Wilma C. Inventor-Miranda l April 17, 2024 l Business Mirror
EVERY year since I can remember, even before I was born, annual tax deadline has always been April 15. My father who is also a CPA had been in Public Practice since I was small. I can always see the frenzied pace in the office as the tax deadline nears. But as a young child I was not perturbed having got used to it since I am always at his office. I am looking forward more to the birthday celebration of my father whose birthday is on April 16—a day right after the April 15 deadline. So it is a double celebration of sorts – end of a tax season celebration and the birthday of my father.
But why is April 15 the deadline—not other days or another month?
The reason why the Philippine government chose April 15 as annual tax deadline is not publicly documented. That made me curious and so I go on a search for the reason why. As it is right now, companies and especially accountants whether CPA or non-CPA and other tax-preparers are burdened with the audit work for those who are in public practice and tax preparation for those in bookkeeping and tax compliance, etc.
With technology, the work was made more efficient and faster but the regulatory requirements were also increased. Imagine having several audit clients for instance, with calendar year ending December 31 and you are still reviewing manually and preparing working papers manually. There are now computer-aided audit tools and electronic working papers where-upon review by the team head or by the partner, it can be seen real time by the audit staff or the preparer. Gone are the days when one has to print several drafts of reports to be reviewed until the final version was approved. But as I mentioned, the regulatory requirements also increased so the race to meet the deadline is still a burden for people in this industry like us.
Let us trace the history of the April 15 for us to know if this deadline is reasonable or if there is a need to move it at a later date.
First, perhaps the April 15 deadline was set thinking that the time from January to March up to even the first two weeks of April gives reasonable time to audit and compile and submit the tax returns. But this is a relative consideration, since it still depends on the number of clients one has. One alternative some auditors resort to is to perform interim audit before the calendar year ends and the rest of the audit procedures to be done after the end of the year.
Second, our government may have followed the deadline set in other countries such as the United States since these countries also set their tax deadline on April 15. With the same tax deadline, it will be easier to synchronize reports or tax compliance for multinational companies operating in the Philippines and for Filipino citizens with foreign income or investments.
Looking at the history of the April 15 deadline in the United States is easier since this was officially documented. When the 16th Amendment was adopted on February 13, 2013, the deadline for tax filing was March 1. The Revenue Act of 1918 however, moved the deadline to March 15 which is just a few extra days from March 1. For many years, the March 15 deadline remained the deadline to beat. However, the Internal Revenue Code of 1954 established April 15 as the tax deadline and continues even in the present (Source: forbes.com dated April 13, 2017).
Third, moving the statutory deadline to later months might also affect the government’s revenue collection which is important to fund government’s spending on public services and infrastructure projects.
Thus, we are stuck with the April 15 deadline and it will stay for many years. Only time will tell if this deadline will be moved earlier or much later in the future.
With the Ease of Paying Taxes made into law and the Revenue Regulations just released last April 12, 2024, the process of paying taxes hopefully will be made less burdensome. There is also the need to educate people to get used to online payments of their taxes, since many Filipinos still have to line up and pay over the counter such as in banks.
The tax deadline is not something that people are excited about anywhere in the world. But this comes only once a year, we might as well accept it. For there are only two things that we cannot avoid in life—taxes and death. Trying to avoid both will only make yourself miserable for one cannot really avoid it. The solution? Prepare well for it, so when it comes it will not be such a burden but a part of life which we need to embrace as humans.
*** Wilma Miranda is the 2024 chairman of the Ethics Committee of the Financial Executives Institute of the Philippines, the managing partner of Inventor, Miranda & Associates, CPAs, and a member of the Board of Directors of KPS Outsourcing Inc. The views expressed herein do not necessarily reflect the opinion of these institutions and the BusinessMirror.