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REMEDIES OF THE STATE A finding by the taxing authority that the taxpayer has

not paid the correct taxes.


1. What are Remedies?
The National Internal Revenue Code or Tax Code It is also a written notice to a taxpayer to the effect
that the amount stated therein is due and containing a
o Provide solutions to the problems of the demand for the payment thereof.
Government in enforcing tax laws and
solutions to the problems of taxpayers 5. Who has the burden of proof in pre-assessment
against unlawful enforcement or collection of Proceedings?
tax. In accordance with the doctrine of presumption of
regularity in the conduct of official functions of
o These solutions are termed remedies ,its government instrumentalities.
basic purpose is to maintain equilibrium
between the interest of the state and There is a presumption of correctness on the part of
taxpayer. the Commissioner of Internal revenue (CIR) ;thus the
onus probandi or burden of proof lies on the taxpayer.
2. What are the different remedies available to the
State and Taxpayer? 6. When pre-assessment notice not required?

(Collection proceedings may initiate without


3. What are the administrative powers of the BIR? assessment notice)
a. when the finding for any deficiency tax is the
Remedies of Common Remedies of result of mathematical error in the
the State Remedies the Taxpayer computation of the tax as appearing on the
Available to face of the return; or
Both
b. When a discrepancy has been determined
I. Administrative between the tax withheld and the amount
Level actually remitted by the witholding agent; or
Assessment Compromise Protest

Collection Abatement Refund c. when a taxpayer who opted to claim refund


or tax credit of excess creditable witholding
II. Judicial Level tax for a taxable period was determined to
have carried over and automatically applied
Civil Appeal to CTA the same amount claimed against the
Suit/Action estimated tax liabilities for the taxable
quarter or quarters of the succeeding taxable
Criminal Suit/ TRO/ Injunction
year.
Action

Criminal Suits d. when the excise tax due on excisable has


Against Erring not been paid.
BIR Officials
e. when an article locally purchased or
a. Assessment and Collection of all internal imported by an exempt person, such as but
revenue taxes, fees and charges not limited to vehicles ,capital equipment
b. Enforcement of all forfeitures, penalties and ,machineries and spare parts ,has been sold
fines connected therewith ,traded or transferred to non-exempt
c. Execution of judgments in all cases decided persons.
in its favor by the Court of Tax Appeals(CTA)
and the ordinary courts 7.What are the administrative collection remedies
d. Give effect to and administer the supervisory of the government?
and police powers conferred to it by the
Code or other laws. 1. Distraint (actual or constructive)
2. Levy
4. What is an Assessment? 3. Tax lien
4. Forfeiture of property
5. Suspension of business operations in 13. Who shall seize and distraint personal
violation of VAT property (Actual Distraint)
6. Enforcement of administrative fine Amount of delinquent tax is more than 1,ooo,ooo-
Commissioner or his duly authorized representatives
The remedies of distraint and levy as well as collection
by civil and criminal actions may. In the discretion of Amount of delinquent tax is 1,000,000 or less –
the Commissioner be pursued singly or independently Revenue District Officer
of each other or all of them simultaneously.
14. What are the procedures for the actual
8.What is distraint? distraint or garnishment ?
It is the seizure by the government of personal 1.Commencement of distraint proceedings by CIR or
property, tangible or intangible to enforce the payment Revenue District Officer
of taxes.
2. Issuance /service of the warrant of Distraint upon
9. What is the nature of the warrant of distraint or the delinquent taxpayer
levy?
The warrant is a summary procedure “forcing “the 3.Posting of public auction sale notices in two (2)
taxpayer to pay. conspicuous places in the locality

