TAX REMEDIES UNDER THE NIRC

Return filed was Not false or No return was filed, or return

Fraudulent was false or fraudulent

COLLECTION WITH PRIOR ASSESSMENT COLLECTION WITH PRIOR ASSESSMENT

Assessment should be made within 3 yrs frm Assessment should be made within 10 yrs frm
date of filing the return or from the last day discovery of the failure to file return, or of the
required by law for filing (usually April 15 ) discovery of the falsity or fraud in the return
(Sec. 203) (Sec. 222- A)
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Collection should be made within 3 yrs from Collection should be made within 5 yrs from date
date of assessment, either by: of assessment, either by: (Sec 222-C)

a) Summary proceedings (Administrative)

1. Distraint of personal property
2. Levy on real property, or

b) Judicial proceedings
1. Civil action and/ or
2. Criminal Action
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COLLECTION WITHOUT PRIOR COLLECTION WITHOUT PRIOR

ASSESSMENT ASSESSMENT

Collection should be made within 3 yrs frm Collection should be made within 10 yrs frm
date of filing the return or from the last day discovery of the failure to file return, or of the
required by law for filing (usually April 15 ) discovery of the falsity or fraud in the return
(Sec. 203) (Sec. 222-A)

In both cases, Collection should be by Judicial proceedings only.

Sec 204-A

COMPROMISE
Authority of the CIR to Compromise
-Reasonable Doubt as to Validity of the tax assessed;
-Financial position of the taxpayer demonstrate inability to pay

Minimum compromise rate:

 -10% if due to financial capacity

-40% if for reasonable doubt as to validity of tax assessed

Who will approve compromise settlement?

- N E B - if basic tax exceeds P1Million or

settement offered is less than prescribed minimum rate

- C I R - basic tax P501,000 to P 1 Million

- R E B - basic tax is P500,000 or less

Specific cases that may be compromised

-delinquent accounts
- pending case under protest
-civil tax cases before the courts
-collection cases filed in courts
- criminal violations other than those – already filed in court or
- those involving tax fraud

Cases that may NOT be compromised:

-WHT cases
-crim tax fraud cases
-crim violations Already filed in Court;
-delinquent accounts w/ duly approved sched of installment payments

Compromise based on “reasonable doubt”:

-delinquent acct resulting from jeopardy assessment (assessed without the benefit of a
complete or partial audit . delay was due to the
taxpayer’s failure to comply with audit requirement.

- taxpayer failed to file admin protest due to failure to receive FAN and there is
reason to believe that assessment is lacking in legal and/or factual basis;

-taxpayer failed to appeal to CTA and there is

reason to believe that assessment is lacking in legal and/or factual basis

When C I R may ABATE or CANCEL tax liability: (204-B)

- Unjustly or excessively assessed;

- Collection costs involved do not justify the collection of the amount
 REMEDIES OF THE TAXPAYER

-PROTEST OR DISPUTE ASSESSMENT (Sec 228)

-REFUND of ERRONEOUSLY /ILLEGALLY COLLECTED TAXES (Sec 229)

Sec 228
Requisites of a Valid Assessment: (Otherwise – Void)

-It must be in Writing;

- It must state the law and the facts on which the assessment is made

Where to file a protest?

- to the C I R (administrative remedy)

When to file a protest?

-Within 30days after from receipt of the assessment,

file either - request for reconsideration or
request for reinvestigation

- Within 60 days from filing of protest, all supporting docs

shall have been submitted, otherwise, the Assessment shall
become Final.

(Judicial Remedy)

If the protest is not acted upon,

within 180 days from submission of documents
the taxpayer affected by the Inaction , may appeal to the CTA within 30 days
from the lapse of the 180-day period.

If the protest is Denied,

the taxpayer affected by the Decision, may appeal to the CTA within 30 days
from receipt of said decision.

Otherwise, the decision shall become final and executory in both cases.
C I R vs. Metro Superama (Dec 8 , 2010)

Section 228 requires that the taxpayer must first be informed that he is liable for
Deficiency taxes thru PAN. The law imposes a SUBSTANTIVE, not merely a formal
Requirement.
The sending of a PAN is part of the “due process requirement ” in the issuance of
a deficiency tax assessment.

Gen Rule: PAN must be issued before issuing FAN and demand letter.

When a Pre-assessement Notice (PAN) shall not be required:

-mathematical error in the computation of deficiency tax;

-discrepancy between the tax withheld and the amount remitted by the
withholding agent;
-when the excise tax due has not been paid;
-when an article purchased by an exempt person is transferred to a
non-exempt person
-when a taxpayer who opted to claim a refund of excess creditable WHT was
determined to apply it against his estimated tax liabilities

Sec. 229 (REFUND)

Requisite:
-written claim for Refund

Where to File ?
-C I R

When to File?
-Within two (2) years from date of payment of the tax, regardless of
any supervening cause.

The 2-year period is applicable to both the Administrative (file Refund with CIR)
remedy and Judicial remedy (file Appeal to CTA within 30days from receipt
of the Denial by the CIR)

Example:
Date Tax paid …………… April 25, 2015
Filed Refund with CIR ….. April 10, 2017
When to file appeal ?
 In this case, filing of Refund (04-10-2017) with the CIR was well within the
2-year period from the date of payment (04-25-2015). However since the 2-year
period will end on April 25, 2017, and the CIR will surely cannot act on his Refund
within that short period of time from filing (April 10 to April 25, 2017), the taxpayer
should file his Appeal to the CTA on or before April 25, 2017.

Note that the law says “Within two (2) years from date of payment of the tax,
regardless of any supervening cause.

Simply stated, both the

-Administrative Remedy ( file claim for refund with CIR), and
-Judicial Remedy (Appeal to CTA, if refund is Denied)
must be filed within the 2-year period

Can the CIR grant Refund without a written claim for it ?

Yes. Where on the face of the return, such payment appears to have been
erroneously paid.