The Bureau of Internal Revenue (BIR) has clarified the procedures taxpayers must follow when seeking refunds or tax credits for excess, erroneous, or illegally collected taxes, including unutilized creditable withholding taxes.
The updated rules are contained in Revenue Memorandum Circular No. 102-2026 and related issuances aimed at clarifying where and how taxpayers should file claims for tax refunds or credits. The BIR said taxpayers seeking refunds or credits for excess or unutilized creditable withholding taxes on income must submit their applications to the appropriate Revenue District Office (RDO), Large Taxpayers Audit Division, or Large Taxpayers Division.
For excess income taxes reflected in a taxpayer’s Annual Income Tax Return, taxpayers may choose to carry the excess forward and use it as a credit against succeeding quarterly income tax liabilities. Once the carry-over option is chosen for a taxable period, however, the choice is generally irrevocable.
There is an exception for businesses that permanently cease operations. Taxpayers that previously opted to carry over excess income taxes may still seek a cash refund if they permanently stop operating, according to the clarified rules.
Taxpayers seeking refunds or tax credits for excess or unutilized creditable withholding taxes must file the prescribed application
