TAXATION: TAXATION PRINCIPLES

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Define Taxation
1. As a state power: Taxation refers to the inherent power of a sovereign state acting through its
legislature to impose a proportionate burden upon persons, property, rights or transaction to raise
revenue to support government expenditure and as a tool for general and economic welfare
(PUBLIC PURPOSE).
2. As a process: Taxation refers to the act of imposing a tax by a sovereign state to raise revenue for
the use and support of the government.
What are limitations on the power of taxation?
1. Inherent limitations – those that restrict the power of taxation even though not provided in the
constitution.
2. Constitutional Limitations – Those that limit power of taxation as embodied in the constitution.
 Due Process of Law (Equality)
 Uniformity and equity rule
 No person shall be imprisoned for debt or non-payment of a poll tax
 Charitable institutions, churches, and parsonages, or convents appurtenant thereto, mosques,
non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and
exclusively used for religious, charitable, or educational purposes shall be exempt from
taxation (real property tax)
 No law granting any tax exemption shall be passed without the concurrence of a majority of
all the members of Congress
 No law impairing the obligation of contracts shall be passed (Bilateral, Unilateral, Franchise)
 No law shall be passed abridging the freedom of speech, of expression, or of the press
 No law shall be made respecting an establishment of religion or prohibiting the free exercise
thereof
 All appropriation, revenue or tariff bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments
 The Congress, may, by law, authorize the President to fix within specified limits, and subject
to such limitations and restrictions as it may impose, tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts within the framework
of the national development program of the Government
 The Supreme Court shall have the power to review, revise, reverse, modify, or affirm on
appeal or certiorari as the law or the Rules of Court may provide, final judgments and orders
of lower courts in all cases involving the legality of any tax, impost, assessment, or toll, or any
penalty imposed in relation thereto
 All revenues and assets of non-stock, non-profit educational institutions used actually,
directly, and exclusively for educational purposes shall be exempt from taxes and duties
 The President shall have the power to veto any particular item or items in an appropriation,
revenue or tariff bill, but the veto shall not affect the item or items to which he does not object
 No public money or property shall be appropriated, applied, paid, or employed, directly or
indirectly for the use, benefit, or support of any sect, church, denomination, sectarian
institution, or system of religion, or of nay priest, preacher, minister, or other religious teacher
or dignitary is assigned to the armed forces or to any penal institution, or government
orphanage or leprosarium (Separation of Church and the State)
 All money collected or any tax levied for a special purpose shall be treated as a special
fund and paid out for such purpose only. If the purpose for which a special fund was created
has been fulfilled or abandoned, the balance, if any, shall be transferred to the general funds
of the government
INHERENT POWERS OF THE STATE
Three inherent powers of a state:
1. Power of taxation
2. Power of Eminent Domain – it refers to the inherent power of a sovereign state to take private
property for public use upon payment of a just compensation.
3. Police Power – it refers to the inherent power of a sovereign state to enact laws to promote public
health, public safety, public morals and the common good.
SIMILARITIES: (GIME)
1. They are indispensable to government existence.
2. They can exist independent of the constitution.
3. They are means by which the state interferes with private rights and properties.
4. They are generally exercised by the legislature.

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TAXATION: TAXATION PRINCIPLES
5. They contemplate an equivalent compensation or benefit.
Point of Distinction Taxation Police Power Eminent Domain
Exercising Authority Government Government Government or private
entities
Purpose Revenue and support of Property is taken for Property is taken for public
the government public use use
Persons affected Community or class of Community or class of Owner of the property
individuals individuals

Amount of Imposition Unlimited Sufficient to cover the No imposition, the owner is

costs of regulation paid the fair market value of
his property
Relationship with the Inferior to the “Non- Superior to the “Non- Superior and may override
Constitution Impairment Clause” of Impairment Clause” of the “Non-Impairment
the Constitution the Constitution Clause” of the Constitution
Limitation Constitution and Public purpose Public purpose and just
Inherent Limitations compensation

