T The implementation of witholding tax article 21 (pph pasal 21) has long been associated with high complexity and administrative burden. to simplify and ease compliance for taxpayers, the government introduced a new calculation scheme through the issuance of the minister of finance regulation (pmk) number 168 of 2023, which introduced the average effective rate (ter) method. this regulation took effect in january 2024 and directly impacted individual employee taxpayers, particularly in the process of filing the annual income tax return form 1770 s, based on the withholding of pph 21 by employers. this study aims to examine the impact of the ter scheme on annual tax return reporting at the kebon jeruk satu primary tax office. the findings indicate a significant increase in the number of returns with overpaid tax status in the 2024 fiscal year compared to the previous year. further investigation revealed that this increase was primarily due to reporting errors, stemming from a misinterpretation of the 1721-a1 withholding tax certificate. these errors caused returns that should have been filed as nil or underpaid to instead be reported as overpaid. the study recommends enhancing taxpayer education, providing technical support for employees, improving the tax filing system, and increasing taxpayer awareness to ensure the objectives of simplification under pmk 168/2023 are effectively achieved.