Employer’s responsibility to withhold tax from salary

Dear PAO,

The company where I previously worked did not withhold tax on my salary. Will I be punished for this?

Dex

Dear Dex,

Being the primary source of revenue of the government, taxes are considered to be the lifeblood of our nation. The money generated from taxes is utilized by the government to support its projects for the benefit of the people. Because of its importance, the government can impose and collect from its citizens their taxes from their income, sales and transactions such as sale of lands and other real properties, among others.

Section 6 of Republic Act (RA) 9504, or the “An Act Amending Sections 22, 24, 34, 35, 51, and 79 of RA 8424, As Amended Otherwise Known as the National Internal Revenue of 1997, imposes upon every employer making payment of wages the liability to deduct and withhold upon such wages a tax as determined in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner of the Bureau of Internal Revenue (BIR). No withholding tax, however, will be deducted from the wages of persons who are considered to be minimum wage earners. The term “minimum wage earner” shall refer to a worker in the private sector paid the statutory minimum wage, or to an employee in the public sector with compensation income of not more than the statutory minimum wage in the non-agricultural sector where he/she is assigned (Section 1, id.).

Unless you are a minimum wage earner, your employer is bound by law to deduct and withhold upon your salary the corresponding income tax. The failure of an employer to carry out the aforementioned provision of law will not in any way result in meting out any punishment to the employee whose salary was not subjected to tax. There is neither law nor rule in our country, which makes an employee liable for the infractions of his employer. Moreover, Section 80 of RA 8424, or the National Internal Revenue Code of 1997 makes the employer liable for its failure to withhold and remit taxes required to be deducted and withheld from its employees, to wit:

“Section 80. Liability for tax.
A) Employer. – xxx If the employer fails to withhold and remit the correct amount of tax as required to be withheld under the provision of this Chapter, such tax shall be collected from the employer together with the penalties or additions to the tax otherwise applicable in respect to such failure to withhold and remit.”

However, please be reminded that if you are not a minimum wage earner, or if you have multiple employers, you are obliged to pay the taxes due and file your income tax return using BIR Form 1700—Annual Income Tax Return (For Individual Earning Purely Compensation Income including Non-Business/Non-Profession Related Income) on or before the 15th day of April of each year covering taxable income for the preceding taxable year. Thus, you are hereby advised to visit the nearest BIR Revenue District Office for proper guidance to avoid any problem on the matter.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated. –Persida Acosta, Manila Times

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.