits intended to help civil servants because salaries are low. The problem is that even the government wants to reduce even the small amount that the workers receive,” COURAGE national president Ferdinand R. Gaite told reporters yesterday.
In a statement, Mr. Gaite also cited the difficult current conditions caused by tax reform, the weak peso and higher fuel prices.
RMO 23-2014 calls for tax to be withheld from compensation paid to government workers. Citing Section 32 (A) of the National Internal Revenue Code (NIRC) of 1997, it added that compensation for services paid in any form, which included salaries, fees, allowances, honoraria, and fringe benefits that are not charged fringe benefits tax, among others, form part of the gross income.
Section 33 (C) of the NIRC states that fringe benefits that are not taxable are those that are exempt under special laws, contributions of the employer for retirement, insurance and hospitalization benefit plans among others.
BusinessWorld sought comment from the BIR but the agency did not reply as of deadline time. — Vann Marlo M. Villegas