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Tax Remedies

Tax Remedies

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Published by: Bryan Catungal on Dec 01, 2012
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Title VIII, Sections 202-231, NIRCRA 1125, as amended by RA 9282Tax Rights and Remedies, Mamalateo, Ch 19 and 20
A. Assessment
1. NatureDefinition (De Leon): Official action of officer authorizedby law in ascertaining; involves:- computation of sum due- notice to that effect to the taxpayer - making of demand for payment, whether concurrentlywith that notice or sometime after ** Without any one of the 3, the assessment is void2. Features3. Period of limitation
SEC. 203.
Period of Limitation upon Assessment and Collection 
Except as provided in Sec 222, IRT shall be assessedwithin 3 years after the last day prescribed by law for thefiling of the return, and no proceeding in court withoutassessment for the collection of such taxes shall bebegun after the expiration of such period:
Thatin a case where a return is filed beyond the periodprescribed by law, the 3-year period shall be countedfrom the day the return was filed. For purposes of thisSection, a return filed before the last day prescribed bylaw for the filing thereof shall be considered as filed onsuch last day.
SEC. 222.
Exceptions as to Period of Limitation of Assessment and Collection of Taxes 
(a) In the case of a false or fraudulent return with intentto evade tax or of failure to file a return, the tax may beassessed, or a proceeding in court for the collection of such tax may be filed without assessment, at any timewithin 10 years after the discovery of the falsity, fraud or omission:
, That in a fraud assessment whichhas become final and executory, the fact of fraud shallbe judicially taken cognizance of in the civil or criminalaction for the collection thereof.(b) If before the expiration of the time prescribed in Sec203 for the assessment of the tax, both theCommissioner and the taxpayer have agreed in writingto its assessment after such time, the tax may beassessed within the period agreed upon. The period soagreed upon may be extended by subsequent writtenagreement made before the expiration of the periodpreviously agreed upon.(c) Any internal revenue tax which has been assessedwithin the period of limitation as prescribed in (a) may becollected by distraint or levy or by a proceeding in courtwithin 5 years following the assessment of the tax.(d) Any internal revenue tax, which has been assessedwithin the period agreed upon as provided in (b)hereinabove, may be collected by distraint or levy or bya proceeding in court within the period agreed upon inwriting before the expiration of the 5-year period. Theperiod so agreed upon may be extended by subsequentwritten agreements made before the expiration of theperiod previously agreed upon.(e)
Provided, however,
That nothing in the immediatelypreceding and (a) shall be construed to authorize theexamination and investigation or inquiry into any taxreturn filed in accordance with the provisions of any taxamnesty law or decree.
SEC. 223.
Suspension of Running of Statute of Limitations 
The running of the Statute of Limitations provided in Sec203 and 222 on the making of assessment and thebeginning of distraint or levy a proceeding in court for collection, in respect of any deficiency, shall besuspended for the period during which theCommissioner is prohibited from making the assessmentor beginning distraint or levy or a proceeding in courtand for 60 days thereafter; when the taxpayer requestsfor a reinvestigation which is granted by theCommissioner; when the taxpayer cannot be located inthe address given by him in the return filed upon which atax is being assessed or collected:
that, if thetaxpayer informs the Commissioner of any change inaddress, the running of the Statute of Limitations will notbe suspended; when the warrant of distraint or levy isduly served upon the taxpayer, his authorizedrepresentative, or a member of his household withsufficient discretion, and no property could be located;and when the taxpayer is out of the Philippines.
NAMARCO vs. Tecson
3-year prescription period = 1095th day
Aznar vs. Commissioner
- False (due to mistakes, carelessness or ignorance)vs. fraudulent (with intent to evade taxes) returns;difference is state of mind- 10-year prescription period applies; substantialincrease in
 Aznar’s net worth that wasn’t reflected in
 his returns- Surcharge of 50% applicable to fraudulent returns- Sec. 248(b) wider scope in terms of 50% surcharge
Commissioner vs. CA
No need to establish bad faith, just that it was filedbeyond the reglementary period
Basilan Estates vs. Collector
- For purposes of the government, as long asassessment is sent out within 5-year period, regardless
of date of receipt; Taxpayer’s point of 
view: date of filing- Assessments are presumed correct. Burden of proof that it is otherwise is on the taxpayer 
Philippine Journalists vs. CIR
important case!- Purpose of waiver: encourages prompt action bythe government; security for taxpayer againstassessments- Requirements for waiver are strictly construed in favor of the taxpayer. Effect: prescription period is tolled- Date of waiver: when accomplished by taxpayer, notwhen it was received
