Quiz 2: General Principles and Tax Administration

Name: _____________________________________ Score: __________________

Multiple Choice:

1. A tax imposed based on the number

a. Income Tax c. Ad valorem tax
b. Specific tax d. Customs duties

2. The theory which most justifies the necessity of taxation:

a. Protection and benefits theory
b. Revenue purposes theory
c. Lifeblood theory
d. Ability to pay theory

3. One of the characteristics of internal revenue laws is that they are:

a. Criminal in nature
b. Penal in nature
c. Political in nature
d. Generally prospective in application

4. Which of the following is not an example of excise tax?

a. Transfer tax c. Real Property tax
b. Sales tax d. Income tax

5. The following are similarities of the inherent power of taxation, eminent domain, and police
power, except one:
a. Are necessary attributes of sovereignty
b. Interfere with private rights and property
c. Superior to the non-impairment clause
d. Are legislative in character.

6. Statement 1: 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.
Statement 2: The power of taxation is essentially a legislative function. Even in the absence of
any constitutional provision, taxation power falls to Congress as part of the general power of
law-making.
a. False, false
b. False, true
c. True, true
d. True, false
True or False:

7. Revenue Regional Director is allowed or authorized to issue Letter of Authority.

8. Revenue Officers have no authority to administer oaths and take testimony in any official matter
or investigation conducted by them regarding any matters within the jurisdiction of the Bureau.
9. Revenue Officers have the authority to make arrest or seizures for the violation of the penal law,
rule or regulation administered by the BIR.
10. Internal Revenue Officers assigned to perform assessment or collection functions shall not
remain in the same assignments for more than two (2) years.

Answers:

7. T 8. F - has 9. T 10. F – 3 years

Multiple Choice:

1. Which of the following powers and duties of Bureau of Internal Revenue (BIR) is false?
a. Assessment and collection of all national internal revenue taxes, fees, and charges.
b. Enforcement of all forfeitures, penalties, and fines connected with assessment and
collection of taxes.
c. Execute judgements in all cases decided by Court of Tax Appeals and ordinary courts.
d. Give effect to and administer the supervisory and eminent domain power conferred by
the Tax Code or other laws.

2. The organization of BIR comprise of:

a. One Commissioner and 4 Deputy Commissioners
b. One Commissioner and 6 Deputy Commissioners
c. One Commissioner and 5 Deputy Commissioners
d. One Commissioner and 3 Deputy Commissioners

3. Which of the following statement is true?

a. The Commissioner has the power to interpret tax laws subject to review of the President of
the Philippines.
b. The Commissioner has the power to decide disputed assessment, refunds of internal
revenue taxes, fees or charges, penalties imposed in relation thereto, or other tax matters,
subject to exclusive appellate jurisdiction of Regional Trial Courts.
c. The Commissioner has the power to decide disputed assessment, refunds of internal
revenue taxes, fees or charges, penalties imposed in relation thereto, or other tax matters,
subject to exclusive appellate jurisdiction of Court of Tax Appeals.
d. The Commissioner has the power to interpret tax laws but not to decide on tax cases.

4. Any return, statement, or declaration filed in any office authorize to receive the same shall not
be withdrawn: Provided that _________ from the date of such filing, the same shall be modified,
 changed, or amended, provided further that no notice of audit or investigation of such return,
statement or declaration has, in the meantime, been actually served upon the taxpayer.
a. Within 2 years
b. Within 3 years
c. Within 4 years
d. Within 1 year

5. What evidence is needed for the Commissioner to assess the tax liability of the taxpayer in case
the latter failed to submit the required returns, statements, reports and other documents or
when there is a reason to believe that such report is false, incomplete or erroneous?
a. Best evidence obtainable
b. Probable evidence obtainable
c. Reliable evidence obtainable
d. Virtual evidence obtainable

