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Chapt-2 Tax Admin

Chapt-2 Tax Admin

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Published by: humnarvios on Jan 28, 2012
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INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS
Chapter 2: Tax Administration
CHAPTER 2
TAX ADMINISTRATION
Problem 2 – 1 TRUE OR FALSE
1.True
2.
False - Department of Finance3.False - Exclusive and original power to interpret tax laws. Final power to interpret taxlaws belongs to the Supreme Court.4.False - Review by the Court of Justice/Court of Appeals
5.
False - Cooperatives are exempted from income tax and annual registration fee.6.False - In all cases, the authority to print is required.7.False - Not required to register again, just file an information update.
8.
False - Tax assessment is needed to enforce payment of unpaid tax liability.9.True10.True11.False - Levy or imposition of tax12.True13.False – executive branch of the government14.False – the description refers to administrative feasibility.
Problem 2 – 2 TRUE OR FALSE
1.True2.False – submit to the BIR.
3.
False - Distraint is for personal property, while levy is for real property.4.True
5.
False - Exceptions are those already filed in court of those involving fraud.6.True7.True8.True9.True
10.
False - value of property.11.False – Redemption of property should be made within one year from the date of sale.12.True13.True
Problem 2 – 3 TRUE OR FALSE
1.True2.True3.False P100,0004.False – 10% final withholding tax5.True – If authorized by the BIR Commissioner6.True7.False – All properties of a delinquent taxpayer may be subject to tax lien.8.True9.False – Seizure10.False – Forfeiture11.True12.False – Criminal violations already filed in court are not subject to compromise.Collection of taxes is not a criminal violation.13.True
Problem 2 – 4 TRUE OR FALSE
1. True2. False – Without letter of authority, the taxpayer could refuse access to his books.3. False – Civil action could also be judiciary pursued.4. True5. False – the appeal must first be made to Court of Tax Appeals.6. False – It could also be done if no tax return is filed.7. False – Ten years prescription period starts at date of discovery that tax return was notfiled.8. False It should be 5 years.9. False – Levy could also be done before or simultaneous with distraint.10. False – Residual value should be returned to taxpayer.11. True12. False – It is also applicable to importation.13. True
Problem 2 5 Problem 2 6
3
 
INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS
Chapter 2: Tax Administration
1. B1. D2. A2. A3. B3. A4. D4. A5. A5. C6. C6. C7. C7. D8. D8. B9. B9. C10. B10. C11. D12. C13. B
Problem 2 – 7Situation 1
 
– No need to appeal.
The prescribed period of filing for the refund is alreadyexpired. The filing of refund should have been made within two years after the payment of taxor penalty. It was filed within 2 years, one month, and 5 days after the date of erroneouspayment, hence, not appealable anymore.
Situation 2 – May 5, 2010.
The filing of refund was appropriately made within the 2 yearprescribed period. The denial was received on April 5, 2010. The filing of appeal to CTA shouldbe made within 30 days from the receipt of denial from the BIR.
Situation 3 – August 2, 2014.
The date of grant for refund was received on August 1, 2009. The refund check (dated July 15, 2009) should be encashed within 5 years from the date thegrant for refund was received (August 1, 2009). The check should be encashed from August 1,2009 to August 1, 2014. It will be forfeited on August 2, 2014.
Situation 4 – August 22, 2014.
The date of grant for refund was received on August 21,2009. The refund check (dated July 30, 2009) should be utilized within 5 years from the datethe grant for refund was received (August 21, 2009). The tax credit certificate should beutilized from August 21, 2009 to August 21, 2014. It will be forfeited on August 22, 2014,unless otherwise revalidated.
Situation 5 – August 20, 2009.
If the BIR has no response after the submission of supporting documents to serve as evidence for the protest, the last day to appeal to the CTAshould be made within 30 days from the lapse of the 180 day period from the submission of the supporting documents.Computation of days:After January 22, 2009Days January 9February 28March31April30May31 June30 July 21 Total number of days as of July 21180Plus 30 days after the 180 days July10August 20 Total day on August 2030
Situation 6 – May 4, 2009.
The last day to appeal to the CTA should be made within 30days from the receipt of the denial of the BIR. The 30 days is determined as follows:DaysFirst denial of the BIR – March 22, 2009to 2
nd
request for reconsideration March 30, 200982
nd
denial of the BIR – April 12, 2009to May 4, 2009 to complete the 30 day period22 Total days as of May 4, 200930
Situation 7 – June 25, 2009.
The appeal to CA should be made within 15 days from date of unfavorable decision from CTA was received (June 10 plus 15 days).
4
 
INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS
Chapter 2: Tax Administration
Situation 9 – July 10, 2009.
The appeal to SC should be made within 15 days from date of unfavorable decision from CA was received (June 25 plus 15 days).
Situation 10 – March 1, 2010.
Within 1 year from the date of sale.
Problem 2 8 B
 Tax due per returnLate filing and payment – simple neglect (P100,000 x 25%)Interest (P100,000 x 20% x 2.5/ 12) Total amount due and payableP100,00025,0004,167P129,167
Problem 2 9 A
Amount due surcharge (P100,000 x 25%)P25,000
Problem 2 10 D
 Tax due per returnLate filing and payment – willful neglect (P100,000 x 50%)Interest (P100,000 x 20% x 14.5/12) Total amount due and payableP100,00050,00024,167P174,167
Problem 2 11D
Deficiency income tax (P120,000 – P100,000)Interest (P20,000 x 20% 435/ 360 days)Amount still dueP20,0004,833P24,833
Problem 2 12 A
Statutory fine (P250,000 x 2)P500,000
Problem 2 13 B
Minimum statutory fine P 5,000
Problem 2 – 14
 Yes, because the prescriptive period of filing the written protest is within 30 days from receiptof assessment.Mr. Lang is obligated to pay the P500,000 assessed against him.
Problem 2 – 15
Basic delinquency taxP 1,000,000Surcharges willful (P1,000,000 x 50%)*500,000Interest (P1,000,000 x 20% x 2) 400,000Amount collected from the highest bidderP 1,900,000Add: Interest for real property redemption (P1,900,000 x15%)285,000 Total redemption amountP 2,185,000*The nonpayment of taxes is already 2 years it becomes habitual; hence, willful neglect.
Problem 2 – 16
Proceeds from the highest bidder (P30,000/6%)*P 500,000Less: Basic tax assessedP 300,000Advertisement10,000Transfer of title15,000Capital gain tax 30,000 355,000Remittance to Mr. SantiagoP 145,000*The capital gains tax is based on the selling price of the real property sold. The rate of capital gains tax is 6%; hence, the proceeds from the highest bidder is P500,000 or(P30,000/6%).
Problem 2 – 17
Corrected sales (P7,000,000/70%)P10,000,000Less: Operating expenses 6,500,000Corrected net taxable incomeP 3,500,000Multiplied by corporate tax rate 30%Corrected total income tax dueP 1,050,000Less: Income tax paid 150,000 Tax deficitP 900,000
5

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