B. Taxpayers’ Remedies
 1. Protesting an assessmentSEC. 228.
Protesting of Assessment 
When the Commissioner or his duly authorizedrepresentative finds that proper taxes should beassessed, he shall first notify the taxpayer of hisfindings:
Provided, however,
That a pre-assessmentnotice shall not be required in the following cases: (a)When the finding for any deficiency tax is the result of mathematical error in the computation of the tax asappearing on the face of the return; (b) When adiscrepancy has been determined between the taxwithheld and the amount actually remitted by thewithholding agent; (c) When a taxpayer who opted toclaim a refund or tax credit of excess creditablewithholding tax for a taxable period was determined tohave carried over and automatically applied the sameamount claimed against the estimated tax liabilities for the taxable quarter or quarters of the succeeding taxableyear; (d) When the excise tax due on exciseable articleshas not been paid; or (e) When the article locallypurchased or imported by an exempt person, such as,but not limited to, vehicles, capital equipment,machineries and spare parts, has been sold, traded or transferred to nonexempt persons.
The taxpayers shall be informed in writing of the lawand the facts on which the assessment is made;otherwise, the assessment shall be void.
Within aperiod to be prescribed by implementing rules andregulations, the taxpayer shall be required to respond tosaid notice. If the taxpayer fails to respond, theCommissioner or his duly authorized representative shallissue an assessment based on his findings. Suchassessment may be protested administratively by filing arequest for reconsideration or reinvestigation within thirty(30), days from receipt of the assessment in such formand manner as may be prescribed by implementing rulesand regulations. Within 60 days from filing of the protest,all relevant supporting documents shall have beensubmitted; otherwise, the assessment shall becomefinal. If the protest is denied in whole or in part, or is notacted upon within 180 days from submission of documents, the taxpayer adversely affected by thedecision or inaction may appeal to the Court of Tax Appeals within 30 days from receipt of the said decision,or from the lapse of 180-day period; otherwise, thedecision shall become final, executor and demandable.
Commissioner vs. AlgueComissioner vs. Union Shipping
Decision of the Commissioner denying the protests mustbe stated in clear, unequivocal terms
Commissioner vs. Ayala Securities CorporationCollector vs. Batangas Transportation
 An assessment may be revise, even after a decision ismade
Lascona Land Co. vs. CIR, CTA Case
- there must first be a decision- the remedies are optional: appeal or wait
Bonifacio Sy Po vs. CTA Case
Protector’s Services vs. CA
Exhaust administrative remedies before CTA. BIR first,then CTA within 30 days
Aguinaldo Industries vs. CIR
Don’t raise defenses for the first time on appeal
Surigao vs. CTARCBC vs. CIR
- after expiration of the 180-day period and there was nodecision, RCBS appealed. But it mistakenly calculatedthe 30-day period within which it could avail itself of aremedy. After its appeal was dismissed, RCBC claims itcan still await a decision from the Commissioner.- confirms Lascona case. Taxpayer has 2 options:appeal with the CTA or wait. Remedies are indeedoptional- But, they are mutually exclusive. Resort to one barsresort to the other remedy
2. Claim for refundSEC. 229.
Recovery of Tax Erroneously or Illegally Collected 
No suit or proceeding shall be maintained in any courtfor the recovery of any national internal revenue taxhereafter alleged to have been erroneously or illegallyassessed or collected, or of any penalty claimed to havebeen collected without authority, of any sum alleged tohave been excessively or in any manner wrongfullycollected without authority, or of any sum alleged to havebeen excessively or in any manner wrongfully collected,until a claim for refund or credit has been duly filed withthe Commissioner; but such suit or proceeding may bemaintained, whether or not such tax, penalty, or sum hasbeen paid under protest or duress. In any case, no suchsuit or proceeding shall be filed after the expiration of 2years from the date of payment of the tax or penaltyregardless of any supervening cause that may arise after payment:
Provided, however,
That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return uponwhich payment was made, such payment appearsclearly to have been erroneously paid.
SEC. 230.
Forfeiture of Cash Refund and of Tax Credit 
Forfeiture of Refund.
- A refund check or warrantissued in accordance with the pertinent provisions of thisCode, which shall remain unclaimed or uncashed withinfive (5) years from the date the said warrant or checkwas mailed or delivered, shall be forfeited in favor of theGovernment and the amount thereof shall revert to thegeneral fund.
Forfeiture of Tax Credit.
