BIR RDO Transfer Requirements When Requested by Employer in the Philippines

BIR RDO Transfer Requirements When Requested by Employer in the Philippines

Introduction

In the Philippine tax system, the Bureau of Internal Revenue (BIR) divides the country into Revenue District Offices (RDOs) to facilitate efficient tax administration. Each taxpayer, whether an individual or a corporation, is registered under a specific RDO based on factors such as residence, principal place of business, or employer's location. For employees, registration is typically aligned with the RDO of their employer to streamline withholding tax processes, reporting, and compliance.

A transfer of RDO becomes necessary when there is a change in circumstances that warrants moving a taxpayer's registration to a different district. This article focuses on scenarios where the employer initiates or requests the RDO transfer for its employees. Such requests often arise during organizational restructuring, branch relocations, mergers, acquisitions, or when hiring employees previously registered under a different RDO. The goal is to ensure that all employee tax records are consolidated under the employer's primary RDO, simplifying payroll tax withholding (e.g., via BIR Form 2316) and annual information returns (e.g., BIR Form 1604-C).

Under Philippine tax laws, primarily governed by the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act (RA) No. 10963 (TRAIN Law), RA No. 11534 (CREATE Law), and various BIR issuances, employers have the authority and responsibility to manage withholding taxes. This includes ensuring employees' registrations are properly aligned. Failure to initiate or complete an RDO transfer can lead to administrative penalties, delays in tax clearances, or complications in employee benefits like tax refunds.

This comprehensive guide covers the legal framework, requirements, procedures, timelines, potential challenges, and best practices for BIR RDO transfers requested by employers.

Legal Basis

The authority for RDO transfers stems from Section 21 of the NIRC, which mandates the BIR to establish districts for tax collection and administration. Revenue Regulations (RR) No. 11-2018 and RR No. 7-2012 provide guidelines on taxpayer registration and updates. Specifically:

• Revenue Memorandum Order (RMO) No. 37-2011, as amended by subsequent orders, outlines the procedures for transferring taxpayer registration from one RDO to another.
• RMO No. 14-2016 addresses bulk transfers, which are particularly relevant when employers request transfers for multiple employees, such as during company expansions or relocations.
• RR No. 2-98, as amended, emphasizes the employer's role as a withholding agent under Section 79 of the NIRC, requiring accurate employee registration to avoid liabilities for under-withholding.

Employer-requested transfers are permitted under BIR guidelines to promote administrative efficiency. However, the BIR retains the final approval authority, and transfers must be justified by valid reasons, such as a change in the employee's work location or the employer's business address. Frivolous requests may be denied, and employers must ensure compliance to avoid penalties under Section 255 of the NIRC (failure to file returns or supply information) or Section 275 (penalties for violations).

Eligibility and When an Employer May Request a Transfer

Employers may request RDO transfers for employees in the following situations:

1. New Hires from Different RDOs: When onboarding employees whose current registration is under an RDO different from the employer's, to align with the company's withholding system.
2. Internal Transfers or Promotions: If an employee is reassigned to a branch or division under a different RDO.
3. Company Relocation or Restructuring: During mergers, acquisitions, or branch closures, where the employer's principal place of business changes, affecting employee registrations.
4. Correction of Errors: If an employee's registration was incorrectly placed under the wrong RDO initially.
5. Bulk Transfers: For large-scale requests involving multiple employees, often in multinational corporations or expanding businesses.

Note that individual employees can also initiate transfers independently (e.g., due to residence changes), but employer-requested transfers are prioritized for efficiency, especially under BIR's eRegistration system.

Transfers are not allowed if the employee has pending tax audits, unpaid liabilities, or ongoing investigations in the current RDO. In such cases, clearance must first be obtained.

Requirements for RDO Transfer

The core document for any registration update, including RDO transfers, is BIR Form 1905 (Application for Registration Information Update/Correction/Cancellation). When requested by the employer, additional supporting documents are required to substantiate the request. Requirements vary slightly based on whether the transfer is for an individual employee or in bulk, but generally include:

For Individual Employee Transfers

• Accomplished BIR Form 1905: Must be filled out by the employee or authorized representative, indicating the request for "Transfer of Registration" and specifying the new RDO code (available on the BIR website).
• Authorization Letter from Employer: A notarized letter on company letterhead, signed by an authorized officer (e.g., HR manager or finance head), explaining the reason for the transfer and confirming the employee's employment status.
• Proof of Employment:
  • Employment contract or Certificate of Employment.
  • Latest BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld).
• Employee's Identification:
  • Photocopy of valid government-issued ID (e.g., Passport, Driver's License, SSS ID).
  • Taxpayer Identification Number (TIN) card or proof of TIN.
• Proof of New Address or Justification:
  • If due to relocation: Utility bills, lease contract, or barangay certificate for the new address.
  • If due to employer change: Company registration documents showing the new RDO.
• Clearance from Current RDO: A Tax Clearance Certificate (TCC) or Certificate Authorizing Registration (CAR) if there are unresolved issues.

