What is Taxpayer Account Management Program (TAMP) and a Top Withholding Agent (TWA)?
TAMP and TWA: Definition and Differences
Taxpayer Account Management Program (TAMP)
The Taxpayer Account Management Program (TAMP) is a program managed by the Revenue District Office (RDO) responsible for at least 80% of the district's tax collection. TAMP taxpayers are strictly monitored for compliance with revenue rules and regulations, including the submission of required information returns and lists, and for significant changes in revenue payments.
Top Withholding Agent (TWA)
A Top Withholding Agent (TWA) is a taxpayer who is mandated to deduct and remit the 1% or 2% Creditable Withholding Tax (CWT) on income payments to local or resident suppliers of goods and services. The criteria for Bullet listidentifying TWAs include:
Existing large taxpayers under RR No. 1-1998, as amended
Top 20,000 private corporations under RR No. 6-2009
Top 5,000 individual taxpayers under RR No. 6-2009
Taxpayers identified and included as Medium Taxpayers or under the Taxpayer Account Management Program (TAMP).
Key Differences
TAMP is a program for monitoring and managing taxpayers, while TWA refers to a specific classification of taxpayers with specific obligations.
TAMP is not automatically equivalent to being a TWA. Taxpayers must meet specific criteria to be classified as a TWA, which includes being a TAMP taxpayer but also meeting other conditions.
In summary, TAMP is a program focused on monitoring and managing taxpayers, while TWA is a specific classification of taxpayers with specific obligations to withhold and remit taxes.
What are the criteria for identifying top withholding agents in RR 31-2020 compared to RR 7-2019?
The key differences between Revenue Regulation (RR) No. 31-2020 and RR No. 11-2018 are:
RR 31-2020 further amends the criteria for identifying top withholding agents (TWAs) by lowering the gross sales/receipts or gross purchases thresholds to ₱12,000,000 for taxpayers in Groups A and B, and ₱5,000,000 for Groups C, D, and E. This is a reduction from the previous thresholds in RR 11-2018.
RR 31-2020 specifies that the obligation to withhold the 1% or 2% creditable withholding tax shall commence on the first day of the month following the month of publication of the list of top withholding agents. This timing was not explicitly stated in RR 11-2018.
RR 31-2020 clarifies that taxpayers classified as top withholding agents prior to its effectivity shall remain as such until they fail to satisfy the criteria and are duly published as delisted. This provides continuity from RR 11-2018.
In summary, the main changes introduced by RR 31-2020 compared to RR 11-2018 are the lowered thresholds for identifying TWAs, the specified timing for withholding obligations, and the clarification on the status of existing TWAs.
What are the criteria for identifying top withholding agents in RR 31-2020 compared to RR 7-2019?
If you receive a letter from the Bureau of Internal Revenue (BIR) notifying you that your business has been included in the Taxpayer Account Management Program (TAMP) and as a Top Withholding Agent (TWA), here are the initial steps you should take:
Verify your inclusion in the TAMP and TWA lists. Check the BIR website for the published list of TAMP and TWA taxpayers to confirm your business has been included.
Familiarize yourself with the requirements for TAMP and TWA taxpayers. TAMP taxpayers are subject to strict monitoring for compliance with revenue rules and regulations. TWAs are mandated to withhold the 1% Creditable Withholding Tax (CWT) on purchases of goods and 2% CWT on purchases of services from local or resident suppliers.
Ensure your business is using the Electronic Filing and Payment System (eFPS) for filing returns and paying taxes. TAMP and TWA taxpayers are required to use eFPS.
Review your existing suppliers and transactions to determine which are subject to the 1% or 2% CWT. The withholding obligation applies to payments to regular suppliers, defined as those you have transacted with at least six times, regardless of amount, in the previous or current year.
Implement procedures to withhold the correct CWT rates on applicable transactions and remit the taxes to the BIR on time. The withholding obligation starts on the first day of the month following the month of publication of the TWA list.
Keep proper records of your withholding tax transactions and ensure compliance with all other TAMP and TWA requirements. Non-compliance may result in penalties.
What to do as an Accountant/Business Owner?
As a business owner who has been identified as a Top Withholding Agent (TWA) by the Bureau of Internal Revenue (BIR), you need to comply with the following requirements:
Withhold the 1% or 2% creditable withholding tax (CWT) from your payments to local suppliers of goods and services, unless the payments are subject to other EWT rates. The obligation to withhold commences on the first day of the month following the month of publication of the list of TWAs.
Remit the withheld taxes to the BIR on a monthly basis, following the due dates prescribed for the filing of monthly percentage tax returns.
Issue Certificate of Creditable Tax Withheld at Source (BIR Form 2307) to your suppliers, showing the monthly breakdown of the total income payments made and the total taxes withheld and remitted during the quarter/period.
Monitor your transactions to ensure that you are withholding the correct taxes and remitting them on time.
Keep proper records of your withholding tax transactions, as these may be subject to review during a tax audit.
What are the Penalties/Consequences?
For non-compliance with Taxpayer Account Management Program (TAMP) requirements:
A penalty of ₱1,000 for every instance, but not to exceed ₱25,000, shall be imposed on eRegistration System users who supply erroneous or invalid information pursuant to Section 250 of the National Internal Revenue Code (NIRC), as amended.
Taxpayers newly identified and included as Medium Taxpayers, and those under the Taxpayer Account Management Program (TAMP) are mandated to use the electronic Filing and Payment System (eFPS) facility for filing returns and paying taxes. While not explicitly stated, failure to comply with this requirement may potentially result in penalties.
TAMP taxpayers are strictly monitored for compliance with revenue rules and regulations, including the submission of required information returns and lists. Non-compliance in these areas may lead to penalties.
No penalty will be charged for late e-filing for Taxpayer Account Management Program (TAMP) taxpayers. This suggests that penalties may be imposed for non-compliance with e-filing requirements for non-TAMP taxpayers.
For non-compliance with Top Withholding Agent (TWA) requirements. Failure to comply with the withholding obligations as a TWA can result in a two-fold tax exposure:
Deficiency withholding tax: The TWA may be assessed for deficiency withholding tax if they fail to withhold the required taxes from income payments to suppliers.
Deficiency income tax: The TWA may also be assessed for deficiency income tax if the corresponding expense deduction is disallowed due to non-compliance with withholding tax obligations.
Both of these exposures are subject to interest and additional penalties
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Written by: Clarice Francesca Mae Lim, 2023, PUP Manila
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