10. What are the two types of Distraint? 4.Public auction sale

1. Actual 15. When may a taxpayer property maybe placed


there is taking of possession of personal property under constructive distraint?
from the taxpayer by the government. If the taxpayer
1. Is retiring from any business subject to tax
2. Constructive 2. Intending to :
the owner is merely prohibited from disposing of -leave the Philippines
his property . -remove his property therefrom
-Hide or conceal his property
11. What are the requisites for the exercise of the 3. is performing any act tending to obstruct the
remedy of distraint or levy? proceeding for collecting the tax due or which maybe
1. Taxpayer must be delinquent (except in due from him.
constructive distraint ) in the payment of
taxes. 16. What are the procedures for the constructive
2. There must be a subsequent demand for its distraint of personal property?
payment (assessment) A. CIR serves the warrant o constructive distraint to
3. The taxpayer must fail to pay the tax at the the delinquent taxpayer
time required and B. Taxpayer must sign the receipt and obligate
4. The period within which to assess or collect himself to preserve the thing distraint
the tax has not yet prescribed C. Upon failure to sign a receipt
a. proceed to prepare a list of such property
12.What are the distinctions between actual and and
constructive Distraint? b. in the presence of two( 2) witnesses leave a
Actual Constructive copy thereof in the premises where the
Made only on the Made on the property of any property distrained is located , after which
property of a taxpayer, whether delinquent the said property shall be deemed to have
delinquent taxpayer or not been placed under constructive distraint.
There is taking of Taxpayer is merely
possession prohibited from disposing his 17. What is levy?
property It refers to the act of seizure of real property in order
Effected by leaving a Effected by requiring the to enforce the payment of taxes.
list of distrained taxpayer to sign a receipt of
property or by service the property or by the 18. What are the procedures for levy?
of a warrant of distraint revenue officer preparing 1. Prepare a Certificate of Levy
or garnishment and leaving a list of such 2. Issuance /serve notice to the taxpayer and
property Registry of Deeds
3. Advertisement of public auction
4. Public Auction Sale
19. What are the distinctions of distraint and levy? 25. What are civil actions?
Distraint Levy These are actions instituted by the government to
Refers to personal Refers to real property collect internal revenue taxes. It is normally resorted
property to:
Forfeiture by the Forfeiture is authorized A. when a tax is assessed but the assessment
government is not becomes final and unappealable because
provided the taxpayer fails to file an administrative
The taxpayer is not The right of redemption is protest with the CIR within 30 days from
given the right of granted in case of real receipt.
redemption with respect property levied upon and
to distrained personal sold or forfeited to the B. when a protest against assessment is filed
property government. and a decision of the CIR was rendered but
the said decision becomes final, executory
and demandable for failure of the taxpayer
20. May property levied be redeemed?
to appeal the decision to the CTA within 30
days from receipt of decision.
Within I year from the date of sale ,the property maybe
redeemed by the delinquent taxpayer or anyone from
However, the CIR authorization is essential before
him, upon payment of taxes, penalties ,and interest
instituting a civil or criminal action.
thereon from the date of delinquency to the date of sale
together with interest on purchase price at 15% per
26. Who has jurisdiction over civil actions?
annum from the date of sale to the date of redemption.
A. COURT OF TAX APPEALS
Where the principal amount of taxes and fees ,
21. What is a tax lien?
exclusive of charges and penalties claimed is One
It is a legal claim charge on the property either real or
million pesos and above . The CTA has a total of 9
personal established by law, as a security in default of
magistrate divided into 3 division compose of 3
the payment of taxes. Generally, it attaches to the
justices per division.
property irrespective of ownership or transfer thereof.
B. REGIONAL TRIAL COURT, MUNICIPAL TRIAL
22. What is the extent and nature of lien?
COURT. METROPOLITAN TRIAL COURT
 The tax together with interest, penalties, and
Where the principal amount of taxes and fees ,
costs that may accrue in addition thereto is a
exclusive of charges and penalties claimed is less
lien upon all property and rights to property
than one million pesos.
belonging to the taxpayer.
 The lien shall not be valid against mortgagee,
27. What are criminal actions?
purchaser, or judgment creditor until notice of
In consonance with the Constitutional limitations, ”no
such lien shall be filed by the Commissioner
person shall be imprisoned for non-payment of debt or
of Internal Revenue in the Office of the
poll tax”.
Register of Deeds of the province or city
where the property of the taxpayer is situated.
The CIR may initiate criminal suit against delinquent
 Lien attaches not only from the service of the
taxpayer and maybe punished behind bars.
warrant of distraint but from the time the tax
became due and payable. 28. Who has jurisdiction over criminal actions?
A. COURT OF TAX APPEALS
23. What is forfeiture?
On criminal offenses arising from violations of the
 Divestiture of property distraint or levied NIRC and other laws administered by the BIR, where
 If there is no bidder in the public sale or the principal amount of taxes and fees , exclusive of
 if the amount of the highest bid is insufficient charges and penalties claimed is One million pesos
to pay the taxes, penalties and costs, and above.
 the real property shall be forfeited to the
government. B. REGIONAL TRIAL COURT, MUNICIPAL TRIAL
 The effect is to transfer the title of a specific COURT, METROPOLITAN TRIAL COURT
thing from the owner to the government. On criminal offenses arising from violations of the
 NIRC and other laws administered by the BIR, where
24. What are the judicial remedies of the State? the principal amount of taxes and fees, exclusive of
A. Civil Actions charges and penalties claimed is less than One
B. Criminal actions
million pesos or where there is no specified amount
claimed.