6. Jeopardy assessment (termination of taxable period) is necessary under the following

circumstances:
a. The taxpayer is retiring from business subject to tax
b. The taxpayer is intending to leave the Philippines, or removing his property therefrom
c. The taxpayer is hiding or concealing his property
d. All of the above

7. For purposes of computing internal revenue tax, the real property must be valued
a. Fair market value as determined by the Commissioner
b. Fair market value as determined by the Provincial or City Assessors Office
c. Fair market value under letter a or letter b whichever is higher
d. Fair market value under letter a or letter b whichever is lower

8. The Commissioner has the authority to prescribe real property values subject to limitations set
by the law. Which of the following limitations is invalid?
a. There must be consultation with competent appraisers both from the private and public
sectors, with prior notice to affected taxpayers
b. The adjustment in the FMV of the property must be done once in every three years
through the rules and regulations issued by the Secretary of Finance based on the
current Philippine Standards.
c. The adjustment shall be published in newspaper of general circulation in the province,
city or municipality concerned.
d. In the absence of provision stated under letter c, the adjustment must be posted in
the provincial capitol, city or municipal hall and in three (3) conspicuous public places
therein. (it must be 2)

9. The Commissioner can inquire into taxpayers’ bank accounts without violating the Bank Secrecy
Law and Foreign Currency Deposit Act under which of the following reason/s:
a. To determine the gross estate of the decedent
 b. To determine the financial incapability of the taxpayer, but a prior approval of the
taxpayer is needed.
c. Foreign tax authority requested for such information
d. All of the above

10. Which of the following statement is false?

a. One who has applied accreditation and denied by the Commissioner, he may appeal
such denial to the Secretary of Finance, who shall rule on the appeal within sixty (60)
days from the receipt of such appeal. Failure of the secretary to rule on the appeal
within the prescribed period shall be deemed as approval of the application for
accreditation of the appellant.
b. The Commissioner may prescribe the manner of compliance with any documentary or
procedural requirement in connection with the submission or preparation of financial
statements accompanying tax returns.
c. The Commissioner shall delegate his powers to his subordinates with the rank
equivalent to a division chief or higher, subject to limitations and restrictions.
d. None of the above.

11. The following powers of the Commissioner shall not be delegated except:
a. The power to recommend the promulgation of rules and regulations by the Secretary of
Finance
b. The power to issue rulings of first impression or to reverse, revoke, or modify any
existing ruling of the Bureau.
c. The power to assign or reassign internal revenue officers to establishment where
articles subject to excise tax are produced or kept.
d. The power to compromise or abate deficiency tax amounting to P 500,000 or less, and
minor criminal violations.

12. Which of the following is not a scheme of shifting the incidence of taxation?
a. The manufacturer transfers the tax to the consumer by adding the tax to the selling
price of the goods sold.
b. The tax forms part of the purchase price.
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 the in the Philippines.
d. The manufacturer transfers the tax to the distributor, then in turn to the wholesaler, in
turn to the retailer and finally to the consumer.

13. In case of conflict between the tax code and generally accepted accounting principles:
a. Both tax codes and GAAP shall be enforced.
b. GAAP shall prevail over the tax code.
c. Tax code shall prevail over GAAP.
d. The issue shall be resolved by the courts.

14. Tax as distinguished from license fee:

 a. Non-payment does not necessarily render the business illegal.
b. A regulatory measure
c. Imposed in the exercise of police power
d. Limited to cover cost of litigation

15. Valued added tax is an example of:

a. Graduated tax
b. Progressive tax
c. Regressive tax
d. Proportional tax

16. What is required to make a BIR ruling of first impression a valid one, except?
a. Must be reasonable and within the authority conferred.
b. Must be germane to the purpose of the law.
c. Must be published
d. Must be prospective in application

17. The following are the powers of the BIR, except:

a. The assessment and collection of all national internal revenue taxes.
b. The execution of all judgements in all cases decided in its favor by the CTA and the
ordinary courts.
c. The enforcement of all forfeitures, penalties and fines connected with national internal
revenue taxes.
d. The assessment and collection of some custom duties.

