TITLE HERE

1
 WHEN IS PAN NOT
REQUIRED?
1. When the finding for any deficiency tax is the
result of mathematical error in the computation
of the tax appearing on the face of the tax return
filed by the taxpayer
2. When a discrepancy has been determined
between the tax withheld and the amount
actually remitted by the withholding agent
 WHEN IS PAN NOT
REQUIRED?
3. When a taxpayer who opted to claim a refund
or tax credit of excess creditable withholding
tax for a taxable period was determined to have
carried over and automatically applied the
same amount claimed against the estimated
tax liabilities for the taxable quarter or quarters
of the succeeding taxable year
4. When the excise tax due on excisable articles
has not been paid
 WHEN IS PAN NOT
REQUIRED?
5. When an article locally purchased or imported
by an exempt person, such as, but not limited
to, vehicles, capital equipment, machineries
and spare parts, has been sold, traded or
transferred to non-exempt persons
 WHO HAS THE AUTHORITY
TO ISSUE PAN?
1. Commissioner of Internal Revenue
2. Revenue Regional Directors
3. Assistant Commissioner – Large Taxpayers
Service
4. Assistant Commissioner – Enforcement and
Advocacy Service
 PRESCRIPTIVE PERIODS
FOR ASSESSMENT AND COLLECTION
• Assessment of the tax liability
- 3 years
- 10 years when
 No return is filed
 The Return is false or fraudulent with intent
to evade the tax
 COLLECTION OF THE TAX
 5 years – from assessment
 10 years – without assessment, and in case of
false or fraudulent returns with intent to evade
the tax

• Criminal Liability
 5 years – from commission or discovery of the
violation whichever is later
 SUSPENSION
OF PRESCRIPTIVE PERIOD
1) Commissioner is prohibited from making the
assessment or beginning the distraint or levy or
a proceeding in court and for 60 days
thereafter.

E.G. a pending petition for review in the CTA from

the decision on the protested assessment
 Interrupts the running of the prescriptive
period for collection.
 SUSPENSION
OF PRESCRIPTIVE PERIOD
2) When the taxpayer request for a reinvestigation
or reconsideration which is granted by the
Commissioner.
3) When the taxpayer request for reinvestigation
or reconsideration.
4) When the taxpayer cannot be located in the
address given by him in the return.
5) When the warrant of distraint and levy is duly
served, but no property of the taxpayer could
be located.
6) When the taxpayer is out of the Philippines
 DUE PROCESS
REQUIREMENT IN THE ISSUANCE OF A
DEFICIENCY TAX ASSESSMENT
STAGE 2 – Issuance of Preliminary Assessment
Notice (PAN)
 Communication issued by the Regional
Assessment Division or by the commissioner or
his duly authorized representative informing
the taxpayer (audited) about the findings of the
revenue officer.
 Preliminary Assessment
Notice (PAN)
 Shall be in writing
 Show in detail the facts and the law, rules and
regulations, or jurisprudence on which the
proposed assessment is based.

#Otherwise the assessment

is void.
 Preliminary Assessment
Notice (PAN)
REMEDY OF THE TAXPAYER
 15 DAYS to reply contesting the finding in the
PAN.

EFFECT OF FAILURE TO REPLY

 The taxpayer is considered in default and the
BIR will the issue a FINAL ASSESSMENT
NOTICE/ FINAL LETTER OF DEMAND.
 Preliminary Assessment
Notice (PAN)
LEGAL EFFECTS OF ISSUANCE OF FAN
 Creates legal obligation on the part of taxpayer
to pay tax to the government.

However if the taxpayer, within 15 days

“responds that he/it disagrees with the findings of
deficiency tax or taxes”
 FLD/FAN shall be issued calling for payment of
tax deficiency, inclusive of penalty.
 Letter of Demand (FLD)
− It is issued when a taxpayer that is assessed for
deficiency tax fails to respond within 15 days
from, the date of receipt of the PAN.

− It is a calling for payment of the taxpayer’s

deficiency tax liability, inclusive of the
applicable penalties.
 DISPUTED ASSESSMENT
− The taxpayer/taxpayer’s authorized
representative or its tax agent MAY protest
against the FLD/FAN

− The protest must be made within thirty (30)

days from the date of receipt of the FLD/FAN

− the protest is a written request for

RECONSIDERATION or REINVESTIGATION
 DISPUTED ASSESSMENT
− A taxpayer may protest administratively against
a FLD/FAN within 30 days from its receipt.

