Tax Articles

Nuances of Covid19 Deadline Extensions

By Atty. Irwin C. Nidea Jr.

Amid the Covid19 pandemic which has disrupted our daily lives, the BIR extended the deadline of filing and payment of different types of tax. The courts also extended the filing of petitions and other pleadings. But these extensions have nuances, that taxpayers must be aware of.

We all know that the BIR was reluctantly forced to move the filing and payment of Annual Income Tax Returns from April 15, 2020 to May 15, 2020. This means delay in the collection of funds necessary to finance emergency assistance to many Filipinos who are in need. But everyone is encouraged to still pay to any Authorized Agent Banks or to any Revenue Collection Officer and not wait for the extended deadline to do so.

Due dates in the filing and payment of all other types of tax were also moved to 1 month after its original due date. This includes VAT, and withholding tax payments. The government according to the Department of Finance has no choice but to look for other sources, like borrowing money, to fill in the gap.
It is a welcome development that the filing of VAT refund applications covering the quarter ending March 31, 2018 can still be accepted until April 30, 2020. Also, the 90-day period to process VAT refund claims for claims currently being evaluated and for those that may be received from March 16, 2020 to April 14, 2020 are suspended and that the counting shall resume after the lifting of the “community quarantine”. But there are other refund claims that are not given a 30-day extension.

First, creditable withholding tax refunds (CWT) are due within 2 years from the filing of the Annual Income Tax Return. 2017 CWT refund of taxpayers that observe calendar year in recording their books, the due date will fall on April 14, 2020 (note that 2020 is a leap year). Since the quarantine period ends on April 12, 2020 then taxpayers are still required to file the administrative claim for refund with the BIR not later than April 14, 2020 (note that 2020 is a leap year).

Second, excise tax refunds are due within 2 years from the date of payment. If the 2-year period has lapsed during the quarantine period, the taxpayer must also immediately file the administrative claim on April 13, 2020, which is the first working day after the quarantine.

But what about appeals to the Court of Tax Appeals (CTA) and other courts? The SC issued a Resolution suspending work in all courts. It also resolved that Petitions and other court submissions that fall due from the period March 15, 2020 to April 15, 2020 is extended for 30 days counted from April 16, 2020.

In the case of VAT refund where the expiration of the 30-day period after the 90-day period for the BIR to decide, falls between March 15, 2020 to April 15, 2020, the taxpayer can still file an appeal to the CTA until May 15, 2020. As regards CWT refunds for 2017 (where the ITR was filed on April 15, 2018 or earlier), as discussed above, the taxpayer must still file the administrative claim for refund with the BIR within 2 years from the filing of the Annual Income Tax Return, or not later than April 14, 2020. But the judicial claim for refund may still be filed with the CTA until May 15, 2020. Almost the same predicament applies to excise tax refunds. Administrative claims must be filed on April 13 and April 14 if they fall due on such dates. But petition with the CTA may still be filed until May 15, 2020 to beat the 2-year prescriptive period.

The BIR officers are still required to work from home especially on assessments that are prescribing. Why is this so? The prescriptive period for the BIR to issue a Final Assessment Notice (FAN) is not suspended by this pandemic. So, if an assessment is going to prescribe on April 10, 2020, the BIR must issue a FAN on April 13, 2020, which is the first working day after the lifting of the quarantine period. Failure by the BIR to issue the said FAN would mean that the BIR loses its right to assess. The taxpayer should find creative ways to submit supporting documents to the examiners so that these will be considered in the preparation of the FAN.

It is understandable that tax deadlines are far from everybody’s mind amid this existential threat. But it is important that taxpayers take note of these nuances to protect their rights. When the dust settles (hopefully very soon), nobody wants to face any more tragedy because of a missed deadline.