#AskTheTaxWhiz: Updating BIR records from freelancer to employee
Dear Mr Tax Whiz,
I was employed at an architectural firm from June 2013 to December 2013. The company processed the tax identification number (TIN) in Makati. From then on, I did not work for any other office but worked freelance. I didn't bother updating my Bureau of Internal Revenue (BIR) records.
Now that I'm all grown up and have the urge to be a responsible citizen, I'm planning on updating my information to self-employed. How do I do this? What BIR forms should I use?
To update your taxpayer information, you must accomplish the following BIR forms:
- BIR Form 1905 or the Application for Registration Information Update
- BIR Form 1901 or the Application for Registration for Self-Employed and Mixed Income Individuals, Estates/Trusts
These are to be submitted to the revenue district office (RDO) where you were registered.
Dear Mr Tax Whiz,
I owned a business and registered to the BIR as self-employed. How do I change my status from self-employed to an employee? How do I change my RDO without traveling to my previous location because it’s an hour's drive from Manila?
Also, I haven’t closed my business yet. Is there going to be a fine? It has not been operating for 5 months now. How much would be the penalty?
To register as an employee, you need to fill out BIR Form 1902 or the Application for Registration for Individuals Earning Purely Compensation Income.
To update the location of your RDO, fill out two copies of BIR form 1905 or the Application for Registration Update and indicate the change in address.
Take note that both forms should be submitted to the RDO where you are currently registered. Give them a call and check if they will accept a faxed copy of your Form 1905, as some RDO offices do. This normally takes 7 business days to complete. After that, call your new RDO to confirm.
Of course, you need to apply for the closure of your business. You will have to use the BIR Form 1905 for this purpose, along with the following documentary requirements:
- Notice of closure or cessation of business
- List of ending inventory of goods, supplies, including capital goods, if applicable
- Inventory of unused sales invoices/official receipts
- Unused sales invoices/official receipts and all other unutilized accounting forms should be physically submitted to the RDO where the head office is registered
- All business notices and permits as well as the certificate of registration should be surrendered for cancellation
- Other documents necessary to support the changes applied for
The penalty for not informing the BIR of the closure of your business may include payment of the unpaid annual registration fee of P500 plus compromise penalty, 25% surcharge and 20% interest on any unpaid taxes.
Dear Mr Tax Whiz,
I have previously been a freelance voice talent and was not able to apply for a TIN.
When I got accepted to work for a BPO company, I submitted Form 1905 to my new employer. I have already resigned from that company and was informed that they were not able to enroll me online with the BIR, as my records showed that I already had a similar name with the BIR's database. They, instead, issued me Form 2316 upon resignation.
As I just got hired by a new company, I re-checked with the BIR and was informed that I already have a record, although there is a discrepancy with my maiden name.
What should I do next aside from filing form 1905 (to rectify my maiden name) in light of my situation stated above?
As a former freelancer turned employee, file BIR Form 1902 to register as an individual earning purely compensation income.
You should also clarify or verify your personal details written on the TIN to the BIR because the TIN you are claiming might not be yours. In case you need to apply for a TIN, submit BIR Form 1902 along with the following documentary requirements to your employer:
- NSO Birth Certificate of the applicant; or
- Passport (in case of non-resident alien not engaged in trade or business);
- Waiver of husband on his right to claim additional exemptions, if wife will claim;
- Marriage Contract, if applicable; as well as
- NSO Certified Birth Certificates of declared dependents, if any.
Dear Mr Tax Whiz,
On my first job as a talent, they asked me to get a TIN by submitting Form 1901.
Two months later, I resigned from the company. I landed my second job and the human resource (HR) officer requested for my TIN, as they considered me as an employee, not a talent. I worked there for one year and two months before I was retrenched.
Here's the problem: I'm currently working on my requirements for a new job and the HR officer told me to update my RDO. I wasn't informed by the HR officer from my second job to update my RDO when I got there.
Will I be facing penalties? What steps should I take to minimize the hassle?
Follow the steps below on how to update your RDO address:
- Fill out two copies of the BIR Form 1905 to update your RDO address.
You need to do this if you've moved to a different company, or changed company address. Most of the time, your employer will help with this process. This is also part of pre-employment requirements.
- Call the BIR to confirm your RDO address.
Your RDO address is where your TIN is registered and it's based on your previous office address.
- Conract the RDO and check if they will accept a faxed copy of your Form 1905.
In the case of RDO 050, they process faxed forms. It normally takes 7 business days to complete.
If your current RDO requires personal appearance or you are in a hurry, you can check the BIR website to find out where the office is. It should only take 3 to 5 working days to transfer your update your RDO address. – Rappler.com
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Mon Abrea is a former BIR examiner and an advocate of genuine tax reform. He serves as chief strategy officer of the country's first social consulting enterprise, the Abrea Consulting Group, which offers strategic finance and tax advisory services to businesses and professionals. Mon's tax handbook, Got a Question About Taxes? Ask the Tax Whiz! is now available in bookstores nationwide. Follow Mon on Twitter:@askthetaxwhiz or visit his group's Facebook page. You may also email him at firstname.lastname@example.org.