− The taxpayer protesting an assessment may file

a written request for reconsideration or
reinvestigation.
 REQUEST FOR
RECONSIDERATION
A PLEA OF RE-EVALUATION OF AN
ASSESSMENT ON THE BASIS OF
EXISTING RECORDS WITHOUT NEED
OF ADDITIONAL EVIDENCE
LIMITED TO THE EVIDENCE ALREADY
AT HAND THEREFOR THERE IS NO
NEED FOR RELEVANT SUPPORTING
DOCUMENTS
REQUEST FOR
RE-INVESTIGATION
A PLEA OF RE-EVALUATION OF AN
ASSESSMENT ON THE BASIS OF
NEWLY DISCOVERED OR ADDITIONAL
EVIDENCE THAT A TAXPAYER INTENDS
TO PRESENT IN THE
REINVESTIGATION
SHALL SUBMIT ALL RELEVANT
SUPPORTING DOCUMENTS IN
SUPPORT OF THE TAXPAYER’S
PROTEST WITHIN SIXTY (60) DAYS
FROM THE DATE OF FILING OF THE
LETTER OF PROTEST
THE TAXPAYER SHALL STATE IN HIS PROTEST:
The nature of the protest ( reconsideration or re-
investigation)

Date of the assessment notice

The applicable law, rules and regulations or

jurisprudence on which his protest is based ,
otherwise, his protest shall be considered void
− When the assessment becomes final, the
taxpayer is barred from disputing the
correctness of FLD/FAN by the introduction of
newly discovered evidence.

− The BIR shall then deny the request for

reinvestigation through the issuance of a FDDA.
 Final Decision on a
Disputed Assessment (FDDA)
The decision of the Commissioner or his duly
authorized representative shall state the:

− facts, the applicable law, rules and regulations,

or jurisprudence on which such decision is
based, otherwise the decision shall be void, and
− That the same is his final decision.
 CLAIM FOR REFUND

− Tax refund cases are based on civil law "solution

indebiti"
− Claim for refund with BIR
 GROUNDS FOR FILING A
CLAIM FOR TAX REFUND OR TAX CREDIT
− The tax has been erroneously or illegally
assesses or collected.
− The tax has been excessively or in any manner
wrongly collected.
− The tax was paid by mistake
− Failure to use excess income tax credits against
quarterly inime taxes for the next taxable year.
 REQUISITES FOR TAX
REFUND OR CREDIT
− Claim must be in writing
− It must be filled with the commissioner within 2
years after the payment of the tax or penalty.
− Show proof of payment
 REFUND OR TAX CREDIT
OF INPUT VAT ON 0% RATED SALES
− Carried over to succeeding months or quarters
− Applied for tax credit certificate
− Applied for tax refund
 RULES WITH REGARD
TO CLAIMS FOR REFUND OR TAX CREDIT
OF UNUTILIZED CREDITABLE INPUT VAT
− When to file an administrative claim with the
CIR? (General rule: 2 yes from close of the
taxable quarter when sales were made)
− When to file a juridical claim with the CTA?
− (Within 30 days from full or partial denial of
administrative claim by the CIR or in case of in
action by the CIR, within 30 days from the
expiration of the 90bdy period provided to the
CIR to decide on the claim as provided for
ununder the Train Law
 REMEDIES
OF THE GOVERNMENT
− Distraint
• Constructive Distraint
• Actual Distraint
− Levy
− Forfeiture
− Enforcement of Tax Lien
 DISTRAINT
− A remedy available to the government whereby
the collection of the tax is enforced on the
goods, chattels or effects of the taxpayer
including other personal property of whatever
character as well as stocks and other securities,
debts, credits, bank accounts, and interest in
and rights to personal property.
− Distraint may be actual or constructive.
 PROCEDURES FOR
DISTRAINT
1) Stocks and other securities shall be distrained
by serving a copy of the warrant of distraint
upon the taxpayer and upon the president,
manager, treasurer, or other responsible officer
of the corporation, company , or association
which issued the stocks.
2) Debts and credits shall be distrained by leaving
with the person owing the debts or having in
his possession or under his control such
credits, or with his agent, a copy of the warrant
distraint.
 PROCEDURES FOR
DISTRAINT
3) Bank accounts shall be garnished by serving a
warrant of garnishment upon the taxpayer and
upon the president, manager, treasurer, or
other responsible officer of the bank.
 ACTUAL DISTRAINT
− It is resorted upon the failure of the person
owing any delinquent tax or delinquent revenue
to pay the same at the same time required
− It consists of seizure of the personal property
and interest in or rights to such property in
sufficient quantity to satisfy the tax , or charge
together with any increment thereto incident
to delinquency, and the expenses of the
distraint and the cost of subsequent sale.
 DIFFERENCES BETWEEN
ACTUAL & CONSTRUCTIVE DISTRAINT
ACTUAL CONSTRUCTIVE
PROCEDURE PERSONAL PROPERTY IS PERSONAL PROPERTY IS NOT
PHYSICALLY TAKEN PHYSICALLY TAKEN
BASIS THE TAXPAYER IS ALREADY THE TAXPAYER IS IN THE
DELINQUENT IN THE PROCESS OF LIQUIDATION
PAYMENT OF HIS TAXES
DISPOSITION OF PERSONAL PERSONAL PROPERTY IS PERSONAL PROPERTY IS
PROPERTY TAKEN TO BE SOLD MERELY HELD AS A
SECURITY
PURPOSE THE DEFICIENCY TAXES ARE TO PROTECT GOVERNMENT
ALREADY DETERMINED REVENUES AND ENSURE
THAT THE PROPERTIES OF
THE GOVERNMENT COULD
PROCEED AGAINST AFTER
DETERMINATION OF THE
AMOUNT OF DEFICIENCY
TAXES
 REMEDIES OF GOVERNMENT:
CONSTRUCTIVE DISTRAINT
− Retiring from business subject to tax
− Intending to leave the Philippines or to remove
his property therefrom or to hide or conceal his
property
− Intending to perform any act tending to
obstruct the proceedings for collecting that tax
due or which may be due from him
 REMEDIES OF GOVERNMENT:
LEVY
− Seizure of real properties and interest in or
rights to such properties for the satisfaction of
taxes due from the delinquent taxpayer.
− It can be made before, simultaneously or after
distraint of personal property
− It is effected by writing upon a certificate
prepared by the Commissioner or his duly
authorized representative and the amounts of
the tax and penalty due from him
 REMEDIES OF GOVERNMENT:
FORFEITURE
− It is the divesture of property without
compensation, in consequence of a default or
offense
− FORFEITURE OF CHATTELS shall be enforced
by seizure and sale, or destruction of a specific
forfeited property
 REMEDIES OF GOVERNMENT:
FORFEITURE
− FORFEITURE OF REAL PROPERTY shall be
enforced by a judgement of condemnation and
sale in a legal action or proceeding, civil or
criminal as case may be.
− All proceeds of the sale will go to the coffers of
he government
 REMEDIES OF GOVERNMENT:
TAX LIEN
− It is a legal claim or charge on property,
whether real or personal established by the law
as a source of security for payment of tax
obligation.
− In seizure for the enforcement of tax lien, the
residue (after deducting tax liability and
expense ) will go to taxpayers.
 THE COMMISSIONER MAY COMPROMISE
ANY INTERNAL REVENUE TAX WHEN:
1) reasonable doubt as to the validity
2) clear inability to pay