SOURCES of Tax Laws (STEAL-JORC)

1. 1987 Constitution
2. Tax Statutes
3. Executive Orders
4. Local Tax Ordinances
5. Tax Treaties
6. Judicial Decisions
7. Rules and Regulations (BIR, BOC, DOF)
8. Administrative Interpretations and
9. Opinions of tax officials
Nature and Characteristics of Tax Laws
1. Tax Laws are prospective, in general
2. Revenue laws are not political in nature
3. Legislative intent
4. Tax Laws are special laws, and prevail over general laws
5. Tax Laws are not penal in character
Power of judicial REVIEW
Courts cannot inquire into the wisdom of a taxing act. As long as the legislature, in imposing a tax,
does not violate applicable constitutional limitations or restrictions, the courts have no concern with
the wisdom or policy of the exaction, the political or other collateral motives behind it, the amount to
be raised, or the persons, property or other privileges to be taxed.
Define TAXES
Taxes are enforced proportional contributions levied by the state for the support of the government.
What are the essential characteristics, requisites or elements of a tax? (LEGS + PP)
a. A tax is an enforced contribution.
b. It is proportionate in character.
c. It is imposed pursuant to a legislative authority.
d. It is imposed for public purpose.
e. It is generally payable in money.
f. It is levied within the territorial and legal jurisdiction of a state (SITUS).
Tax distinguished from OTHER CHARGES and FEES
DISTINCTION OF TAX WITH SIMILAR ITEMS

TAX VS. REVENUE

Tax Revenue
Refers to the amount imposed Refers to the amount collected
Only one of the sources of government The product of taxation. It refers to all the
revenues funds derived by the government whether from
tax or from other sources. Revenue is broader
than Tax

TAX VS. LICENSE

Point of distinction
Purpose
Amount
Subject of Imposition
Effect of non-compliance
Tax License
For revenue For regulation
No limit Limited to cost of regulation
Person, properties, business Required for the
rights, interests, privilege, acts commencement of a business
and transactions profession
Does not necessarily make the Makes the business illegal
act, business or profession

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TAXATION: TAXATION PRINCIPLES
illegal
Revocability Has a nature of permanence Always revocable
Scope The power to tax includes the Power to license does not
power to license include the power to tax
When imposed Post-activity Pre-activity
Basis of imposition Current data Preceding year or quarter
date. If new business, based
on capitalization
Sources of Power Taxing power of the government Police power of the
government

TAX VS. TOLL

Tax
Demand of sovereignty
One’s support for the government
Imposed only by the government
Based on government needs
Toll
Demand of ownership
Compensation for the use of somebody else’s
property
May be imposed by the government or by private
individuals
Determined by the cost of the property or
improvements thereon

TAX VS. DEBT

Tax Debt
Basis Law Contract
Effect of non-compliance May involved imprisonment, except No imprisonment
for poll tax
Assignable? No Yes
Mode of settlement Generally money Cash or In kind
Set-off? Generally not subject to set-off Subject to set-off
Interest Does not earn interest except when Draws interest when stipulated or
delinquent when in POGIault

TAX VS. SPECIAL ASSESSMENT

Tax
Subject of the imposition business, interests, transactions,
rights, persons, properties or
privileges
Effect on the person May be made a personal liability of
owning the subject the person assessed
because it is the land that answers
Basis of Imposition Necessity with no hope of direct or
immediate benefit to the taxpayer
Coverage of application General application
Special Assessment
Land
Cannot be made the personal
liability of the person assessed,
for the liability
Entirely on benefits received
Exceptional in application

TAX VS. TARIFF

Tariff refers to a book of rates containing names of merchandises with corresponding duties to be paid for
the same. Tariff refers to the duties payable on goods imported or exported. It is a system or principle of
imposing duties on the importation or exportation of goods.

