Written by Elizabeth K. Adaoag, 13 March 2008
Last week, many taxpayers rushed to file their tax amnesty applications with the various authorized agent banks of the Bureau of Internal Revenue (BIR) hoping to beat the deadline for availment of the program which was on March 6 but was later extended to March 7 to accommodate the late filers. At this time, it is still too early to know how much collection was generated from the program but from the number of queries we have been receiving from our clients, it would seem that there are still many taxpayers who would want to avail of the program. However, they need more time to prepare the required documents for availment, more particularly the Statement of Assets, Liabilities and Net Worth (SALN).
Yesterday, it was reported in the newspapers that no less than the principal author of the law, Congressman Danilo E. Suarez, who is currently the Chairperson of the House Committee on Ways and Means of Congress, called for the extension of the program to accommodate taxpayers who were not able to file their tax amnesty applications.
Legally, extension of the 6 months deadline provided under the Tax Amnesty Law (Republic Act No. 9480) is not possible unless a law is enacted for this purpose. However, in my view, availment of the program beyond the March 6 deadline set by the BIR is still possible without the need to extend the program but using as basis the argument that the six-month period ends not on March 6, 2008 but on May 5, 2008.
Republic Act No. 9480 provides that the filing of the Tax Amnesty Return together with the SALN and the payment of the amnesty tax shall be made within six (6) months from the effectivity of the Implementing Rules and Regulations (IRR), which is Department Order No. 29-07 as circularized in Revenue Memorandum Circular No. 55-07 (Tax Amnesty IRR).
The bone of contention here, therefore, is when did the IRR take effect? The answer to this question is very material as this would be the basis in determining the deadline or last day for the availment of the tax amnesty.
The BIR reckons the effectivity of the IRR to be September 5, 2007, which is 15 days after August 21, 2007, the date the IRR was published in the major daily newspapers. On this basis, the availment period for the tax amnesty should end on March 6, 2008.
I would like to point out, however, that there is a technical issue in this position, which somehow must have been overlooked by the BIR.
Under Section 3(1) and Section 4, Chapter 2, Book VII of the 1987 Administrative Code, effectivity of administrative issuances, e.g., revenue rules and regulations, requires filing of certified copies of the administrative issuance with the UP Law Center (considered the National Administrative Register or NAR), in addition to publication in the Official Gazette or newspaper of general circulation as provided in Article 2 of the New Civil Code. The law becomes effective only after 15 days from such filing, unless a different date is fixed by law or specified in the rule in certain exceptional cases.
The NAR filing is a mandatory requirement as was confirmed by the Supreme Court in the case of Philippine Association of Exporters, Inc. vs. Torres et. al., (G.R. No. L-191279 dated August 6, 1992) where certain administrative circulars were declared legally invalid and unenforceable for lack of proper publication and filing with the Office of the NAR at the UP Law Center.
Clearly, from the above provisions and jurisprudence, the effectivity of the IRR on the Tax Amnesty Program shall be determined based on compliance with two mandatory requirements:
- publication of the IRR in the Official Gazette or any newspaper of general circulation and
- filing of a copy of the IRR with the NAR. If these two filing requirements were done on the same date, the 15-day period from which to reckon the effectvity of the IRR shall be counted on said date.
However, if the publication and filing of the IRR were done on different dates, which is what happened in the Tax Amnesty IRR, the 15 days should be counted from the later date. In the case of the Tax Amnesty IRR, it was published in the newspapers on August 21, 2007 while filing of its copy with the NAR was done only on October 23, 2007.
Given these dates, the actual effectivity of the Tax Amnesty IRR was on November 7, 2007, which is 15 days after October 23, and not on September 5, 2007 as fixed by the BIR. Thus, it follows that the deadline to avail of the tax amnesty program, which the law has set at six months from effectivity of the IRR, should legally be on May 5, 2008 and not on March 6, 2008.
Although there is strong legal basis to argue that the Tax Amnesty Program can be further extended to May 5, 2008, it is difficult to say that the BIR will be willing to issue the necessary RMC or RMO considering that the BIR has already programmed its collection targets on the basis that the Tax Amnesty Program would end on March 6, 2008.
Having said that, the Department of Finance therefore needs to exert its administrative authority over the BIR to compel the latter to clarify this legal issue.
