Additional options for submission of 2019 ITR and attachments

Prior to the pandemic and the various quarantines imposed in various parts of the country, the hard copy of duly filed Income Tax Return (ITR), along with the required attachments, had to be submitted manually and stamped “Received” at the Large Taxpayers Division (LTD)/Revenue District Office (RDO) where the taxpayer is registered, within 15 days from the statutory due date or date of filing/payment of the ITR, whichever comes later. This year, due to the state of emergency, the filing and payment of income tax have been extended until 14 June. However, as 14 June falls on a Sunday, the deadline is automatically extended to the next working day (15 June). Consequently, the submission of the duly filed 2019 ITR and its attachments has been extended until 30 June.

Option 1 - Submission through RCOs

The first alternative is for taxpayers to manually submit their duly filed 2019 ITR with its attachments to the RCOs nearest to them, notwithstanding RDO jurisdiction. For instance, if the taxpayer is registered in Makati City but is currently in Cebu City, the ITR and its attachments can be manually submitted to the RCO of Cebu City. The RCO will then forward the documents to the RDO in Makati where the taxpayer is registered.

For ITRs paid online through the facility of the Authorized Agent Banks (AABs), the RCOs shall stamp “Received” on the first page of the ITR, balance sheet, income statement, and the external auditor certificate. For ITRs filed electronically, the RCOs will only stamp as “Received” the Filing Reference Number generated from the eFPS or the e-mail confirmation from the eBIR Forms System and the financial statements.

Option 2 - Submission through online EAFS

As an alternative to physical submission, taxpayers are also given an option to submit the duly filed 2019 ITR and attachments electronically through the eAFS system of the Bureau of Internal Revenue (BIR). The eAFS is available to all types of taxpayers, and there are no requirements for technical specifications or software installation. It is a web-based system and can be used if the taxpayer has access to a browser and a reliable internet connection.

Enrollment in eAFS

The eAFS or the portal for online submission can be accessed through the BIR webpage at www.bir.gov.ph by clicking the eAFS icon. Enrollment is required, and the taxpayer should supply all the necessary information such as the taxpayer’s data, name of authorized tax agent/representative, and login information. Once all the information has been encoded, the Statement of Undertaking will appear. The taxpayer will have to click “Accept” for the enrollment to proceed.

The confirmation message and an activation link will then be sent to the taxpayer’s designated e-mail. The activation link must be clicked within 72 hours to activate the account. Otherwise, the enrollment will be discarded. Note that the system is Tax Identification Number (TIN) and e-mail sensitive. This means that the TIN and e-mail address can only be registered once; thus, all the information provided must be correct. Once enrollment is done, there is no mechanism for amending the information submitted.

Uploading to eAFS

The attached documents are grouped into three types: Income Tax Return (File 1), Audited Financial Statements (File 2), and the Other Required Attachments (File 3). The taxpayer must attach the appropriate documents to upload to every file box. To upload and submit the files thru eAFS, the taxpayer must scan the documents, save them as PDF files, and name them accordingly as prescribed in the RMC.

The eAFS will acknowledge the successful submission by issuing a system-generated Transaction Reference Number (TRN) and an e-mail confirmation with the TRN to the taxpayer. The TRN shall serve as proof of submission by the taxpayer, in place of the manual “Received” stamping. In case of corporations and other juridical persons who also need to submit the audited financial statements (AFS) to the Securities and Exchange Commission (SEC), the TRN shall serve as proof of submission to the BIR. The taxpayer must print the TRN and attach it to the AFS for submission to the SEC.

Retention period

After submitting the ITR and its required attachments, the taxpayer shall keep the original copies of the digitally submitted documents as required under Section 235 of the Tax Code. Under Revenue Regulations (RRs) No. 17-2013 and 5-2014, all books of account, subsidiary books, and other accounting records must be kept by the taxpayer for 10 years. For the first five years, the preservation of accounting records must be in hard copy. For the sixth to the tenth year, accounting records may be preserved only in electronic form based on the guidelines of the RR.

Based on RMC No. 49-2020, the options to submit to the nearest RCOs or online would seem to apply only for calendar year taxpayers with respect to their 2019 ITRs and their attachments, in the absence of a provision including in the coverage the submission of amended ITRs and AFS for prior years, and those with a fiscal year ending 31 January, 2020, or onwards. It would be good for the BIR to release a circular clarifying this matter, especially since 31 January year-end taxpayers are due to submit the same documents by 15 July. Not only will it dispel confusion but also minimize the influx of taxpayers at the RCOs given the restrictions on social distancing.

Thinking even further ahead, it would certainly be a big boost to the country’s ease of doing business status if the eAFS option is made available on a more permanent basis. Perhaps it could even be expanded to include other documents that are still manually filed (or in electronic format but still physically filed) like the annual inventory lists and withholding tax certificates issued to employees (BIR Form 2316) with the accompanying certified list of employees qualified for substituted ITR filing. Online tax filing and payment was introduced by the BIR 18 years ago back in 2002, but it is only now that full electronic filing of all documents has been possible. Here’s hoping that the eAFS and similar online portals become available all year round, which could be one silver lining we can attribute to the unfortunate COVID-19 cloud.