Disallowed Expense Due to Non Withholding of a Tax

 I was so surprised when in 2013, the Secretary of Finance and the BIR Chief jointly issued a regulation stating that your failure to withhold a tax on your income payment will not only disallow such expense as a deduction from your gross income but also you have to pay the withholding tax appurtenant thereto.

That's preposterous. I believe that an abuse of power and authority had been performed. Accordingly, if you will read Section 34(K) and Section 248, NIRC and the legal doctrine 'solutio indebiti', you will notice and understand that the Tax Code is allowing a taxpayer to pay any of his internal tax liabilities LATE. In doing so, he is required to pay the civil fines appurtenant thereto. To allow a taxpayer to pay late is also to allow him to enjoy his personal property which in this case is the 'allowable itemised deductions'

What happened here is that Section 34(K) and Section 248 and the said doctrine were separately interpreted and implemented. The Philippine Supreme Court has already taught us the process in interpreting as well as understanding the laws, (yes, the organic and substantive law and not the BIR issuances) they must be harmonised with each other and no law shall be treated as an isolate from other laws. Furthermore, the old law can only be repealed by a new law. Therefore, Section 34(K) must be read with Section 248. Or, Section 248 has already repealed Section 34(K).

Please comment and share this post so that if we have the number we can file a declaratory relief at the Regional Trial Court.