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TAX II | A Reviewer

ENUMERATIONS

CHAPTER XXV
ADMINISTRATIVE REMEDIES OF GOVERNMENT

Question of Fact Question of Law


When doubt or difference arises as to the truth or falsehood of the When doubt or difference arises as to what the law is on certain
alleged facts state of facts

Reply Protest
Prescription of 15 days from the date of receipt of the PAN within He is given 30 days from the date of receipt within which to file
which to make his written reply thereto his protest against the FAN
Due to the shorter time given to the taxpayer to make the reply, a The protest is usually sufficient and comprehensive to explain the
TP is generally does not respond in an adequate manner to the legal and factual bases why the assessment is incorrect, and certain
specific findings of the Revenue Officer documentary evidence not presented during the preliminary
assessment phase and legal authorities and jurisprudence relevant
to the findings of the revenue officers are submitted or presented.
Most often than not, the TP himself normally handles the aspect of A TP is almost always represented by his tax agent or consultant.
the preliminary assessment process, hoping that he could still
convince the revenue officer of the correctness or reasonableness
of the TP’s position
Failure to reply to a PAN makes the TP in default and authorizes Failure to file a timely protest to a FAN makes the FAN final and
the revenue official to issue the FAN. However, no liability for executory, and the TP loses his right to contest the assessment, at
additional or deficiency tax arises from such failure to file a reply. the administrative and judicial levels, even if such assessment is
The filing of a reply to a PAN is therefore directory on the part of weak or has no legal basis. In other words, the filing of a protest
the TP. against an assessment is mandatory and had to be made on a timely
manner.

Delinquency Deficiency
Can be immediately collected administratively through the Can also be collected through administrative and/or judicial
issuance of the warrant of distrain and levy and/or by judicial remedies but has to go through the process of filing the protest
action against the assessment by the taxpayer and denial of such protest
by the BIR
Filing of civil action for the collection of the delinquent tax is a Filing of civil action at the ordinary court for the collection of a
proper remedy deficiency tax during the pendency of a protest may be the subject
of a motion to dismiss
Subject to administrative penalties such as 25% surcharge, interest Generally not subject to the 25% surcharge although subject to
and compromise penalty interest and compromise penalty
Considered delinquent when: (1) the self-assessed tax per return Considered deficient when: (1)the amount by which the tax as
filed by the taxpayer on the prescribed date was not paid at all or determined by the CIR exceeds the amount shown as the tax by
was only partially paid; or (2) the deficiency tax assessed by the the taxpayer upon his return; (2) no amount is shown as the tax by
BIR became final and executory. the taxpayer upon his return or if no return is made by the taxpayer.
The amount by which the tax exceeds the amount previously
assessed as a deficiency

Distraint - remedy whereby the collection of delinquent tax is enforced on the personal property of whatever character of the
taxpayer.
Actual Distraint Constructive Distraint
Resorted when at the time required for payment, a person fails to Issued where no actual tax delinquency is necessary before the
pay his delinquent tax obligation. Distraint consists in the actual same is resorted to by the government. It shall be effected by
seizure and taking possession of personal property requiring taxpayer or any person having possession or control of
the personal property to sign a receipt covering the property
distrained and obligate himself to preserve the same intact and
unaltered and not to dispose of the same in any manner whatever
without the express authority of the CIR.

Compromise Compromise Penalty


Similarities

1. They both imply mutual agreement. A compromise penalty cannot be impose in the absence of a showing that the TP
consented thereto. If the Commissioner’s offer of compromise is rejected by the TP, the Commissioner cannot enforce
it but he may file a criminal action against the TP for the tax violation;

2. The Commissioner has no power to impose and collect the compromise penalties in the absent of a compromise
agreement validly entered into between the TP and the Commissioner. However, where in an appeal to the CTA, the
TP has expressed his willingness to pay compromise penalties, said amounts may be collected as part of the judgment;

3. The right to enter into an agreement , including the amount to be paid in settlement of a tax violation, is discretionary
to the Commissioner or the TP.
Differences
Definition and Nature of Violation being Compromised
A compromise is an amount of money paid by the TP to settle his A compromise penalty is an amount of money paid by a TP to
civil liability for tax assessed by the government. compromise a tax violation that he has committed, which may be
the subject of criminal prosecution
Basis of the Amount Paid
The basis of the amount paid is the basic tax assessed The basis is the gross sales or receipts during the year or the tax
due
Minimum Amount Prescribed
The law sets a limit as to the amount that may be accepted by the The amount set depends on the nature of the tax violation and the
government, depending on the legal grounds used by the TP minimum amount is generally not less than P1000.

Compromise Abatement
When reasonable doubt as to the validity of the claim against When tax or any portion thereof appears to be unjustly or
taxpayer exists or the financial position of the taxpayer excessively assessed or when the administration and collection
demonstrates a clear inability to pay the assessed tax costs involved do not justify the collection of the amount due
Either 10% or 40% of the basic tax assessed must be paid Entire tax liability is cancelled

CHAPTER XXIX
ASSESSMENT AND PROTEST

Request for Reconsideration Request for Reinvestigation


It is a plea for evaluation of the assessment on the basis of existing It a plea for re-evaluation of the assessment on the basis of
records without the need of presentation of additional evidence. additional or newly discovered evidence which are to be
introduced for examination for the first time.
It does not suspend the period to collect the deficiency tax. It suspends the running of the prescriptive period to collect.
The 180-day period within which the BIR shall act on the protest The 180-day period within which the BIR shall act on the protest
starts from the filing of the request for reconsideration. starts only from the date of submission of the additional or newly
discovered evidence.

CHAPTER XXX
PRESCRIPTION

Extension of Prescriptive Period Interruption of Prescriptive Period


The TP and the Commissioner or his authorized representative The contracting parties do not sign any written agreement
sign a written waiver extending the period within which the BIR interrupting the period. Either the TP requested for a
may assess or collect the tax. reinvestigation which was granted by the Commissioner, or a
warrant of distraint or levy was issued by the Commissioner or his
duly authorized representative and no property of the TP could be
located.
The grounds for extension of the prescriptive period are provided The grounds for interruption of the prescriptive period are given
for in Section 222(b) to (e). in Section 223.
To validly extend the prescriptive period, the waiver must be The actions of the TP and the BIR are taken after the issuance,
signed by the contracting parties before the expiration of the time release and mailing of assessment notice and letter of demand.
prescribed to assess or to collect.
The effect is to extend or prolong the period within which the The period during which any of the enumerated condition exists is
Commissioner may assess or collect the tax. deducted from the total period. The period to assess or collect
mentioned in the law is not extended,

CHAPTER XXXI
TAX CREDIT OR REFUND

Tax Credit Tax Deduction


It refers to an amount that is subtracted directly from one’s total It is an amount allowed by law to reduce income prior to the
tax liability. It reduces the tax due, including the income tax that application of the tax rate to arrive at taxable income.
is determined after applying the corresponding tax rates to taxable
income.
It is used only after the tax has been computed. It is used only before the tax has been computed.