In the Philippine tax landscape, the Revenue District Office (RDO) serves as the specific jurisdiction where a taxpayer is registered. For employees, ensuring that their RDO matches their place of employment (or residence, depending on current BIR circulars) is crucial for the proper monitoring of tax credits and the issuance of substituted filing.
Under the National Internal Revenue Code (NIRC) and various Revenue Memorandum Orders (RMO), both employers and employees share responsibilities regarding the maintenance of registration data.
The Legal Framework
The primary mechanism for updating registration information is BIR Form 1905 (Application for Registration Information Update/Correction/Cancellation). While the Tax Code generally views tax registration as an individual responsibility, the employer plays a pivotal role in the "onboarding" process and the year-end "alpha listing."
- RR No. 11-2018: Amending the TRAIN Law provisions, emphasizing that taxpayers should be registered at the RDO having jurisdiction over their place of residence (for individuals).
- RMO No. 37-2019: Streamlined the process for the transfer of registration records.
Is the Employer Obligated to File Form 1905?
Strictly speaking, the primary obligation to sign and submit Form 1905 lies with the employee. Because the form requires the taxpayer’s signature and may involve personal data (such as a change in home address or civil status), the BIR treats this as a personal filing.
However, the employer has a compliance obligation in the following ways:
- Administrative Facilitation: Most reputable HR departments facilitate the submission of Form 1905 for new hires. If an employee is registered in a different RDO than where the company files its taxes, the employer may struggle to validate the employee’s Tax Identification Number (TIN) or include them correctly in the monthly/annual reports.
- Verification: Employers are required to verify that the employee’s TIN is active and registered in the correct system to avoid penalties during the Annual Alphabetical List of Employees (Alphalist) submission.
- The "New Employee" Protocol: When a company hires an individual, they must ensure the employee is transferred to the RDO where the employer is registered (if applicable under current guidelines) or simply ensure the employee's record is updated to reflect the current employer-employee relationship.
Key Scenarios for Form 1905
| Scenario | Purpose | Responsibility |
|---|---|---|
| Transfer of RDO | Moving from an old job's jurisdiction to a new one. | Employee (Often assisted by HR) |
| Change in Civil Status | Updating name (for marriage) or dependents. | Employee |
| Correction of Errors | Fixing misspelled names or wrong birthdates. | Employee |
| Update of Contact Info | Changing address or email for BIR notices. | Employee |
Procedural Requirements
To successfully update an RDO via Form 1905, the following steps are typically followed:
- Preparation of Form: The employee fills out BIR Form 1905 in triplicate.
- Submission to Old RDO: Previously, taxpayers had to submit the transfer request to the old RDO (where they were currently registered).
- Modern Shift: Recent BIR issuances have moved toward allowing the New RDO to accept transfer requests to make the process "taxpayer-friendly," though many districts still prefer the request to originate where the records currently sit.
- Employer Records: Once the "stamped" Form 1905 is returned, the employee provides a copy to the HR/Payroll department to update the company’s internal tax database.
Consequences of Non-Compliance
- For the Employee: Failure to update the RDO can lead to "open cases" or difficulties in securing a Tax Clearance or BIR Certificate of Registration later in life (e.g., when starting a business or buying property).
- For the Employer: If an employee is registered in the wrong RDO, it can lead to discrepancies in the BIR Form 1604-C (Annual Information Return of Income Taxes Withheld on Compensation). This may result in the BIR questioning the validity of the withheld taxes or the "Substituted Filing" status of the employee.
Important Note: Under the current "Ease of Paying Taxes Act" and recent circulars, the BIR is transitioning toward a more centralized digital system. However, until the Online Registration and Update System (ORUS) is fully mandated for all individual transfers, Form 1905 remains the legal standard for manual updates.