For Bulk Transfers (Multiple Employees)

• BIR Form 1905 for Each Employee: Individual forms are still required, but they can be submitted as a batch.
• Master List of Employees: A spreadsheet or list detailing employee names, TINs, current RDOs, and reasons for transfer.
• Employer Authorization: A single notarized letter covering all employees, with board resolution if applicable for corporations.
• Company Documents:
  • SEC Registration or DTI Certificate.
  • Latest General Information Sheet (GIS) for corporations.
  • BIR Certificate of Registration (COR) under the target RDO.
• Payment of Fees: Documentary Stamp Tax (DST) of PHP 30 per Form 1905, if applicable.

All documents must be submitted in original or certified true copies. Electronic submissions are encouraged via the BIR's Online Registration and Update System (ORUS) for faster processing.

Procedure for RDO Transfer

The process involves coordination between the old RDO, new RDO, and the BIR's central office in some cases. Steps are as follows:

1. Preparation: Employer gathers required documents and assists employees in accomplishing Form 1905. Ensure the form specifies "Transfer to New RDO" under Section B.
2. Submission to Current (Old) RDO:
   • File the application at the employee's current RDO.
   • Pay any applicable fees (e.g., PHP 500 certification fee if requesting a TCC).
   • The old RDO verifies records, checks for liabilities, and issues a clearance if compliant.
3. Endorsement to New RDO:
   • Upon approval, the old RDO endorses the application to the new RDO via inter-office memo or the BIR's internal system.
   • For bulk transfers, this may involve the Revenue Regional Director's approval.
4. Processing at New RDO:
   • The new RDO reviews documents and updates the registration in the Integrated Tax System (ITS).
   • Issues an updated COR or confirmation of transfer.
5. Notification and Confirmation:
   • Employee receives a stamped Form 1905 and updated registration details.
   • Employer updates payroll systems accordingly.

Timeline: Processing typically takes 3-5 working days for individual transfers and up to 15 days for bulk, assuming no issues. Delays can occur due to incomplete documents or peak filing periods (e.g., April tax season).

For electronic filing via ORUS:

• Log in using the employer's or employee's eBIR credentials.
• Upload scanned documents.
• Track status online.

Potential Challenges and Remedies

• Denials: Common reasons include pending taxes or invalid justifications. Remedy: Settle liabilities first and resubmit with additional proof.
• Inter-RDO Coordination Issues: Delays in endorsement. Remedy: Follow up via BIR hotlines or the Client Support Section.
• Employee Non-Cooperation: If employees refuse to sign Form 1905. Remedy: Employers can proceed with authorization but may face internal HR issues.
• Penalties for Non-Compliance: Late transfers can result in PHP 1,000 to PHP 50,000 fines per violation under Section 255-276 of the NIRC, plus interest on under-withheld taxes.
• COVID-19 and Digital Adaptations: Post-pandemic, BIR encourages online submissions to minimize physical visits.

Best Practices for Employers

• Maintain updated employee tax records and conduct annual audits of RDO alignments.
• Train HR personnel on BIR procedures to avoid errors.
• Use BIR's eServices for faster processing and real-time updates.
• Consult with tax professionals or accredited agents for complex cases, such as cross-regional transfers.
• Ensure data privacy compliance under RA No. 10173 (Data Privacy Act) when handling employee TINs.

Conclusion

Employer-requested BIR RDO transfers are a critical aspect of tax compliance in the Philippines, ensuring seamless withholding and reporting. By adhering to the requirements and procedures outlined, employers can avoid penalties, enhance operational efficiency, and support employee tax obligations. Proactive management of these transfers reflects strong corporate governance and contributes to the broader goal of a robust tax system under the BIR's mandate. For specific cases, direct consultation with the relevant RDO is recommended to address unique circumstances.