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Tax Remedies Under The Nirc (Repaired)
Tax Remedies Under The Nirc (Repaired)
REMEDIES
UNDER THE
NIRC
2.025 Trillion
21% increase
Compared to the collection goal of 2015
1.674 Trillion
Collection goal for Iloilo City this 2016
amounts to
40+ Billion
What is taxation?
It is a mode by which a government make
exactions for revenue in order to support
their existence and carry out their legitimate
objective.
GOVERNMENT REMEDIES
TAXPAYER REMEDIES
GOVERNMENT REMEDIES
Powers of the BIR (Sec. 2)
To assess and collect all national
internal revenue taxes, fees and charges
To enforce forfeitures, fines and
penalties
To execute judgments in all cases
decided in its favor by the tax court and
ordinary courts
To administer supervisory and police
powers conferred upon it by law
(Sec. 3, NIRC)
REGIONAL OFFICES
Regional Directors
Third-party information
data matching programs:
Reconciliation
of
Listing
for
Enforcement System Summary List of
Sales and Purchases (TRS-RELIEF) RMO
No. 30-2003
Bureau of Customs Data Program (TRSBOC) RMO 34-2004
Tax Reconciliation System (TRS-LN)
RMO 28-2007, as further amended by
RMO No. 7-2010
Power to make
assessments and inquire
into bank deposits (Sec. 6)
A.Examination
of
returns
and
assessment of tax due
Failure to file a return shall not
prevent the Commissioner from
authorizing the examination of any
taxpayer
TAX ASSESSMENT
It is an official action by an administrative
officer to determine the tax due of the
taxpayer
It consists of:
Computation of the amount of tax that
must be paid by the taxpayer
Coupled with a demand to pay the tax
within a specified period of time
Remedies of the
GOVERNMENT
ASSESSMENT
COLLECTION
KINDS OF ASSESSMENT:
1.Self-assessment when taxpayer
computes his own liability, files his return,
and pay the tax based on his
computation (Sec. 56[a])
2.Deficiency assessment occurs upon
discovery of the BIR that the selfassessment was either deficient, or when
no return was made by the taxpayer (Sec.
56[b])
Whichever is LATER
Exceptions:
1.False or fraudulent return with intent to
evade taxes within 10 years from
DISCOVERY of falsity or fraud
2.Failure or omission to file a return
within 10 years after discovery of failure or
omission to file the return
3.Waiver of statute of limitations in writing,
which must be made before the expiration
of the three-year period of assessment of
taxes: period agreed upon
Claiming
fictitious
expenses
as
deductions is a proof of falsity or fraud in
the income tax return.
Tan Guan v. CTA
Gr. No. L-23676, April 27, 1967)
SURCHARGE
25%
50%
Penalties:
20% general interest from due date up to time
paid
Amount to be paid:
TAX DUES + 20% interest
Criminal action
No criminal action for the recovery of
taxes shall be filed without the approval
of the CIR
Acquittal of taxpayer in a criminal case
does not exonerate him from tax liability
The crime is complete when the violator
has knowingly and willfully filed a
fraudulent return or neglected to file a
return with intent to evade the tax
Criminal action
No criminal action for the recovery of
taxes shall be filed without the approval
of the CIR
Acquittal of taxpayer in a criminal case
does not exonerate him from tax liability
The crime is complete when the violator
has knowingly and willfuly filed a
fraudulent return or neglected to file a
return with intent to evade the tax
CRIMINAL CASES
Payment of tax due after apprehension
shall not constitute a valid defense in any
prosecution
Sec. 254 to Sec. 268 violations by
taxpayers
Sec. 269 to Sec. 273 violations by
government officers
Sec. 274 to 280 other penal provisions
COLLECTION
2. Judicial Remedies
Ordinary civil action
Criminal action
Kinds of distraint:
1.Actual distraint actual delinquency in tax
payment is necessary
2.Constructive distraint no actual delinquency
is necessary, resorted to when tax payer is
Retiring from any business subject to tax;
Intends to leave the Philippines
Intends to remove his property from the
Philippines
Intends to hide or conceal this property
Performs any act tending to obstruct the
proceedings from collecting the tax due
COMPROMISE
Grounds
Doubtful validity of the
claim against taxpayer
Financial incapacity of
the taxpayer
Minimum Compromise
Rate
40% of the basic
assessed tax
10% of the basic
assessed tax
Gen. Rule:
All criminal violations may be
compromised
Exception:
Those already filed in court;
Those involving fraud.
PRESCRIPTI
VE PERIOD
ASSESSMEN
T VS.