29. May criminal action be filed during the


pendency of an administrative protest in the BIR?
Yes, it is not a requirement for filing of criminal
complaint to have a precise computation and
assessment of the tax, since what is involved in the
criminal action is not the collection of tax but a
criminal prosecution for the violation of the NIRC.
REMEDIES OF THE TAXPAYER a. filing of criminal complaint against erring BIR
officials and employees
1. What are the remedies of the taxpayer? b. Injunction –when the CTA in its opinion the
A. Administrative collection by the BIR may jeopardize
-within the BIR taxpayer.
a. Protest
b. Refund 7.When may the CTA issue a TRO/Injunction
B. Judicial-with the courts against a collection of a Tax?
a. Appeal to the CTA
b. Temporary Restraining Order/Injunction from General Rule:
CTA and No action shall suspend the collection payment, levy
c. Filing criminal suit against erring BIR or distraint and or sale of any property of the
Officials taxpayer.

2. What is a Protest? Exception:


A challenge against an assessment. Normally, a The CTA is empowered to suspend the collection of
taxpayer subject of an assessment will contradict or internal revenue taxes and custom duties only when
repel the final demand of the BIR by filling a formal there was a:
letter address to the BIR Commissioner impugning the
validity of the Assessment made by stating clearly the 1. Showing that collection of the tax may jeopardize the
laws and the facts of his petition. interest of the government and or the taxpayer.
2. Deposit of the amount claimed or file a surety bond
3.How is protest filed? for not more than double the amount of tax with the
Filing a petition for reconsideration or reinvestigation court when required and
within 30 days from receipt of assessment with the CIR. 3. showing by taxpayer that appeal is not frivolous nor
dilatory.
And within 60 days from filing of protest, all relevant
supporting documents should have been submitted , 8. May the government be held liable for interest
otherwise the assessment shall become FINAL – on tax refunds?
cannot be disturbed. Government cannot be required to pay interest on
taxes refunded to the taxpayer in the absence of
4. What is a refund? statutory provision clearly or expressly directing or
Remedy of a taxpayer in case of excessive or authorizing such payment.
erroneous payment of a tax with the BIR:
a. Tax is collected erroneously or illegally 9. What is a tax credit certificate?
b. Penalty is collected without authority a. In lieu of cash payment tax warrants or
c. Sum collected is excessive. certificate maybe applied against any
internal revenue tax except withholding
5.What are the requisites of tax refund or tax taxes.
credit? b. Original copy is surrendered to the revenue
a. claim must be in writing office
b. it must be filed with the CIR within 2 years c. Must be used within a period of 5 years.
after the payment of the tax or penalty.
c. Show proof of payment.
6. What are the different judicial remedies
available to a taxpayer?
Civil Action:
1. Appeal to the Court of Tax Appeals-within 30
days from receipt of the decision on the
protest or from the lapse of 180 days due to
inaction of the Commissioner whichever
comes first.

