TAXPAYERS seeking refunds of excess or unutilized creditable withholding taxes will have to meet stricter filing and documentation requirements under new Bureau of Internal Revenue (BIR) rules.
The changes were introduced through Revenue Memorandum Circulars (RMCs) 102-2026 and 103-2026, which amend earlier BIR issuances governing the processing of tax credit and refund applications.
Under the updated rules, taxpayers seeking a CWT tax credit or refund must file BIR Form 1914 (Application for Tax Credits/Refunds) with the office having jurisdiction over the taxpayer-claimant.
This means filing with the taxpayer’s revenue district office (RDO), or, for taxpayers under the Large Taxpayers Service, the appropriate Large Taxpayers Audit Division (LTAD) or Large Taxpayers Division (LTD).
The BIR also reiterated the irrevocability of a taxpayer’s decision to carry over excess income taxes.
Under the rules, an individual or corporation with excess income taxes shown on its annual income tax return (AITR) may choose to carry over the excess and credit it against estimated quarterly income tax liabilities in succeeding taxable years.
Once that option is chosen, however, it is considered irrevocable for that taxable period and the taxpayer may not subsequently apply for a tax credit or refund of the same excess amount.
The circular provides an exception for taxpayers that have permanently ceased operations. Those that previously chose the carry-over option may claim a tax refund after permanently ceasing operations, as provided under Section 76(C) of the Tax Code.
For taxpayers that remain operating as going concerns and have chosen to seek a tax credit or refund, the bureau said the application must be filed within two years from the date the AITR was filed.
The BIR said an AITR showing an overpayment is considered a written claim for tax credit or refund. However, for purposes of the 180-day processing period under Section 204(C), counting begins only upon submission of BIR Form 1914 together with the complete documentary requirements prescribed by the BIR.
The required documents must be submitted within the two-year prescriptive period.
The circular distinguishes between the two-year period for filing a refund claim and the 180-day processing period.
While the AITR showing an overpayment serves as a written claim, the BIR said the 180-day period starts upon submission of the formal application and complete supporting documents.
The BIR also provided a separate rule for taxpayers undergoing dissolution or cessation of business.
For these taxpayers, the processing office must decide on the application and issue the tax credit or refund of excess or unutilized CWT within two years from the date of dissolution or cessation of business.
The circular treats this as an exception to the 180-day processing period under Section 204(C). For purposes of the two-year period, the period begins upon the submission of BIR Form 1905 (Application for Registration Information Update/Correction/Cancellation) together with the complete documentary requirements for business closure and the refund of excess income taxes arising from cessation or dissolution.
The BIR further said only applications with complete documentary requirements will be received and processed by the authorized processing office.
Separate checklists are provided for non-individual taxpayers with going-concern status, individual taxpayers with going-concern status, and taxpayers undergoing dissolution or cessation of business.
Meanwhile, for claims involving capital gains tax (CGT) on the sale of real property classified as a capital asset, as well as the related documentary stamp tax (DST), taxpayers must file BIR Form 1914 with the RDO that has jurisdiction over the location of the real property subject to CGT.
For all other tax credit or refund claims covered by Sections 204(C) and 229, applications must be filed with the office having jurisdiction over the taxpayer-claimant — either the appropriate RDO or the respective LTAD or LTD.
Both circulars state that inconsistent revenue issuances or portions thereof are “repealed, modified or amended accordingly, and both took effect immediately.”