TAX VS. PENALTY

Tax Penalty
to regulate conduct through
Purpose to raise revenue punishment and suppression
of injurious act
Exercising authority the government the government or by private
individuals
Source Law Law or contract
Mode of settlement in money in money or in kind

Tax Administration
It is a system involving assessment, collection and enforcement of taxes, including the execution of
judgement in all taxes cases decided in favor of the BIR by the courts.

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TAXATION: TAXATION PRINCIPLES
Powers and duties of the BIR
1. Assessment and collection of all national internal revenues taxes, fees and charges
2. Enforcement of all forfeitures, penalties and fines connected therewith
3. Execution of judgement in all cases decided in its favor by CTA and ordinary courts
4. Give effects to and administer the supervisory and police power conferred to it by the NIRC or other
laws.
Powers and Duties of the Commissioner of Internal Revenue (CIR)
1. To interpret tax laws and to decide tax cases
2. To obtain information, and to summon, examine, and take testimony of persons
3. To make assessments and prescribe additional requirements for tax administration and
enforcement
4. Power to Compromise Taxes
 Reasonable doubt as to validity of claim against taxpayer
 Financial incapacity of taxpayer
5. Power to Abate or Cancel Tax Liabilities
 Excessive assessment
 Cost exceeds benefit
Power to Make Assessments
1. To examine returns and determine tax due (whether there is filing of return or not)
2. To conduct inventory-taking, surveillance and to prescribe presumptive gross sales and receipts
3. To terminate taxable period
4. To prescribe real property values
5. To inquire into bank deposit accounts
 For determination of gross estate
 Compromise by reason of financial incapacity
6. To accredit and register tax agents
7. To prescribe additional procedural or documentary requirements
Non-delegable powers of the Commissioner
1. The power to recommend the promulgation of rules and regulations by the Secretary of Finance
2. The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of
the Bureau
3. The power to compromise or abate any tax liability
4. The power to assign or reassign internal revenue officers to establishments where articles subject
to excise tax are produced or kept