- A tax credit certificateissued in accordance with the pertinent provisions of thisCode, which shall remain unutilized after five (5) yearsfrom the date of issue, shall, unless revalidated, beconsidered invalid, and shall not be allowed as paymentfor internal revenue tax liabilities of the taxpayer, and theamount covered by the certificate shall revert to thegeneral fund.
Transitory Provision.
- For purposes of thepreceding Subsection, a tax credit certificate issued bythe Commissioner or his duly authorized representativeprior to January 1, 1998, which remains unutilized or hasa creditable balance as of said date, shall be presentedfor revalidation with the Commissioner or his dulyauthorized representative or on before June 30, 1998.
Victoria’s Milling Co. vs. Central Bank
Refund is not an obligation (
solutio indebiti 
).Obligation by law
CIR vs. Philam Insurance
Only at the final adjustment return that prescriptiveperiod starts to run; only then will it be known if 
there’s a
refundable amount
CIR vs. TMX Sales, IncCIR vs. Wander Philippines, 160 SCRA 573Philex Mining Corp. vs. CIR, GR No. 125704,August 28, 1998CIR vs. A Soriano, GR No. 113703, Jan 31, 1998CIR vs. Insular Lumber Corp, GR No. L-24221,December 11, 1967CIR vs. CA, GR No. 106611, July 21, 1994CIR vs. Asturias Sugar Central, GR No. L-15013,December 28, 19613. Appeal to the Court of Tax Appeals
Section 228 (see above)Sections 7 and 11, RA 1125, as amended by RA 9282
4. Injunction by the Court of Tax AppealsSEC. 218.
Injunction not Available to Restrain Collection of Tax 
No court shall have the authority to grant an injunction torestrain the collection of any national internal revenuetax, fee or charge imposed by this Code.Section 11, RA 1125, as amended by RA 9282
5. Compromise during appeal
Section 204, NIRCRevenue Reg 30-2002
6. Appeals from the Court of Tax Appeals
Sections 18 and 19, RA 1125, as amended by RA9282
7. Other remediesSEC. 231.
Action to Contest Forfeiture of Chattel 
In case of the seizure of personal property under claimof forfeiture, the owner desiring to contest the validity of the forfeiture may, at any time before sale or destructionof the property, bring an action against the personseizing the property or having possession thereof torecover the same, and upon giving proper bond, mayenjoin the sale; or after the sale and within 6 months, hemay bring an action to recover the net proceeds realizedat the sale.
(A) Remedies Available to the Government for theEnforcement and Collection of Taxes
1. Judicial RemediesSEC. 205
Remedies for the Collection of Delinquent Taxes 
The civil remedies for the collection of internal revenuetaxes, fees, or charges, and any increment theretoresulting from delinquency shall be:(a) By distraint of goods, chattels, or effects, and other personal property of whatever character, includingstocks and other securities, debts, credits, bankaccounts, and interest in and rights to personal property,and by levy upon real property and interest in or rights toreal property; and(b) By civil or criminal actionEither of these remedies or both simultaneously may bepursued in the discretion of the authorities charged withthe collection of such taxes:
Provided, however,
that theremedies of distraint and levy shall not be availed of where the amount of tax involved is not more than P100.The judgment in the criminal case shall not only imposethe penalty but shall also order payment of the taxessubject of the criminal case as finally decided by theCommissioner. The BIR shall advance the amountsneeded to defray costs of collection by means of civil or criminal action, including the preservation or transportation of personal property distrained and theadvertisement and sale thereof, as well as of realproperty and improvements thereon.
SEC. 220
Form and Mode of Proceeding in Actions Arising under this Code 
Civil and criminal actions and proceedings instituted inbehalf of the Government under the authority of thisCode or other law enforced by the BIR shall be broughtin the name of the Government of the Philippines andshall be conducted by legal officers of the BIR but nocivil or criminal action for the recovery of taxes or theenforcement of any fine, penalty or forfeiture under thisCode shall be filed in court without the approval of theCommissioner.
SEC. 221
Remedy for Enforcement of Statutory Penal Provisions 
The remedy for enforcement of statutory penalties of allsorts shall be by criminal or civil action, as the particular situation may require, subject to the approval of theCommissioner.
2. Administrative Remediesa. Distraint of personal propertySEC. 206
Constructive Distraint of the Property of a Taxpayer 
To safeguard the interest of the Government, theCommissioner may place under constructive distraintthe property of a delinquent taxpayer or any taxpayer who, in his opinion: is retiring from any business subjectto tax, or is intending to leave the Philippines or toremove his property therefrom or to hide or conceal his

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