2. action for damages against a revenue officer


by reason of any act done in the
performance of his official duty.

Criminal Action
LIMITATIONS TO REMEDIES
B. when the taxpayer requests for a
1. What are the limitations to the assessment reconsideration which is granted by the CIR.
power of the state? C. when the taxpayer cannot be located in the
Prescription address given by him in the return, unless he
o Through the lapse of time, a right may informs the CIR of any change in his
either be extinguished or acquired. address.

o The power of the state to D. when the warrant of distraint or levy is duly
assess(investigate /audit) taxpayer shall served, and no property is located and
prescribe after three years (3) from the E. When the taxpayer is out of the country.
date the return is due (required by law
or filed, whichever is later. 5. What are the prescriptive periods for the
Exceptions: violation of any provision of the Tax
1.Failure to file a return Code?
Ten (10) years from the date of the Should be filed within Five (5) years from the
discovery of the omission to file a return 1. day of the commission of the
2. False or fraudulent return with the intention to violation of the law and if the same be not
evade the tax known,
Ten (10) years from the date of the 2. from the discovery thereof and the
discovery of the falsity or fraud. institution of the judicial proceedings for its
investigation and punishment.
2. When will the prescriptive period commence in
case of an amended return? 6. What are the different prescriptive periods
o If the amended return is substantially different for protest?
from the original return, the prescriptive A. A. A protest must be filed within 30 days
period shall be counted from the filing of the from receipt of assessment
amended return. B. B. Submit supporting documents within 60
days from date of the filing of the
o But the said period shall run form the filing of protest.
the original return if the same is sufficiently C. If protest is denied
complete to enable the commissioner to make D. Appeal the matter to the division of the Court
proper assessment. of Tax Appeals(CTA) within 30 days from
receipt of final decision of CIR or if the CIR
When substantive: fails to act on the protest within 180 days
o Substantial under-declaration from date of submission of evidentiary
(exceeding 30% of that declared) of document by taxpayer , whichever comes
taxable sales, receipts or income or a first.
substantial overstatement (exceeding E. D. Appeal within 15 days to the CTA en banc
30% of actual deductions )of deductions from receipt of the Division of the CTA
. denial decision.
F. Appeal to the Supreme Court within 15 days
3. What is the limitation to the collection power of from receipt of the CTA en banc decision.
the State?
The State’s power to collect tax shall prescribe within: 7. What are the prescriptive periods for refund?
o 5 years from assessment or within A. claim for refund must be made within 2 years
period for collection agreed upon in from date of payment.
writing before expiration of the 5- year B. In case of the CIR’s denial of the claim for
period refund , the 30-day period to appeal with the
o 10 years without assessment in case of CTA must be within the 2- year pre-emptory
false or fraudulent return with intent to period for instituting judicial action.
evade or failure to file return.
4. What are the grounds for suspension of the
running of Statute of limitations?
A. when the CIR is prohibited (by TRO) from
making the assessment or beginning the
distraint or levy or a proceeding in court and
for sixty (60) days thereafter.
COMMON REMEDIES cases , within 30 days from receipt thereof
and there is a reason to believe that it is
Between the State and Taxpayer lacking in legal and or factual basis; or
1. What is a compromise? B. The financial position of the taxpayer
demonstrates a clear inability to pay the
Mutual concession between the taxpayer and the
assessed tax.
government in settling a tax deficiency amicably.