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TAXATION: TAXATION PRINCIPLES
Multiple Choices
Taxation
1. Not one of the purposes or objectives of
taxation
a. Reduction of social inequity
b. Protectionism
c. Promotion of general welfare
d. Expropriation
2. Which is the correct and best statement? A
tax reform at any given time underscores the
fact that:
a. Taxation is an inherent power of the state;
b. Taxation is essentially a legislative power;
c. Taxation is a power that is very broad;
d. The state can and should adopt progressive
taxation.
3. Which statement is wrong? A revenue bill:
a. Must originate from the House of
Representatives and on which same bill the
Senate may propose amendments;
b. May originate from the Senate and on which
same bill the House of Representatives may
propose amendments;
c. May have a House version and a Senate
version approved separately, and then
consolidated, with both houses approving the
consolidated version;
d. May be recommended by the President to
Congress.
4. Which of the following statements is not
correct?
a. Taxes may be imposed to raise revenues or
to provide disincentives to certain activities
within the state;
b. The state can have the power of taxation
even if the Constitution does not expressly
give it the power to tax;
c. For the exercise of the power of taxation, the
state can tax anything at any time;
d. The provisions of taxation in the Philippine
Constitution are grants of power and not
limitations on taxing powers.
5. A tax must be imposed for a public purpose.
Which of the following is not a public
purpose?
a. National Defense;
b. Public education;
c. Improvement of sugar industry;
d. None of the above.
Limitations
6. Statement 1: Because the power of taxation
is inherent in state, the inherent limitation on
the power of taxation always applies.
Statement 2: Inherent limitations on the
power of taxation must give way to
constitutional limitations.
a. The first statement is true while
the second statement is false;
b. The first statement is false while
the second statement is true;
c. Both statements are true;
d. Both statements are false.
Constitutional Limitations
7. Which statement is wrong? “The tax should
be based on the tax payer’s ability to pay”
a. As a basic principle of taxation,
this is called “theoretical justice”;
TAX by Jonas POGI Reyes, CPA
b. As a theory of taxation, this is
called “ability-to-pay-theory”;
c. No person shall be imprisoned for
non-payment of a tax;
d. A graduated tax table is in
consonance with this rule.
Limitations
8. The City of Manila, claiming that it can
impose taxes under the Local Government
Code, imposed a tax on banks (in addition to
the percentage tax on banks imposed in the
National Internal Revenue Code). The banks
within the City of Manila objected for the
various reasons written below.
Which would satisfy the objection of the
banks?
a. The power of taxation cannot be
delegated;
b. The rule on double taxation;
c. Uniformity in taxation;
d. None of the above.
Inherent Limitations
9. Statement 1: Direct double taxation is
prohibited by the Philippine Constitution.
Statement 2: Indirect double taxation is
allowed by the Philippine Constitution.
a. The first statement is true while
the second statement is false;
b. The first statement is false while
the second statement is true;
c. Both statements are true;
d. Both statements are false.
Constitutional Limitations
10. Which statement is false?
a. A law that imposes a tax on
sugar mills and centrals where the revenue
collected will be used to improve the sugar
industry is a tax for a public purpose, and the
law is constitutional;
b. A law that imposes a tax on
movie goers in the city, where the revenue
will be used to improve flood control
infrastructures in the low areas in the city is
constitutional;
c. A law that gives tax privileges to
manufacturers in defined industrial areas,
which are not enjoyed by other
manufacturers elsewhere, is not
discriminatory and is constitutional;
d. None of the above.
Constitutional Limitations
11. POGI School of Accountancy, a private
educational institution which is offering
primary, secondary and tertiary education is
registered with and accredited by DepEd and
CHED.
Which of the following is exempt from tax?
What kind of tax?
a. The importation of laboratory equipments –
from customs duties
b. The school building being rented by the
school – from real property tax
c. A portion of the school building being leased
to a fastfood chain – from real property tax
d. The income from operation – from income
tax
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TAXATION: TAXATION PRINCIPLES
12. Assuming that the school is a non-stock non-
profit educational institution. Which of the
following is subject to tax? What kind of tax?
a. The school building owned by the school –
from real estate tax
b. The school building being rented by the
school – from real property tax
c. A portion of the school building being leased
to a fastfood chain – from real property tax
d. The income from operation – from income
tax
Constitutional Limitations
13. Congressman Manny Pacquiao and Senator
Grace Poe sponsored a bill in the House of
Representatives and the Senate,
respectively, subjecting to a zero rate (0%)
of value-added tax the sale of mineral
resources. Which of the following is correct?
a. The senate bill should be discussed ahead of
the house bill
b. The senate and house bills should be
discussed at the same time
c. The house bill should be discussed ahead of
the senate bill
d. Any of them can be discussed ahead of the
other
Limitations
14. Which of the following questions is
answerable by “YES”?
a. May Congress, under the 1987 Constitution,
abolish the power to tax of local government
units?
b. May a tax be validly imposed in the exercise
of the police power and not of the power to
tax?
c. Is indirect duplicate taxation a valid defense
against legality of a tax measure?
d. When an item of income is taxed in the
Philippines and the same income is taxed in
another country, is there a case of direct
double taxation?
Inherent Limitations
15. Not a usual method of avoiding the
occurrence of double taxation
a. Allowance of tax credit for foreign taxes paid
b. Allowance of deduction for foreign taxes paid
c. Reporting an income which is lower than the
correct amount
d. Reduction of the Philippine tax rate
Constitutional Limitations
16. Fr. Villegas had the following activities during
the week. Which of the following activities is
subject to income tax?
a. Celebrates mass and collect the alms from
the faithful
b. Solicit funds for the construction of the
church
