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June 1, 2022

CASH CONVERSION OF UNUTILIZED TAX CREDIT CERTIFICATE

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Published — January 16, 2021 

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

Read also: Frequently Asked Questions on Credit and Collection Laws

  • Tax Credit Certificate (TCC) represents the amount due to a taxpayer resulting from an overpayment of a tax liability or erroneous payment of a tax due.

  • A TCC may be applied for by the taxpayer instead of filing a claim for refund with the Bureau of Internal Revenue (BIR).

  • Any TCC which remains unutilized for more than one (1) year at any given interval of time during its validity shall be converted into cash with prior written notice by the BIR.

Tax Credit Certificate (TCC) represents the amount due to a taxpayer resulting from an overpayment of a tax liability or erroneous payment of a tax due. A TCC may be applied for by the taxpayer instead of filing a claim for refund with the Bureau of Internal Revenue (BIR). It may be used as payment of any tax liability by way of applying for Tax Debit Memo (TDM) or may be converted into cash, in case the taxpayer-owner has no longer use for it.

While TCCs, thru the TDMs, are used in payment of internal revenue taxes, it is not generally recognized as actual tax collections because it does not represent the real or true yield of the taxes prescribed and sought to be generated by the Tax Code. The attainment of targeted collections from any tax initiative, whether thru legislative or administrative, should be measured by the amount of cash actually collected by the BIR.  Thus, BIR Commissioner Caesar R. Dulay issued Revenue Regulations (RR) 14-2020 to amend provisions on the cash conversion of unutilized TCC.

Revenue Regulations 14-2020 provides:

Any request for conversion into cash refund of unutilized tax credits may be allowed during the validity period of the TCC. Provided, however, that the original copy of the Tax Credit Certificate showing a creditable balance is surrendered to the Asst. Commissioner, Collection Service or other duly authorized Revenue Officer for verification and cancellation. Provided, further, that a refund check or treasury warrant issued in accordance with the pertinent provisions of the Tax Code of 1997, as amended, which shall remain uncashed or unclaimed within five (5) years from the date of issue, mailing or delivery, whichever comes later, shall be forfeited in favor of the Government and the amount thereof shall revert to the general fund.

Provided, furthermore, that any TCC which remains unutilized for more than one (1) year at any given interval of time during its validity shall be converted into cash with prior written notice by the BIR, subject to the availability of funds in accordance with the procedural requirements that will be issued by the BIR for this purpose.


Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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