“BIR expects to lose up to P6 billion this year from the OSD which was devised in 2009 to lessen BIR’s audit work due to limited manpower.”

After issuing Revenue Regulations (RR) No. 2-2010 last February 25, 2010, the BIR issued another issuance Revenue Memorandum Circular (RMC) No. 16-2010 to remind income taxpayers of the requirement to disclose their election to avail of the 40% Optional Standard Deduction (OSD) for the taxable year 2009, due to be filed or paid for this year.

Commissioner Joel L. Tan-Torres, stressed under the RMC, that if the taxpayer elects to use OSD it should be used for the succeeding quarterly returns and in the final ITR for the taxable year. The election to avail of the OSD or Itemized Deduction (ID) as signified in the return shall be irrevocable for the taxable year 2009 upon filing thereof.

Taxpayers who are elected to avail of OSD are required to check the appropriate box of their income tax return (ITR) filed for the first quarter of the taxable year of 2009, whether they adopt calendar or fiscal period.

Failure to indicate the election to avail of the OSD shall be considered as having availed ID for the said taxable year.

Newly registered taxpayers should also disclose their election to avail the OSD in their initial quarterly income tax return which is required to be filed for the taxable year 2009.

Any ITR amendment for the first/initial quarter of the taxable year shall “not effect the irrevocable character of the election to avail of the OSD or ID, as the case may be,” according to the Commissioner Tan-Torres.

BIR expects to lose up to P6 billion this year from the OSD which was devised in 2009 to lessen BIR’s audit work due to limited manpower.