c. Teaches religion in one university and
collects his salary
d. Sells bible to the public
Constitutional Limitations
17. POGI University is a non-stock, non-profit
educational institution run by Lipa Cathedral.
It is occupying the following buildings:
Bldg. 1 being used by students for
classroom purposes
TAX by Jonas POGI Reyes, CPA
Bldg. 2 being used as dormitory of
students-scholar but open to non-students
who want to stay therein
Bldg. 3 owned by Mr. Jonas being leased
to POGI University and used as
administration building which houses the
offices of the school president, registrar,
principal, deans and other school officials.
Which of the following buildings is exempt
from real estate tax?
a. Buildings 1 and 3
b. Buildings 1 and 2
c. All of them
d. Building 1 only
Constitutional Limitations
18. The Congress may, by law, delegate the
legislative power to the President to fix
within specified limits the following, except:
a. Tariff rates
b. Tonnage and wharfage dues
c. Import and export quotas
d. Arrastre charges
Constitutional Limitations
19. The Municipality of Malvar has a ten hectare
cemetery consisting of four different
cemeteries which are differently owned.
Which of the following is subject to real
estate tax?
a. Cementerio Municipal del Malvar – a
government cemetery owned by the
municipal government which was established
for the purpose of using it as burial ground of
those living in the squatter area
b. Malvar Catholic Cemetery – owned by
Catholic Church; profits are remitted to the
church for betterment of cemetery
c. Malvar Memorials – owned by a corporation
where dividends are distributed to the
shareholders at the end of the year
d. Malvar Gardens – owned by an association
consisting of 1,000 families; each family
owns 50 square meters of lot; not a single
portion is held for sale to either member or
non-member of the association
Inherent Limitations
20. A tax upon a corporation for its property and
upon its shareholders for their shares is an
example of:
a. Direct double taxation
b. Indirect duplicate taxation
c. Uniformity in taxation
d. Due process
21. Which statement gives the correct answer?
That a feasibility study needs or need not
look into the taxes of different political
subdivisions of government which may be
alternative sites of the business is because:
a. Provinces, cities and
municipalities must have uniform taxes
between and among themselves;
b. The local taxes of one political
subdivision need not be uniform with the
local taxes of another political subdivision;
c. Businesses that are subject to
national business taxes are exempt from
local business taxes;
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TAXATION: TAXATION PRINCIPLES
d. Local business taxes maybe implements by imposing a penalty when the
credited against business national taxes. law that authorizes the revenue regulation
does not impose a penalty.
22. Under this basic principle of a sound tax a. The first statement is true while
system, the Government should not incur a the second statement is false;
deficit: b. The first statement is false while
a. Theoretical justice; the second statement is true;
b. Administrative feasibility; c. Both statements are true;
c. Fiscal adequacy; d. Both statements are false.
d. None of the above.
Principles of a Sound Tax System 29. One of the characteristics of internal revenue
23. As a basic principle of taxation, that “Taxes laws is that they are:
must be based on the taxpayer’s ability to a. Criminal in nature;
pay” is called: b. Penal in nature;
a. Equality in taxation; c. Political in nature
b. Ability-to-pay theory; d. Generally prospective in
c. Theoretical justice; application.
d. Equity in taxation.
30. Which of the following is erroneous?
24. The following, except one, are basic a. Taxes are pecuniary in nature
principles of a sound tax system: b. Taxes are enforced charges and contributions
a. It should be capable of being effectively c. Taxes are levied by the executive branch of
enforced the government
b. It must be progressive d. Taxes are imposed on persons and property
c. Sources of revenue must be sufficient to within the territorial jurisdiction of a state
meet government expenditures and other
public needs 31. Which of the following is not an example of
d. It should be consistent with economic goals excise tax?
a. Transfer tax;
25. The following are similarities of the inherent b. Value added tax;
power of taxation, eminent domain and c. Real property tax;
police power except one: d. Income tax.
a. Are necessary attributes of
sovereignty; 32. Tax of a fixed proportion of the value of the
b. Interfere with private rights property with respect to which the tax is
property; assessed and requires the intervention of
c. Affect all the persons or the assessors or appraisers to estimate the value
public; of such property before the amount due from
d. Are legislative in implementation. each taxpayer can be determined is known
as:
26. Which statement is false? a. Specific;
a. A tax is a demand of sovereignty b. Ad valorem;
while a toll is a demand of property c. Special or regulatory;
ownership; d. Answer not given.
b. Non-payment of a tax does not Kinds of Taxes-Incidence
make the activity taxed unlawful; 33. The basic community tax of P5.00 of an
c. A grant of police power to a unit individual is:
of local government carries with it a grant of a. An excise tax;
the power to tax; b. A direct tax;
d. Customs duty is a tax. c. A national tax;
d. An ad valorem tax.
27. One of the following is not a characteristic of
police power in distinguishing it with the 34. Statement 1: The value-added tax is a
other powers property tax.
a. It regulates both liberty and property Statement 2: The estate tax is a direct tax.
b. The property taken is destroyed for the a. The two statements are correct.
purpose of promoting the general welfare b. The two statements are wrong.
c. The amount imposed should only be c. The first statement is correct
sufficient to cover the necessary expenses of while the second statement is wrong.
police surveillance and regulation d. The first statement is wrong
d. The authority to exercise the power may be while the second statement is correct.
granted to public service companies Tax vs. License Fee
35. Tax as distinguished from license fee:
28. Statement 1: A revenue regulation must not a. Non-payment does not
be contrary to the provision of the law that it necessarily render the business illegal;
implements. b. A regulatory measure;
Statement 2: A revenue regulation cannot c. Imposed in the exercise of the
expand the provision of the law that police power;

