Please avoid tentative ITR

Revenue Memorandum Circular 50-2013

SUBJECT:   Clarification Regarding “Tentative Annual Income Tax Returns” Being Filed by Certain Taxpayers

 What do you mean by “Tentative Annual Income Tax Returns” being filed by tax payers?

These are the Income tax returns that are being filed by the taxpayers but there is incompleteness or non-finality of the data. The issue is not literally as being “tentative”, but as an incomplete data of ITR submitted at the DEADLINE of the tax filing.

How is this possible? Why are there incomplete data of financial statements?

During the season of income tax filing, the financial statements or income statements that serve as the basis for the taxable income were not yet completed by the book keepers or accountant of the withholding agent.  External factors like poor internal control of accounting system (especially SMEs), other than willful neglect of non-compliance may be a reason. More so, the hassle in beating the tax deadline has cause the rise of tentative filing of income tax returns.

What does the responsibility of the taxpayer in accordance with RMC 50-2013?

Whenever the taxpayer affixes his or her signature in the ITR the taxpayer is also declaring that the tax return is made in good faith, true and correct, hence in accordance with the provisions of the National Internal Revenue Code (Tax Code), as amended and existing regulations. The taxpayer should know that in doing so, the filing of amended tax returns and finalization of its audited financial statements should be a priority by the tax payer. The filing of amended tax returns has the effect of extending the three (3) year period within which the Bureau of Internal Revenue is allowed to examine the books of the taxpayers.

 Why should the taxpayer give importance in preventing “Tentative filing of ITR”?

For purposes of the RMC 50-2013, a “Tentative Tax Return” shall be considered as a final return, unless a final amended return is filed by the concerned taxpayer. However, once an electronic Letter of Authority or any other notice of audit is received, taxpayers are barred from making amendments to the tentative tax returns filed. This emphasizes that income tax returns marked as “Tentative” may also be the subject of examination pursuant to Section 6(A) of the Tax Code, as amended.