18. Which of the following powers of the Commissioner of the BIR may be delegated?
a. Enforcement of all forfeitures, penalties, and fines in connection with the collection of
national internal revenue taxes.
b. The power to recommend the promulgation of rules and regulations by the Secretary of
Finance.
c. The power to issue rulings of first impression or to reverse, revoke or modify any
existing ruling of the bureau.
d. The power to assign or reassign internal revenue officers to establishments where the
articles subject to excise tax are produced and kept.

19. A suit questioning the validity of tax statute or law is:

a. Taxpayer’s suit
b. Derivative suit
c. Class suit
d. Representative suit

20. The Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue,
issued a Revenue Regulation using gross income as the tax base for corporations doing business
in the Philippines. Is the Revenue Regulation valid?
 a. Yes, the Secretary of Finance has the power to issue rules and regulations.
b. Yes, gross income taxation over corporations is valid.
c. No, Secretary of Finance has virtually amended the NIRC.
d. No, only the Commissioner of the BIR has the authority to make revenue rules and
regulations.

21. The power to decide disputed assessment, refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other matters arising under the Tax Code or
other laws is vested with
a. The Commissioner of Internal Revenue, subject to the exclusive appellate jurisdiction
of the Court of Tax Appeals.
b. The Secretary of Finance, subject to the review of Office of the President.
c. The Court of Tax Appeals, subject to the exclusive appellate jurisdiction of the Supreme
Court.
d. The Regular Courts, subject to exclusive appellate jurisdiction of the Court of Tax
Appeals.

22. The power to interpret the provisions of National Internal Revenue Code and other tax laws
shall be under the exclusive and original jurisdiction of the
a. The Commissioner of Internal Revenue, subject to the review of by the Secretary of
Finance.
b. The Commissioner of Internal Revenue, subject to the exclusive appellate jurisdiction of
the Court of tax Appeals.
c. The Court of Tax Appeals, subject to the exclusive appellate jurisdiction of the Court of
Tax Appeals.
d. The Regular Courts, subject to the review by the Court of Tax Appeals.

23. It is the official action of an administrative officer in determining the amount of tax due from a
taxpayer, or it may be a notice to the effect that the amount stated therein is due from the
taxpayer with a demand for payment of the tax or deficiency stated therein
a. Tax investigation
b. Tax audit
c. Tax assessment
d. Tax mapping

24. What are the means employed in the assessment of taxes, except?
a. Examination of tax returns
b. Inventory taking surveillance and use of presumptions, gross sales or receipts
c. Prescription of real property values
d. Examination of bank deposits

25. The power to tax is the power to destroy. Is this always so?
a. No, the executive branch may decide not to enforce a tax law which it believes to be
confiscatory.
 b. Yes, the tax collectors should enforce a tax law even if it results to the destruction of the
property rights of a taxpayer.
c. Yes, tax laws should always be enforced because without taxes the very existence of the
State is endangered.
d. No, the Supreme Court may nullify a tax law, hence, property rights are not affected.
26. Statement 1: Nonpayment of tax will only result to civil liability.
Statement 2: Tax liabilities of a corporation will not extend to the stockholders absolutely.
a. True, true
b. False, false
c. False, true
d. True, false

27. All are objectives of taxation, except:

a. Revenue purpose
b. Regulation
c. Increase of social inequality
d. Encourage economic growth

28. Motor vehicle registration fees are now considered

a. License fee
b. Margin fee
c. Regulatory tax
d. General tax

29. The National Internal Revenue Code is also known as:

a. RA 9337
b. RA 8424
c. PD 1158
d. EO 464

30. How will the local government units be able to exercise their taxing power?
a. By local legislation
b. By authority conferred by Congress
c. By the issuance of the Department of Finance
d. By the help of the BIR