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TAXATION: TAXATION PRINCIPLES
d. Limited to cover cost of
regulation.
36. This is a demand of owners:
a. License fee;
b. Tax;
c. Toll;
d. None of the above.
37. Tariff may generally be defined as:
a. Amounts imposed on goods entering the
imposing country
b. Amounts which are levied on goods leaving
the imposing country
c. Amounts imposed on goods passing through
the imposing country, but destined ultimately
to another country
d. List of commodities with corresponding
duties collectible therefrom
38. The power of taxation is inherent in
sovereignty being essential to the existence
of every government. Hence, even if not
mentioned in the Constitution, the state can
still exercise the power.
It is essentially a legislative function. Even in
the absence of any constitutional provisions,
taxation power falls to Congress as part of
general power of law-making.
a. False, False
b. False, True
c. True, True
d. True, False
39. All items of gross income, deductions, and
personal exemptions, if any, are reported in
one income tax return and the tax is paid
under a single set of income tax rates
a. Global tax system
b. Semi-schedular tax system
c. Schedular tax system
d. Withholding tax system
40. Which of the following is not a tax under the
NIRC?
a. Documentary stamp tax
b. Excise tax on cigars and cigarettes
c. Community tax
d. Franchise tax
41. Which of the following is not a scheme of
shifting the incidence of taxation?
a. The manufacturers transfers the
tax to the consumer by adding the tax to the
selling price of the goods sold;
b. The purchaser asks for a discount
or refuse to buy at a regular prices unless it
is reduced by the amount equal to the tax he
will pay;
c. Changing the terms of the sale
like FOB shipping point in the Philippines to
FOB destination abroad, so that the title
passes abroad instead of in the Philippines;
d. The manufacturer transfers the
sales tax to the distributor, then in turn to
the wholesaler, in turn to the retailer and
finally to the consumer.
TAX by Jonas POGI Reyes, CPA
Forms of Tax Escape
42. Statement 1: Tax evasion, which is the use
of means to escape a tax that is already a
liability, is prohibited by law, and is
punishable;
Statement 2: Tax avoidance which is the use
of means to prevent an accrual of tax, or to
minimize a tax that may accrue is likewise
prohibited by law and is punishable.
a. The first statement is true while
the second statement is false;
b. The first statement is false while
the second statement is true;
c. Both statements are true;
d. Both statements are false.
Forms of Tax Escape
43. Statement 1. A tax amnesty that forgives tax
delinquency of prior years is a legislative act
of the Government;
Statement 2.A tax compromise that lowers
the delinquent tax due from a taxpayer is an
executive act pursuant to a legislative grant
of power to the Executive Department of the
Government.
a. The first statement is true while
the second statement is false;
b. The first statement is false while
the second statement is true;
c. Both statements are true;
d. Both statements are false.
Forms of Tax Escape
44. Tax exemption as distinguished from tax
amnesty
a. Freedom, immunity or privilege from the
burden of taxation to which others are
subject
b. General pardon on persons guilty of tax
evasion
c. Condones tax liabilities, penalties as well as
criminal or administrative penalties
d. Waiver of the government’s right to collect
past due and unpaid tax collectibles giving
tax evaders who wish to relent and are
willing to reform a chance to do so
Forms of Tax Escape
45. Which of the following is not correct with
respect to tax exemption?
a. Tax exemptions are liberally construed in
favor of the grantee and strictly against the
government
b. When tax exemption is claimed, it must be
shown to exist, for every presumption is
against it, and a well-founded doubt is fatal
to the claim
c. Tax exemptions are looked upon with
disfavor against the grantee and generally in
favor of the taxing authority
d. The state cannot strip itself of the most
essential power of taxation by doubtful word.
It cannot be deprived of this attribute of
sovereignty
Taxpayer’s Suit
46. A taxpayer gives the following reasons in
refusing to pay a tax. Which of the following
is not acceptable for legally refusing to pay
the tax?
a. That there is lack of territorial jurisdiction
b. That due process of law was not observed