2. What are the requisites for compromise? 1. the corporation ceased operation or is
already dissolved or
A. The taxpayer must have a tax liability.
2. the taxpayer is suffering from surplus or
B. There must be an offer (by the taxpayer of an earning deficit resulting to impairment in the
amount to be paid by the taxpayer) original capital by at least 50% or

C. here must be an acceptance (by the 3. the taxpayer is suffering from a net worth
Commissioner or taxpayer as the case maybe ) deficit computed by deducting total liabilities from
of the offer in the settlement of the original claim. total assets , taken from the latest audited
financial statement or
3. What cases maybe compromised?
4. the taxpayer is a compensation earner with no
A. Delinquent actions other source of income and family’s gross
monthly compensation does not exceed
B. cases under administrative protest
(10,500/month if single; 21,000/month if
C. Civil tax cases being disputed before the married)and that it appears that the taxapayer
courts possesses no other leviable /distrainable assets
other than his family home or
D. Collection cases filed in courts
5. the taxpayer is a compensation earner with no
E. Criminal violations , other than those already other source of income and family’s gross
filed in court or those involving criminal tax monthly compensation does not exceed
frauds. (10,500/month if single; 21,000/month if
married)and that it appears that the taxpayer
4. What are the grounds for compromise? possesses no other leviable /distrainable assets
other than his family home or
A. A Reasonable doubt as to the validity of the
claim against taxpayer exists; or

1. the delinquent account or disputed


assessment is one resulting from a jeopardy
assessment. 5. What are the Minimum Compromise rates?
2. The assessment seems to be arbitrary in
nature, appearing to be based on o In case of financial capacity:
presumptions, and there is a reason to
Minimum Compromise ate=10% of the basic
believe that it is lacking in legal or factual
assessed tax
basis or
3. The taxpayer failed to file and administrative o Other cases :
protest on account of the alleged failure to
receive notice of assessment or preliminary MCR=40% of the basic assessed tax
assessment and there is no reason to believe
6.What are the remedies in case the taxpayer
that it is lacking in legal and or factual basis or
refuses or fails to abide the tax compromise?
4. The taxpayer failed to file a request for A. Enforce the compromise by court action.
reinvestigation /reconsideration within 30
days from receipt of the final assessment B. If it is judicial compromise .it can be enforced
notice and there is reason to believe that it is by mere execution.
lacking in legal and or factual basis or
5. The taxpayer failed to elevate to the CTA an A Judicial Compromise
adverse decision of the Commissioner , or his
duly authorized representative , in some
-is one where a decision based on
the compromise agreement is rendered by
the court on request of the parties.

Compromise Penalty

It is an amount of money which the taxpayer pays


to compromise a tax violation.

This is paid in lieu of criminal prosecution.

8. What is abatement?

A tax maybe cancelled or obliterated upon


authority of the BIR under certain circumstances.

9. What are the grounds for abatement?

A. The tax or any portion thereof appears to be


unjustly or excessively assessed :

1. when the filing of the return /payment is made


at the wrong venue;

2. when the taxpayer’s mistake in payment of his


tax is due to erroneous written official advice of a
revenue officer;

3. when the taxpayer fails to file the return and


pay the tax on time due to substantial losses from

o prolonged labor dispute


o Force majeure
o Legitimate business reverses

provided ,however ,the abatement shall


only cover the surcharge and the
interest imposed under Section 249 of
the National Internal Revenue Code

4. When the assessment is brought about or the


result of taxpayers’ non-compliance with the law due
to a difficult interpretation of said law.

5. when the taxpayer fails to file the return and pay


the correct tax on time due to circumstances beyond
his control , provided , however ,the abatement shall
only cover the surcharge and the interest imposed
under Sec 249 of the Code.

B. he administration and collection costs involved


do not justify the collection of the amount due.

C. The Commission may also , even without a


claim , therefore, refund or credit any tax where
on the face of return upon which payment was
made such payment appears clearly to have
been erroneously paid.