Tax Alert No. 34 [Revenue Memorandum Order (RMO) No. 25-2024 dated 1 July 2024]

Providing guidelines, policies and procedures in the processing of claims for credit/refund of taxes erroneously or illegally received or collected or penalties imposed without authority pursuant to Section 204(C), in relation to Section 229 of the National Internal Revenue Code of 1997, as Amended (Tax Code), except those under the authority and jurisdiction of the Legal Group

Please be informed that the BIR issued Revenue Memorandum Order (“RMO”) No. 25-2024 on 3 July 2024 to provide guidelines, policies and procedures in the processing of claims for credit/refund of taxes erroneously or illegally received or collected or penalties imposed without authority pursuant to Section 204(C), in relation to Section 229 of the Tax Code. This excludes those under the authority and jurisdiction of the Legal Group.

The RMO provides the following salient points for taxpayers with going concern status:

• The application for tax credit/refund shall be made within two (2) years from the date of filling the annual income tax return (AITR) showing an overpayment as a written claim for such tax credit/refund.
• The processing period for purposes of this application shall be 180 days counted from the submission of the complete documents as prescribed by the BIR.
• The income upon which the taxes were withheld must be included as part of the gross income declared in the AITR supported by the withholding tax certificate duly issued by the payor (withholding agent) to the taxpayer-claimant payee showing the amount of income payment and the amount of tax withheld.
• “Stop-Filer Cases” should be resolved independently to ensure due process in settling open cases and to exercise just enforcement of civil remedies as mandated by the Tax Code.
• In case of full or partial denial of the claim of the taxpayer-claimant, the latter may opt to elevate to the Court of Tax Appeals (CTA) within 30 days from the receipt of such full or partial denial.
• In case the application for tax credit/refund is not acted upon by the authorized processing office within the 180-day processing period, the taxpayer-claimant has the option to:
• Appeal to the CTA within the 30-day period from the expiration of the 180-day processing period; or
• Forego the judicial remedy and await the final decision of the authorized processing office.
• If no decision has been made on the application for tax credit/refund after the 180-day period and the taxpayer-claimant opted to seek for a judicial remedy within 30 days from such period, the administrative claim for refund shall be considered moot and shall no longer be processed.

The following are the salient points in case the taxpayer applied for tax credit/refund for purposes of dissolution or cessation of business:

• As an exception to the 180-day processing period rule, the processing office/s shall decide on the application and refund the excess taxes within two (2) years from the date of the dissolution or cessation of business.
• The 2-year period to decide and refund the excess taxes shall commence from the submission of the Application for Registration Information Update/Correction/Cancellation (BIR Form No. 1905) together with the complete documentary requirements set forth under Section 76(C) of the Tax Code for the closure of business and the refund of excess income taxes.
• The approved refund, if any, shall be released only after completion of the mandatory audit of all internal revenue tax liabilities covering the immediately preceding year and the short period return and full settlement of all tax liabilities relative to cessation or dissolution of the business and any existing tax liabilities prior to the cessation or dissolution of the business.
• The taxpayer claiming for tax credit/refund is responsible in proving the existence of taxes withheld and no income tax refund shall be granted unless the BIR Form No. 2307 or BIR Form No. 1606, whichever is applicable, is verified. Nonetheless, the withholding tax payments as the source of the claimed creditable taxes must be declared and included by the withholding agent in the Alphabetical List of Payees and such withholding agent has also remitted the same to the government.

You may access the full version of the RMO, including the annexes, through the BIR website.

For any inquiry or request for assistance, please feel free to contact anyone from our Tax Services group. You may also reach us through this link.