BIR form 2316, substituted filing and e-signatures

With the end of the year approaching, most people start preparing for the holidays. For accountants and tax practitioners, this is also the time to plan for year-end statutory obligations, such as the Certificate of Compensation Payment/Tax Withheld for Compensation Payment With or Without Tax Withheld (BIR Form 2316) which must be issued to employees and submitted to the Bureau of Internal Revenue (BIR).

BIR Form 2316 must be accomplished by an employer for each employee receiving salaries, wages, and other forms of remuneration, indicating the total amount paid and the taxes withheld for the calendar year. It must be issued to the employee on or before Jan. 31 of the succeeding year, or on the day of last payment of wages in case of termination from employment. This certificate, in turn, should be attached to the employee’s Annual Income Tax Return (AITR) in case the employee opts to file one or is not qualified for substituted filing.

EMPLOYEES QUALIFIED FOR SUBSTITUTED FILING

Employees who meet certain conditions need not file an AITR. The BIR Form 2316 filed by their employers serves as their AITR (i.e., substituted filing). Under Revenue Regulations (RR) No. 2-98, as amended, individual taxpayers qualified for substituted filing are: 1. those receiving purely compensation income, regardless of the amount, 2. Those with only one employer in the Philippines for the calendar year, and 3. those whose income taxes have been withheld correctly by the employer. Qualified employees must signify their intention for substituted filing by signing the declaration portion of BIR Form 2316 in three copies and returning it to the employer.  The employer must file the duplicate copy of the form to the BIR with the certified list of qualified employees, reflecting the name of the employee, their tax identification number (TIN), their compensation income, tax due, and tax withheld.

Under BIR rules, should the employee need a BIR-stamped ‘Received’ copy of BIR Form 2316, this may be requested from the BIR through submission of a form accompanied by the employer’s certification of inclusion in the list of employees qualified for substituted filing. Employers may also handle this request on behalf of their employees.

EMPLOYER OBLIGATIONS FOR BIR FORM 2316

The employer is to prepare BIR Form 2316 in triplicate, to be distributed as follows: original — employee’s copy; duplicate — BIR’s copy; and triplicate — employer’s copy, to be retained for 10 years.

BIR Form 2316 must be signed by both the employer’s authorized officer and the employee, under penalty of perjury. The employer must give the original copy to the employee, while a duplicate copy is to be submitted by the employer to the concerned BIR office no later than Feb. 28 of the succeeding year.

Under the RR, all taxpayers must manually submit a Digital Versatile Disc Recordable (DVD-R) containing the soft copies of BIR Form 2316 using PDF file format with the filenames alphabetically arranged in the DVD-R. The filename must contain the employee’s surname, TIN, and the taxable period (e.g., Dela Cruz_123456789000_12312021). In addition, the DVD-R must be labeled following the format prescribed by the BIR along with a notarized sworn declaration that the soft copies contained in the DVD-R are the complete and exact copies of the originals.

Since there are still months to go, I’m hoping that the BIR also comes up with a platform for the online submission of these documents, similar to the Electronic Audited Financial Statements (eAFS) System, which is the platform used for the online submission of required attachments to the AITR. It will eliminate the need for taxpayers to flock to the BIR offices, and make complying with this obligation more convenient and efficient, not to mention safer for all concerned.

ARE ELECTRONIC SIGNATURES ALLOWED FOR BIR FORM 2316?

On Feb. 26, 2021, the BIR circulated Revenue Memorandum Circular (RMC) No. 29-2021, allowing the use of e-signatures on certain BIR Forms/Certificates, including BIR Form 2316. This was in response to the continuing effect of the COVID-19 pandemic and compliance with Republic Act No. 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018.

Under the circular, employees and withholding agents/employers have the option to use e-signatures on the BIR Forms even without seeking prior approval from the BIR. An e-signature includes digital signatures and other methods. Previously, the requirement was that the forms should be signed manually or in wet ink to be considered valid and binding.

It is also worth noting that under RMC 18-2021 circulated on Feb. 2, 2021, the BIR allowed the submission of duplicate copies of BIR Form 2316 even without the employees’ signatures, provided that the authorized representative of the taxpayer-employer signed it. Although this RMC was specifically for the taxable year 2020, let’s hope that the BIR also implements this for the 2021 submission.

Considering that the COVID-19 pandemic continues to affect our way of working, the BIR should continue to develop and implement new measures and platforms that will help taxpayers to meet their statutory obligations. After all, in precarious times, adaptation is the key to moving forward.