The following shall be considered in a tax

compromise agreement:
− The taxpayer must have a tax liability
− There must be an offer by the taxpayer or
commissioner of an amount to be paid by the
taxpayer
 CASES WHICH MAY BE COMPROMISE:
1) Delinquent accounts
2) Cases under administrative protest after
issuance of the final assessment notice to the
taxpayer
3) Civil tax cases
4) Collection cases filed in courts
CASES WHICH CANNOT BE COMPROMISE:
1) Withholding tax cases
2) Criminal tax fraud cases
3) Criminal violation already filed in court
4) Delinquent accounts with duly approved
schedule of installment payments
5) Cases where final reports of reinvestigation or
reconsideration have been issued resulting to
reduction in the original assessment and the
taxpayer is agreeable to such decision
 Minimum Amounts for Compromise
Settlement
 For cases of financial incapacity, a minimum
compromise rate of 10% of the basic assessed
tax
 For other cases, a minimum compromise rate
equivalent to 40% of the basic assessed tax
 CIVIL ACTION
1.
 tax assessed
 tax payer fails to file an
administrative protest
 request for
reconsideration or
reinvestigation within
30 days from the
receipt of assessment.
 CIVIL ACTION
2.
 A protest against the
assessment is filed by
the taxpayer but the
Commissioner’s
decision denying in
WHOLE or in PART.
 The said protest, was
NOT APPEALED to the
CTA within 30 days
from the receipt of such
decision.
 CRIMINAL ACTION
• The judgement in the
criminal case shall not
only impose the
penalty but shall also
order the payment of
taxes subject of the
criminal case.
• Criminal liability arises • Criminal complaint
upon failure to satisfy may proceed even
his civil obligation to without prior
pay tax. assessment or
computation.
 No Injunction to Restrain Tax
Collection
 No court shall have the authority to grant an
injunction to restrain the collection of any
internal revenue tax, fee or charged imposed by
the NIRC, except when the decision of the
Commissioner is pending appeal before the
Court of Tax Appeals, the said court may enjoin
the collection of taxes if such collection will
jeopardize the interest of the government
and/or the tax payer.
 TAX CREDIT CERTIFICATE
(TCC)
1) May be applied against any interval revenue tax
except withholding taxes,
2) Original Copy is surrendered to the revenue
office,
3) No tax refund shall be given resulting from
availment of incentives granted by law where
no actual payment was made
 Forfeiture of:
Tax Refund
When a refund check or warrant
remains unclaimed or uncashed
within 5 years from the date of
mailing or delivery
Tax Credit
When a tax credit certificate
which remains unutilized after
5 years from the date of issue:
1) invalid unless revalidated
2) shall not be allowed as
payment for internal
revenue taxes liabilities of
the taxpayer
3) the amount covered by the
certificate shall revert to
the general fund
 Revalidation of TCCs

 TCC may be revalidated prior to the expiration

of its validity
 Revalidated TCC shall be valid for a period of 5
years from the date of issue.