Republic of the Philippines

SORSOGON STATE COLLEGE

Sorsogon Campus
Sorsogon City

JOMALYN M. CRUZ
BS-ACCOUNTANCY III
INCOME TAXATION (TAX I)
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I.TOPIC: The Bureau of Internal Revenue
II. Methodology: The method used was Document Analysis. Any related
books certainly by Banggawan and Ampongan books were the origins of
the data gathered.
III. Content and Discussion

Bureau of Internal Revenue (BIR)

 Is an administrative agency that is involved in the administration
and collection of the national internal revenue taxes and also a
part of the Revenue operations group of the Department of Finance
together with the Bureau of Customs, Revenue Service and Legal
Service.

A Commissioner
Chief
Officials of
4 Deputy Commissioners
BIR

A. Operations Group

B. Legal Enforcement
Group
C. Information System
Group
D. Resource Management
Group
Power to examine books and other accounting records and
obtain information

In ascertaining the correctness of any return, or in making a

return when none has been made, or in determining the liability of
any person for any internal revenue tax, or in collecting any tax
liability, or in evaluating tax compliance, the Commissioner is
authorized to:

 examine any book, paper, record or data which may be relevant or

material to such inventory;
 obtain on a regular basis any information from any person other
than the person whose internal revenue tax liability is subject
to audit or investigation, government agencies and
instrumentalities, including the Bangko Sentral ng Pilipinas and
government owned or controlled corporations;
 summon the person liable to tax or required to file a return, or
any officer or employee of such person, or any person having
possession, custody or care of the books of accounts and other
accounting records containing entries relating to the business
of the person liable for tax, or any other person, to appear
before the Commissioner or his duly authorized representative at
a time and place specified in the summons and to produce such
books, papers, records other data, and to give testimony;
 make testimony of the person concerned, under oath, as may be
relevant or material to such inquiry; and
 cause revenue officers and employees to make a canvass from time
to time or any revenue district or region and inquire after
concerning all persons therein who may be liable to pay any
internal revenue tax, and all persons owning or having the care,
management or possession of any object with respect to which a
tax is imposed.

Powers of the Bureau of Internal Revenue

1. Assessment and Collection of Taxes
2. Enforcement of all forfeitures, penalties and fines, and
judgements in all cases decided in its favor by the courts
3. Giving effect to, and administering the supervisory and
police power conferred to it by the NIRC and other laws
4. Assignment of Internal Revenue Officers and other
employees to other duties
5. Provision and distribution of forms, receipts,
certificates, stamps, etc. to proper officials
6. Issuance of receipts and clearances
7. Submission of annual report, pertinent information to
Congress and reports to the Congressional Oversight
Committee in matters of taxation
 Power to make assessments

1.To interpret the provisions of the NIRC, subject to review by the

Secretary of Finance
2.To decide tax cases, subject to exclusive appellate, jurisdiction
of the Court of Tax Appeals
3.To obtain information and to summon, examine, and take testimony of
persons to effect tax collection
4.To make assessment and prescribe additional requirement for tax
administration and enforcement
6.To examine tax returns and determine tax dues
7.To conduct inventory taking or surveillance
8.To accredit and register tax agents
9.To refund or credit internal revenue taxes

Bureau's authority to inquire into taxpayer's bank deposits

General Rule: All deposits made by the people shall be considered as

absolutely confidential in nature and may not generally be examined,
inquired or looked into by any person, government official, bureau or
office. (Provisions from Bank Secrecy Law - R.A No. 1405)

However, two instances were given to authorize the Commissioner to

inquire into bank deposits -
1. to determine the gross estate of the decedent; and
2. when the taxpayer applies for a compromise of tax of his
liability by reason of financial liability. (Sec. 6 (F), NIRC)

The application filed by the taxpayer to compromise the payment

of his tax liability with regards to his inability to pay the tax
assessed shall not be considered unless and until he waives in
writing his privilege under R.A 1405 or any other general or any
special laws, and such waiver shall constitute the authority of the
Commissioner to inquire into a bank deposits of the taxpayer.
Compromise- a contract whereby parties by reciprocal concessions
avoid litigations or put an end to one already commenced.