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TAXATION: TAXATION PRINCIPLES
c. That the prescriptive period for assessment 53. The power to decide disputed assessments,
has elapsed refunds of taxes, fees and other charges,
d. That he will derive no benefit from the tax penalties, and other matters arising under
Tax Administration the NIRC is vested with the Commissioner of
47. Which of the following is not true? Internal Revenue, subject to the exclusive
a. If a taxpayer is acquitted in a criminal appellate jurisdiction of
violation of the Tax Code, this acquittal does a. Commissioner of Internal Revenue
not exonerate him from his civil liability to b. Court of Appeals
pay the taxes c. Secretary of Finance
b. A conviction for tax evasion is not a bar for d. Court of Tax Appeals
collection of unpaid taxes Powers of CIR vs. Powers of BIR
c. A tax assessment is necessary to a criminal 54. Question 1: Does the power of the
prosecution for willful attempt to defeat and Commissioner of Internal Revenue to inquire
evade payment of taxes into the bank deposits of a taxpayer conflict
d. Criminal proceedings under the Tax Code is with the Secrecy of Banks Deposits Law?
now a mode of collection of internal revenue Question 2: May the Commissioner of
taxes, fees or charges Internal Revenue authorize an examiner to
inquire into the bank deposits of a taxpayer
48. One of the following does not fall within the who is suspected to have committed fraud in
powers of the Commissioner of Internal declaring his income?
Revenue (CIR)
a. To review tax cases decided by the Court of Which of the above questions is answerable
Tax Appeals by “Yes”?
b. To interpret tax laws and to decide tax cases a. Question 1 only
c. To summon, examine and take testimony of b. Question 2 only
persons c. Questions 1 and 2
d. To make assessment and prescribe additional d. Neither Question 1 nor 2
requirements to tax administration and Powers of CIR vs. Powers of BIR
enforcement 55. A Commissioner of Internal Revenue cannot
a. Abate or cancel tax liability
49. The following are coercive means in the b. Compromise payment of internal revenue
collection of taxes by the BIR, except one: taxes
a. Distraint and levy c. Credit or refund taxes erroneously or illegally
b. Compromise collected
c. Enforcement of tax lien d. Compromise criminal aspect of tax violations
d. Seizure of goods on which the government if already filed in court
has a claim for unpaid taxes Tax Compromise
56. Which of the following tax cases cannot be
50. Which of the following violations cannot be the subject of a compromise?
subject to compromise penalties? a. Those pending before the CIR
a. Failure to keep/preserve books of accounts b. Those filed in the Regional Trial Court
and accounting records c. Cases filed in the Office of the City
b. Failure to keep books of accounts or records Prosecutor
in a native language or English d. Cases under investigation by a Revenue
c. Failure to have books of accounts audited Examiner
and have financial statements attached to Tax Agents
income tax return certified by independent 57. Which of the following is not qualified to be
CPA accredited as tax agent?
d. Keeping two sets of books of accounts or a. CPAs engaged in public practice of
records accounting
b. Corporations organized for the practice of
51. All of the following, except one, are powers public accountancy
and duties of the BIR: c. Partners in a general professional partnership
a. Enforcement of penalties, fines and engaged in the practice of accounting,
forfeitures auditing, and taxation
b. Assessment and collection of fees, taxes and d. Graduates of degree in Bachelor of Science in
charges Business Administration with at least 18 units
c. Decide tax cases in accounting and/or taxation
d. Administrative supervision over its personnel Claim for Refund
58. Which of the following is false with respect to
52. The power to interpret the provisions of the a claim for refund?
NIRC shall be under the exclusive and a. A withholding agent has the right to file an
original jurisdiction of the application for tax refund
a. Commissioner of Internal Revenue b. A refund uncashed within two years from the
b. Secretary of Justice date mailed or delivered, shall be forfeited
c. Secretary of Finance c. If the two year prescriptive period to file
d. Court of Tax Appeals claim for refund is about to expire, the
taxpayer should directly commence the case

