The Bureau of Internal Revenue (BIR) recently issued Revenue Memorandum Order (RMO) No. 20-2018, which prescribes the revised guidelines, policies and procedures in the processing of Tax Credit Certificates (TCCs) into cash refunds. For those unfamiliar of what a TCC is, it is a certification issued to a taxpayer by the Commissioner of Internal Revenue (CIR) acknowledging that the taxpayer is legally entitled to a tax credit, which may be used in payment of internal revenue tax liabilities, or may be converted as a cash refund. TCCs are generally issued by the BIR to a taxpayer for various reasons, the most common of which is for situations where taxes have been erroneously or illegally paid.

We provide below the highlights of RMO No. 20-2018:

All requests for cash conversion shall be filed with the BIR office that originally processed the claim for issuance of a TCC, except in the following cases:

Claims filed with the Revenue District Offices but were subjected to further review and approval by the BIR National Office, in which case, it shall be filed with the Tax Audit and Review Division; and

Revalidated TCCs which shall be filed with the Miscellaneous Operations Monitoring Division of the Collection Service for revalidated TCCs.

In any case, the concerned offices shall process the requests for cash conversion and certify as to the authenticity and validity of the TCC issued. In this regard, the following are the documents required to be submitted in support of the request for cash conversion of TCCs:

Original copy of the TCC for conversion;

Original copy of the Secretary’s Certificate/Special Power of Attorney (SPA) executed by the taxpayer authorizing a representative to apply for TCC cash conversion on his behalf;

Board Resolution approving the issuance of a Secretary’s Certificate/SPA to the authorized representative, whichever is applicable; and

Any government-issued identification card of the taxpayer or his authorized representative.

The original copy of the TCC, once surrendered to the concerned processing office, shall be cancelled, and this fact shall be entered into the BIR Integrated Tax System – Tax Credits and Refund System. All requests for cash conversion of TCCs shall be referred to the Assistant Commissioner – Collection Service for verification of the taxpayer’s tax liabilities, and subsequently, to the Assistant Commissioner-Finance Service for funding purposes.

If the taxpayer is found to have outstanding tax liabilities during the processing of the request, he may use the TCC to pay the deficiency taxes.

The Deputy Commissioner– Operations Group (or in his absence, the CIR) shall approve/disapprove the recommendations for cash conversion of TCCs issued by all offices in the BIR National Office and Regional Offices, prior to submission to the Finance Service for processing of payment of cash conversion of TCCs.

Note however that the conversion of TCCs to cash shall NOT be allowed in the following situations.

TCCs issued as a result of the availment of incentives granted by special laws for which no actual payment was made;

TCCs transferred or assigned prior to the effectivity of Revenue Regulations (RR) No. 14-2011 (issued on July 29, 2011). Note that under RR No. 14-2011, TCCs may not be transferred or assigned to any person; TCCs which remain unutilized after 5 years from date of issue (unless revalidated before the end of the fifth year).

Manila Times Source

ATTY. PEACHES ARANAS

Managing Partner LMA LAW