COLLECTIO
N
Regular Return
was made
Assessment
3 years
Collection
5 years from
assessment
False,
Fraudulent, or
Failure to File a
Return
10 years from
discovery
5 years from
assessment
REINVESTIGATION RECONSIDERATIO
N
Plea for re-evaluation
on the basis of newlydiscovered or additional
evidence
that
a
taxpayer intends to
present
of
taxpayer
is
out
of
the
TP files a
PROTEST
LETTER
TP has
30days to
protest
ISSUANCE OF
FLD/FAN
TP has 15
days to
respond
ISSUANCE OF
PAN
BIR finds
deficiency
FILING OF
TAX RETURN
TP has 60 days
from protest
letter to
submit
supporting
documents
(reinvestigatio
n
30 days from
the denial or
after 180
days of
inaction
CTA
BIR Denial
(representative
)
appeal
CIR
Remedies of the
TAXPAYER
PROTEST OR DISPUTE THE
ASSESSMENT
REFUND OR RECOVERY OF
ERRONEOUSLY OR
ILLEGALLY COLLECTED
TAXES
1.Pre-assessment
notice
a
communication issued by the Regional
Assessment Division, or any concerned BIR
office informing a taxpayer who has been
audited of the findings of the Revenue
Officer following a review of these findings
2.Final assessment notice a notice
given to the taxpayer by the BIR informing
him of the amount of deficiency tax for
which the taxpayer is being assessed on the
findings of the BIR upon failure of the
taxpayer to respond to a PAN or after an
examination has been conducted
DELINQUENT
DEFICIENT
DELINQUENCY
DEFICIENCY
Can be immediately
collected administratively
through the issuance of a
warrant of distraint and levy
or judicial action
Subject to administrative
penalties such as 25%
surcharge, interest and
compromise penalty
PROTESTING AN ASSESSMENT
(REMEDY BEFORE PAYMENT)
Step one: Issuance of the Preliminary
Assessment Notice (PAN)
Taxpayer is given 15 days from receipt of PAN to
respond
If he doesnt respond (default) Formal Letter
of Demand and Final Assessment Notice
(FLD/FAN) shall be issued
If he responds, a FLD/FAN will be issued
within 15 days from the filing/submission of
the taxpayers response
PRE-ASSESSMENT NOTICE
5-Day Letter
15-Day Letter
REPLY TO PAN
WHEN TO FILE REPLY?
Within 15 days from date of receipt of PAN
Extension or further extension may be requested
from BIR
CONTENT OF REPLY?
Explanation to every item of income or deduction
or other matter questioned by revenue officer
Factual and/or legal bases, including applicable
jurisprudence
Prays for total or partial cancellation of PAN
QUESTION OF FACT OR LAW
Question of fact: Truth or falsity?
Question of law: Law on certain set of facts?
DUE PROCESS OF LAW
Issuance of FAN and Demand Letter is tantamount
to denial of Reply to PAN. Essential elements of
due process are notice and opportunity to present
ones side (Phil. Health Care Providers vs. CIR)
ESSENTIAL REQUIREMENTS
FAN (BIR FORM 17.08) contains name, address,
and TIN; kind of tax; period covered; basic tax
and penalties; date tax must be paid
FAN and demand letter must state facts, law or
jurisprudence; otherwise, assessment is void (CIR
v. Enron Subic Power Corporation, G.R. No. 166387, Jan.
19, 2009)
Taxpayer was fairly informed since it was able
to categorically explain how assessment came
about (Toledo Power Co. vs. CIR)
PAN has audit sheet but did not explain how
assessment was arrived. Demand letter did
not contain the information on law and facts
(HPCO Agridev Corp vs. CIR)
Signed by Commissioner or his authorized
representative
Issued within the prescriptive period under the
law or the extended period agreed upon between
the parties
Served by personal delivery or by registered mail
FAN was issued on account of a valid letter of
authority
How to file:
written request
reconsideration or reinvestigation
for
with
first
requirement,
TAX REFUND
There is ACTUAL
reimbursement
TAX CREDIT
This can be applied
against any sum
that may be due
and collectible from
the taxpayer, except
withholding taxes
Not transferrable
(RR 14-2011)
General Rule:
Two-year prescriptive
period runs from the payment of the
tax
Exception:
1.Overpaid
quarterly
corporate
income tax after a final adjustment
return is accomplished
2.Overpaid withholding taxes end of
the taxable year
3.Creditable withholding taxes filing
of taxpayers final adjustment return
4.Tax paid in installments date of
payment of the last installment
REFUND
OR
CREDIT
CORPORATIONS
(Sec.
76Adjustment Return)
FOR
Final
How to choose:
by marking the
corresponding option box provided in the
Final Adjustment Return(FAR)
Failure to signify ones intention in the
FAR does not mean outright barring of a
valid request for a refund
Carry-over option if chosen, choice is
considered
IRREVOCABLE
for
the
taxable period
HAVE A GREAT
DAY!!
ATTY. BRIANNA KAY A.
TENEFRANCIADE LOS SANTOS, REB