Under the Tax Code, the employer has the duty to withhold and remit the taxes on compensation of their employers. It is essential for the employers to know that the following are the potential violations that they may commit under the Tax Code:
1. Non-withholding of Tax. This happens when an employer fails to withhold the tax on in the taxable income of the employee.
2. Underwithholding. This happens when an employer fails to correctly withhold the tax which should be equal to the tax due of the employee at the end of the taxable year.
3. Nonremittance. This happens when an employer fails to remit the total amount withheld from the employee.
4. Underremittance. This happens when an employer fails to correctly remit the total amount withheld or when the total amount of remittance is lesser than the total amount withheld.
5. Late remittance. This happens when an employer remits the correct amount withheld beyond the prescribed date.
6. Failure to refund excess taxes withheld. When employer fails/refuses to refund excess taxes withheld to its employees.
In case of failure to comply with its duty to withhold and remit the taxes on compensation of their employees, the Tax Code imposes a number of penalties.
1. Under Section 248 of the Tax Code, a penalty equivalent to twenty five percent (25%) of the amount due for failure to file any return and pay the tax due thereon as required on the date prescribed; in case of wilful neglect to file the return within the period prescribed. In case a false or fraudulent return is wilfully made, the penalty shall be fifty percent (50%) of the tax or the deficiency tax, in case, any payment has been made on the basis of such return before the discovery of the falsify or fraud.
2. Under Section 249 of the Tax Code, interest at the rate of twenty percent (20%) per annum on any unpaid amount of tax, from the date prescribed for payment until the amount is fully paid.
3. Under Section 251 of the Tax Code, for failure of any person required to withhold, account for, remit any tax imposed or who wilfully fails to withhold such tax, or account for and remit such tax, or aids or abets in any manner to evade any such tax or the payment thereof, shall, in addition to other penalties, be liable upon conviction to a penalty equal to the total amount of the tax not withheld, or not accounted for and remitted.
4. Under Section 252 of the Tax Code, the employer shall, in addition to the penalties, be liable to a penalty equal to the total amount of refunds which was not refunded to the employee resulting from any excess of the amount withheld over the tax actually due on their return for failure or refusal of any employer/withholding agent to refund excess withholding tax
5. Under Section 255, the employer shall, in addition to the penalties imposed under existing laws, upon conviction be punished by a fine of not less than P10,000 and suffer imprisonment of not less than one (1) year but not more than ten (10) years for failure to pay tax, make return, keep record, or supply correct and accurate information or withhold or remit taxes withheld, or refund any excess taxes withheld on compensation at the time required by law or rules and regulations.
6. Under Section 256, the responsible corporate officers, partners, or employees shall upon conviction for each act or omission, be punished by a fine of not less than 50,000 but not more than 100,000
