HR 101 : Individual Tax Return (2316)

As part of the offboarding and onboarding procedures task done by Human Resources and to a certain extent, Payroll or Accounting Practitioners (if in any case that Payroll Management is not under Human Resources) will (1) require incoming employees to submit or ask for a copy of the Individual Tax Return Form or BIR 2316 or (2) issue this certificate once the final pay of the departing employee leaves the company.

Any incoming employee who previously worked or was employed within the calendar year is required to submit this to consolidate one's income with the current employer. By consolidating income for both employers, the new employee compute its to make sure that correct deductions were made by the previous employers therefore corrections will be made by deducting the shortfall to the withholding tax at the end of the year (although there will be arrangements that deductions will be done at one time - but this will be arranged accordingly).

POST EMPLOYMENT

For offboarding or upon leaving the company, this document should be given to the resigning or terminated employee as part of his exit documents that he request HR at the time his last pay is released.

HR/Payroll practitioners must issue this on the date the last pay is given since the need to consolidate the annual income is now required by the Bureau of Internal Revenue. This is to avoid the employee to file it separately at the BIR instead of the company doing this in the employee's behalf.

I would also suggest that HR should advise the outgoing employee not to spend the Tax Refund which is part of the final pay. This will at least offset the tax due to the government at the end of the said year.

ONBOARDING:

For onboarding, the employee is required to submit this to Human Resources, in which HR will forward a copy to Payroll for consolidation at the end of the year. The said form must be submitted to the current employer ideally before November or of the current taxable year.

WHAT IF I HAVE A PREVIOUS EMPLOYER AND FAILED TO SUBMIT MY 2316 BECAUSE THEY DID NOT GIVE ME THIS FORM BEFORE THE DEADLINE IMPOSED BY MY NEW EMPLOYER?

There are instances when you requested for this as required by the new employer and unfortunately, you were informed that this will be issued the following year by your former employer, despite numerous follow ups from your end. Or at worse, the ones in charge are not aware of the regulation and insists on the old deadline. As a result, you cannot meet the deadline imposed by your current employer.

In this case, you'll still need to submit your combined income tax return on or before April 15. You need to get both ITRs from your previous and current employer and combine them. Your new employer has the option to help you in the preparation or suggest an Accountant or bookkeeper to do this for you (and yes pay their professional fee to do the whole process - from consolidation and preparation of the form). Any tax due (as a result in the difference in salaries from both employers) will be paid via banks accredited by the Bureau of Internal Revenue on or before April 15 - the earlier done the better to avoid rushing or beating the deadline.

AM I (OR THE COMPANY) LIABLE IF I DID NOT GIVE MY FORMER EMPLOYEE A COPY OF THE ITR?

Yes, you will be liable under Section 250 of the Tax Law and Section 3 of the Revenue Regulations 11-2013. Failure to comply with the filing or submission of the form within the time required.

For each failure, unless shown that the failure to submit - i.e. file information return, statement, or list, keeping records - unless there is a valid reason/cause and not due to willful neglect - will pay Php 1,000 for each failure - the aggregate amount to be imposed for all such failure during the calendar year shall not exceed Php 25,000.00.

However, failure to do so for two (2) years, this will fall under Section 255 - aside from the above mentioned penalties - upon conviction - fine of not less than Php 10,000 and imprisonment of not less than 1 year but not more than 10 years; settlement under the situation - compromise fee shall be Php 1,000 per 2316 not filed without maximum threshold.

ADVICE TO HR/PAYROLL PRACTITIONERS?

For employees leaving the organization - please provide the ITR on the day the employee receives his final pay, no ifs and buts. Delaying the release or telling them that it will be issued the following year makes it difficult to the employee, getting someone to consolidate it separately & paying for their services and going to the bank to pay their taxes in person. You will make your colleagues in the profession (on the other company) jobs easy.

Questions? Please do send me a feedback!