The Commissioner has the authority to compromise on the

following grounds:
1. Reasonable doubt as to validity of the claim against the taxpayer
exists; or
2. The financial position of the taxpayer demonstrates clear
inability to pay the assessed tax.

 of where the compromise settlements are subject to any of

the following minimum amounts:
1. Minimum of compromise rate equivalent to ten percent (10%) of the
basic assessed tax for financial incapability cases: and
2. Minimum rate of forty percent (40%) of the basic assessed tax for
other cases.
3. When required basic assessed tax involved exceeds P1M or where the
settlement offered is less than the prescribed minimum rates, the
approval of the Commissioner and the four Deputy Commissioners shall
be required.
Those already filed in the court

All criminal violations may be compromised except:

:
Those involving fraud

Commissioner- the only official vested with the power and

discretion to enter into compromise of criminal and civil cases.

Compromising or abatement is a power that cannot be delegated

by the Commissioner, except in the following cases:
1. Assessment issued by the Regional Offices involving basic
deficiency taxes of P500,000 or less; and
2. Minor criminal violations. (Sec. 7 [C]id.)
 in which these cases may be compromised by a Regional
Evaluation Board.ss

Tax Liability: Abatement or Cancellation

The Commissioner may abate or cancel tax liability when:
1. The tax or any portion thereof appears to be unjustly or
excessively assessed; or
2. The administration and collection costs involved do not justify
the collection of the amount due. (Sec. 204[B], id.)

Non-delegable powers of the Commissioner

The Commissioner may delegate the powers vested in him under the
pertinent provisions of the Code to any of such subordinate officials
with the rank equivalent to a division chief or higher, subject to
such limitations and restrictions as may be imposed under rules and
regulations to be promulgated by the Secretary of Finance, upon
recommendation of the Commissioner:

Provided, however that the following powers shall not be delegated:

1. The power to recommend the promulgation of rules and regulations

by the Secretary of Finance.
2. The power to issue the rulings of first impression or to reverse,
revoke or modify any existing ruling of the Bureau.
3. The power to compromise or abate, under Sec. 204 (A) and (B)of the
Code , any tax lability. However, assessments issued by the regional
offices involving deficiency taxes f P500,000 or less, and minor
criminal violation discovered by the regional and district officials,
may be compromise in the regional level.
4. The power to assign or reassign internal revenue officers to
establishments where articles subject to excise tax are produced or
kept.

Refund or Credit of Taxes

Tax Credit- a claim for issuance of a tax credit certificate,
showing an amount owing from the government to the taxpayer whom the
latter is legally authorized to credit or offset against national
internal taxes payable by him, except withholding taxes (Mamalateo,
Reviewer on Taxation, 2004).
Refund- a claim for payment of cash for taxes erroneously or
illegally paid by the taxpayer to the government.

The Commissioner may credit or refund taxes erroneously or illegally

received penalties imposed without authority.

Other Agencies tasked with Tax Collections or Tax

Incentives Related Functions
  Bureau of Customs
The Bureau of Customs is tasked to administer collection of tariffs
on imported articles and collection of the value added tax
importation. The BOC is headed by the Custom Commissioner and is
assisted by five Deputy Commissioners and 14 District Collectors.

 Board of Investments
The BOI is task to lead the promotion of investments in the
Philippines by assisting Filipinos and other foreign investors to
venture and prosper desirable areas of economic activities. The BOI
is composed of 5 full time governors, excluding the DTI Secretary as
its chairman. The President of the Philippines shall appoint a Vice
Chairman of the board who shall act as the BOI’s managing head.

 Philippines Economic Zone of Authority

The PEZA is created to promote investments in export oriented
manufacturing industries in the Philippines and, among other myriads
of functions, supervised the grant of both fiscal and non-fiscal
incentives. The PEZE is headed by a Director General and is assisted
by 3 deputy directors.

 Local Government Tax Collecting Unit

Provinces, Municipalities, cities and barangays also imposed and
collect various taxes to rationalize their fiscal autonomy.

IV. SUMMARY
The Bureau of Internal Revenue is an agency assigned for the
assessment and collection of the national taxes. BIR collects more
than half of the total revenues of the government and is a part of
the revenue operation group of the Department of Finance. It is
headed by the Commissioner and 4 Deputy Commissioner as assistant.
The Commissioner, upon the recommendation of the Secretary of
Finance, is appointed by the President as well as the four Deputy
Commissioner who are recommended by the Commissioner with the
approval of the Secretary of Finance.

V.REFERENCE
Income Taxation Laws, by Omar Erasmo G. Ampongan, 2016 Edition
Income Taxation Laws, Principles and Application by Rex Banggawan, CPA,
MBA, 2016 OBE Edition