BIR to garnish Makati City’s bank accounts

The Bureau of Internal Revenue (BIR) in Makati is set to issue today notices of garnishment to all banks where the Makati City government maintains bank accounts, a highly placed source said yesterday.

The source, who requested anonymity, told The STAR that the garnishment stemmed from the Makati City government’s P1.1 billion alleged unpaid withholding taxes from 1999 to 2002.

"The notice of garnishment will be issued to all Makati banks near City Hall and all main offices of the bank. The main offices of the banks will garnish all branches," the source said.

In a demand letter dated last March 9 to Mayor Jejomar Binay, the city treasurer and the city accountant, BIR withholding tax division chief Marivic Galban asked the city government to pay a total of P1,150,331,321.81, representing its unremitted withholding taxes from 1999 to 2002.

Galban has warned Binay that the BIR will be compelled to enforce the collection of the unpaid withholding taxes of the city government from his properties should Binay failed to settle city government’s tax obligation.

She has given Binay until March 31, 2007 to settle the city government’s tax obligation and avail of a special "one-time administrative abatement program," but the Binay did not settle it.

"The collection will be enforced against your properties to effect the collection of the said liabilities without further notice," Galban said.

Withholding taxes are mandatory salary deductions withheld by the city government from the monthly salaries of their employees and are remitted to the BIR representing payment of income taxes withheld.

Under BIR regulations, the remittance of withholding taxes are the duty of the city mayor and city treasurer and both are made equally liable under the criminal penalties provided for in the National Internal Revenue Code.

Under regular practice, the taxes should be paid every quarter after the city government withholds it from the salaries of their employees.

Binay earlier denied that the City government still has tax obligations with the BIR.