TAX by Jonas POGI Reyes, CPA Page 9

TAXATION: TAXATION PRINCIPLES
to the Court of Tax Appeals without the need d. File an appeal to SC
of filing a claim with the Commissioner of Claim for Refund
Internal Revenue 63. Date of final payment
d. The two year prescriptive period to claim April 11, 2013
refund should be computed from the time of Claim for refund was mailed to BIR
filing the Adjustment Return and final June 30, 2013
payment of the tax for the year Claim for refund was received by BIR
Claim for Refund December 30, 2013
59. The following data pertains to an income Decision of BIR denying the claim was signed
taxpayer: by CIR March 4, 2015
Amount of tax per ITR P Decision of BIR was mailed
25,000 March 6, 2015
Withholding tax Decision of BIR was received by taxpayer
10,000 March 10, 2015
1st installment payment
April 1, 2013 When is the last day to file an appeal to the
2nd installment payment CTA?
June 30, 2013 a. April 4, 2015
b. April 6, 2015
When is the last day to claim for refund? c. April 9, 2015
a. April 1, 2015 d. April 10, 2015
b. April 15, 2015
c. June 30, 2017
d. June 30, 2015
Claim for Refund
60. Date of tax erroneously paid
April 14, 2013
Date claim for refund was filed with BIR
Feb 14, 2014
Date BIR decision of denial was received
Mar 5, 2015

The last day to appeal to the Court of Tax

Appeals
a. April 4, 2015
b. April 14, 2015
c. February 14, 2016
d. April 5, 2015
Claim for Refund
61. Date of tax erroneously paid
April 14, 2013
Date claim for refund was filed with BIR
Feb 14, 2014
Date BIR decision of denial was received
April 5, 2015

The last day to appeal to the Court of Tax

Appeals
a. May 5, 2015
b. April 14, 2015
c. May 4, 2015
d. February 14, 2016
Claim for Refund
62. POGI, a businessman, filed his ITR and paid
the tax due thereon on April 15, 2015. Later
on, he found out that he erroneously
computed his tax liability and that he
overpaid it by P169,000. He filed a claim for
refund on December 22, 2015. He did not
receive any reply or decision from the BIR
until he was reminded by a friend on March
23, 2017. At this date, what step should be
taken by POGI in order to recover the
P169,000?
a. No action should be made, just wait for the
decision from the BIR
b. Send a follow-up letter to the CIR
c. File an appeal to the CTA

TAX by Jonas POGI Reyes, CPA Page 10