Gov’t workers perks taxable

The Supreme Court (SC) voted unanimously Tuesday to uphold Bureau of Internal Revenue (BIR) regulations taxing the allowances and bonuses of government employees.

The SC junked a 2014 petition filed by a labor group and lower court judges which questioned BIR’s memorandum order 23-2014 that required government agencies to withhold taxes on fringe benefits.

“An employee who claims exemption from withholding taxes has the burden to prove the factual and legal basis of the claim before proper administrative and judicial proceedings,” the SC said.

The SC ruled that the judiciary, the Office of the Ombudsman and constitutional commissions cannot hide behind their fiscal autonomy to escape the common burden of paying taxes.

The petitioners argued that the “fringe and minimal benefits” of government workers, such as allowances, bonuses and compensation for services, are non-taxable.

Not so, ruled the high court when it said: “All income received by an employee from his/her employer are presumptively taxable and subject to withholding tax.”

“Government, as an employer, has the duty to withhold and remit the proper taxes due,” the SC ruled.

But the court struck down section VI of the BIR memo that named governors, city and municipal mayors, barangay captains, and heads of government agencies and government-owned and controlled corporations as persons authorized to withhold and required to remit withholding taxes.

The SC said the BIR “overstepped the boundaries” of its authority to interpret existing provisions of the National Internal Revenue Code of 1997 in issuing Section VI of the memo.

Prior to the BIR memo, government employees’ benefits were not taxed, except for the 13th month pay above P30,000, as well as the “loyalty pay.”