The Bureau of Internal Revenue (BIR) has issued detailed procedures for taxpayers seeking credits or refunds of excess payments made through erroneous or illegal collections, under Revenue Memorandum Circular (RMC) No. 102-2026. The guidance matters for businesses because it spells out where a claim must be filed, which deadlines apply, and what documentation the bureau requires before it will process a claim.

Under the circular, taxpayers applying for a credit or refund of excess or unutilized creditable withholding taxes on income must file an application with their respective Revenue District Office (RDO), the Large Taxpayers Division, or the Large Taxpayers Division.

The circular likewise confirms that taxpayers that permanently cease operations may still claim a refund even if they had previously chosen to carry over their excess income taxes — a clarification relevant to businesses winding down operations.

For going concerns opting to seek a tax credit or refund of excess income tax reflected in their annual income tax return, the application must be filed within two years from the date the return was filed. For taxpayers undergoing dissolution or cessation of business, the processing office must decide on the application and issue the tax credit or refund within a two-year period — putting a defined timeline on both the filing side and the bureau's processing side.

Only applications with complete documentary requirements will be received and processed by the authorized office, making a complete file a precondition for any claim to move forward.

In a related issuance, RMC No. 103-2026 amended the filing procedures for claims involving taxes that were erroneously or illegally received or collected, as well as penalties imposed without authority.

Tax credit or refund claims involving capital gains tax on the sale of real property classified as a capital asset, along with the corresponding documentary stamp tax, should be filed with the RDO that has jurisdiction over the location of the property. All other claims covered by the circular should be filed with the RDO, Large Taxpayers Audit Division, or Large Taxpayers Division that has jurisdiction over the taxpayer — splitting the venue between the office covering the property and the office handling the taxpayer's account.

Both circulars took effect immediately, meaning claims filed from now on must follow the newly prescribed venues and timelines.

Separately, the BIR said it updated its offline forms package for micro taxpayers seeking to avail of the one-time abatement program.

“We encourage qualified micro taxpayers to take advantage of the One-Time Abatement Program for Micro Taxpayers before the Dec. 31, 2026 deadline,” Commissioner Charlito Martin R. Mendoza said in a statement on Thursday. “With the updated eBIRForms package, we are making the process easier and more convenient so taxpayers can settle their covered liabilities and return to regular compliance,” he added.

Qualified micro taxpayers with covered total basic tax liabilities not exceeding P80,000 for a taxable year may avail of the abatement by paying a P5,000 fee per taxable year — a fixed cost and a fixed cutoff that together frame the window for eligible businesses to regularize covered liabilities and return to regular compliance.

— Justine Irish D. Tabile, BusinessWorld

Source: BusinessWorld