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Amicus Curiae

BIR clarifies regulations on credit/debit/prepaid cards as alternative modes of tax payment

Jessielle Ann C. Fabian

May 31, 2017

The Bureau of Internal Revenue (BIR) has promulgated on Feb. 8 Revenue Regulation No. 2-2017 (RR No. 2-2017) which amended Revenue Regulation No. 3-2016 (RR No. 3-2016). This pertains particularly to when tax payments are made through credit/debit/prepaid card and covers the liability of the Authorized Agent Bank-Acquirer in case of non-payment.


In 2016, BIR promulgated RR No. 3-2016 prescribing the policies and guidelines on the adoption of Credit/Debit/Prepaid Cards payments as additional modes of payment of internal revenue taxes. However, since the time it was promulgated, some taxpayers don’t even know that they can pay their taxes through these modes, and if they do, that there are guidelines and obligations they have to consider. On top of the payment mechanisms already in place such as cash or check payment through Authorized Agent Banks (AAB) or revenue collection agents, mobile money platform (Gcash), and even e-payment (Bank Transfer or Electronic Fund Transfer, Tax Debit Memo, and Tax Remittance Advice for NGAs), by which taxpayers can pay their internal revenue taxes, taxpayers may now also resort to payment by credit/debit/prepaid cards through Authorized Agent Banks (AAB). Indeed, the government continuously exerts efforts to adapt to the changing times and to integrate new technologies and mediums for taxpayers to easily and conveniently pay their taxes.

 

However, RR 3-2016 had certain drawbacks for the taxpayers.

In its general policies, it relieved BIR of any responsibility and liability on issues between the taxpayer-cardholder and the card issuer, such as the card issuer’s erroneous posting or charging to the account of the taxpayer-cardholder, among other issues. This left taxpayers with no recourse through the BIR and without help from the taxing authority.

Furthermore, the payment of taxes through credit/debit/prepaid card was considered made only on the date and time appearing in the system-generated payment confirmation receipt issued to the taxpayer-cardholder by the AAB-Acquirer, and provided, that the payment is actually received by the BIR. In fact, in case payment is not received by the BIR, it is the continuing liability of the taxpayer to pay. The taxpayer is not relieved of, and has a continuing liability for, such taxes until the payment is actually received by the BIR.

These risks and uncertainties were what deterred some taxpayers from using credit/debit/prepaid cards as an alternative mode of payment. Can you imagine having an amount corresponding to your tax due charged to your card but still being liable to pay the same amount of tax since the amount was not actually received by BIR?

That is why under the new RR No. 2-2017, BIR appointed the AAB-Acquirer as the trustee of the government with the obligation the remit the payment on time to the BIR.

Section 4 of RR No. 3-2016 was amended to read as follows:

“Section 4. When Payment is Deemed Made. -- The payment of taxes through credit/debit/prepaid card shall be deemed made on the date and time appearing in the system-generated payment confirmation receipt issued to the taxpayer-cardholder by the AAB-Acquirer.

However, in case of late remittance or non-remittance of taxes to the BIR, despite the timely issuance of a valid confirmation receipt by the AAB-Acquirer to the taxpayer-cardholder, the liability to pay the tax rests upon the AAB-Acquirer considering that from the time of issuance of a valid confirmation receipt to the taxpayer-cardholder, the AAB-Acquirer becomes the trustee of the government with the obligation to remit the payment on time to the BIR.”

Payment of taxes through credit/debit/prepaid card is now deemed made on the date and time appearing in the system-generated payment confirmation receipt issued to the taxpayer-cardholder by the AAB-Acquirer, regardless of BIR’s receipt of the payment.

This amendment has shifted the liability to pay taxes from the taxpayer to the AAB-Acquirer from the moment the taxpayer receives a confirmation receipt from the bank. This is similar to the liability of employers as withholding agents of the government.

This has somewhat reduced the apprehensions of some taxpayers in using cards as an alternative mode of payment. It gave them assurance that the confirmation receipt they have in their hands is enough proof of their payment and that they can sleep without worrying if the AAB-Acquirer has remitted their payment to the BIR or has remitted their payments on time.

Indeed, BIR, through amending RR 3-2016, has complied with the principles of a sound tax system on administrative feasibility and has, in some way, reduced the burden and difficulties experienced by taxpayers in the payment of internal revenue taxes.

(The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.)