Chapter 10

1. is the process of examining, going over, or scrutinizing the books and records of a
taxpayer to ascertain the correctness of the tax declared and paid by the taxpayer.
a. Preliminary assessment notice
b. Tax assessment
c. Letter of authority
d. Tax audit
2. It is the official action of an officer authorized by law in ascertaining the amount of tax due
under the law from a taxpayer.
Preliminary assessment notice
Tax assessment
Letter of authority
Tax audit
3. It is an official document that empowers a Revenue Officer to examine and scrutinize a
taxpayer’s books of accounts and other accounting records, in order to determine the
taxpayer’s correct internal revenue tax liabilities.
a. Preliminary assessment notice
b. Tax assessment
c. Letter of authority
d. Tax audit
4. It is a written notice given to a taxpayer informing him of the findings of the BIR officer(s)
relating to a deficiency in his tax return, indicating therein the law and the facts on which the
assessment is made and requiring the taxpayer to respond within a given period, otherwise, the
Commissioner or his duly authorized representative will issue an assessment based on his
findings.
a. Preliminary assessment notice
b. Tax assessment
c. Letter of authority
d. Tax audit
5. Preliminary assessment notice is not required in the following, except:
When the findings 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.
When the discrepancy has been determined between the tax withheld and the amount
actually remitted by the withholding agent.
When a taxpayer who opted to claim a return 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.
None of the above
6. Which of the following is correct?
a. If the taxpayer to be audited is under the jurisdiction of the National Office, the letter of
authority shall be issued by a Regional Director.
b. If the taxpayer to be audited is under the jurisdiction of the regional offices, the letter of
authority shall be issued by the Commissioner of Internal Revenue.
c. Both ‘a’ and ‘b’
d. Neither ‘a’ nor ‘b’
7. The prescriptive period for the issuance of a formal notice of assessment may not ordinarily
be stayed because of the lifeblood theory. However, there are certain instances where the
running of the prescriptive period maybe suspended. Which among of the following is not
among the recognized exception which suspend the prescriptive period within which to assess?
a. Where the taxpayer requests for and is granted a reinvestigation by the Commissioner;
b. If the taxpayer is out of the country;
c. If the taxpayer changes his address informing the Commissioner of such change
d. When the commissioner of Internal Revenue is prevented from making an assessment
and within 60 days thereafter.
8. Which of the statements regarding collection of tax assessment is incorrect?
I. Within five (5) years from assessment
II. Within ten (10) years in case there is no assessment and in case of false or fraudulent
returns with intent to invade the tax.
a. I only
b. Both I and II
 c. II only
d. Neither I nor II

9. Which of the following rules governs the prescription for violation of the Tax Code?
1st Rule: Prescription starts from the day the law is violated and the same is not known,
prescription starts from the discovery of violation thereof.
2nd Rule: All violations of any provision of the Tax Code shall prescribe after 10 years.
a. Both rules are correct
b. 1st rule wrong, 2nd rule correct
c. Both rules are wrong
d. 1st rule correct, 2nd rule wrong
10. Statement 1: A tax return, statement or declaration filed by a taxpayer may be modified,
changed and amended within three (3) years from the date of filing.
Statement 2: When a letter of authority or investigation of tax return, statement or
declaration has been actually served upon the taxpayer, amendment of such return shall no
longer be allowed.
a. Statement 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statement 1 and 2 are true
11. Which of the following statement is incorrect?
a. The prescriptive period of three (3) years commences to run after the date the return is
due (last day prescribed by law for filing) or filed, whichever comes later.
b. If the return is filed before the last day for filing, the prescriptive period begins to run
only from such last day.
c. If the return is filed after the last day or due date, the period shall be counted from the
day the return is filed.
d. If the return is amended substantially, the period starts from the due date of the return.
12. Which of the following prescriptive period for the B.I.R to conduct a tax audit is correct?
a. Ten (10) years when no return is filed
b. Ten (10) years when return filed is false or fraudulent
 c. Three (3) years of actual filing of return or from the deadline for filing if the return filed
is not fraudulent
d. All of the above

13. Mike filed his 2015 Income Tax Return and paid the tax due thereon on April 1, 2016. The
last day for the Bureau of Internal Revenue to send an assessment is?
a. April 1, 2019
b. April 15, 2021
c. April 15, 2019
d. April 15, 2026
14. The following is related to a tax assessment of a taxpayer:
Date when assessment was received October 1, 2014
Petition for reconsideration was filed with the BIR October 9, 2014
BIR decision of denial was received July 2, 2015
2nd request for reconsideration was filed with the BIR July 15, 2015
Date revised assessment was received July 5, 2016
The last day to appeal to the Court of Tax Appeals is on?
a. July 15, 2016
b. August 4, 2016
c. August 6, 2016
d. September 5, 2016
15. assuming the following information
Date of tax erroneously paid June 10, 2015
Date of claim for refund was filed with BIR March 3, 2016
Date of BIR decision of denial was received April 5, 2016
Last day to appeal to the Tax Appeal is on
a. June 8, 2016
b. March 3, 2017
c. June 10, 2016
d. May 5, 2016
16. A taxpayer filed an income tax return for the calendar year 2014 on March 10, 2015. The
BIR issued a deficiency income tax on April 10, 2016 which has been final. When is the last day
for BIR to collect?
a. April 10, 2021
b. April 15, 2020
c. April 15, 2018
d. March 10, 2018
17. A taxpayer received an assessment notice on January 5, 2015. He files a motion for
reconsideration with the BIR on January 15, 2015. When is the last day for the submission of
complete documents to support his motion for reconsideration?
a. February 4, 2015
b. March 16, 2015
c. January 15, 2017
d. None of the above
18. An examination of a calendar year corporate taxpayers records shows that it filed its final
adjustment income tax on February 12, 2012 for its 2011 income. It subsequently filed an
amended return on March 17, 2012. Up to what date has the BIR within which to issue a formal
assessment notice and a letter of demand?
a. February 15, 2015
b. March 18, 2015
c. April 15, 2015
d. March 18, 2022
19. Apolinario has filed his Income Tax Return (ITR) for taxable year 2013 on May 2, 2014. After
an investigation, it was discovered that the tax paid was deficient. The last day for the BIR to
send an assessment:
a. April 15, 2017
b. May 2, 2017
c. May 2, 2016
d. April 15, 2016
20. Ana filed her 2013 Income Tax Return (ITR) on April 10, 2014. On June 20, 2014, she filed an
amended return which is substantially different from the original return. The last day to release,
mail or send an assessment is?
a. April 10, 2017
 b. April 15, 2017
c. June 20, 2017
d. June 20, 2019
21. A taxpayer disclosed to you the following information:
Date of filing the Income Tax Return: Mar. 28, 2012
Date assessment was received: June 20, 2014
Request for reinvestigation was filed: July 4, 2014
The last day for the taxpayer to submit relevant supporting documents is?
a. September 4, 2014
b. July 20, 2014
c. September 2, 2014
d. April 15, 2015
22. In question no. 21, assuming that the taxpayer submitted the documents supporting his
motion on August 26, 2014. The Bureau of Internal Revenue should act on the protest not later
than?
a. September 26, 2014
b. April 15, 2015
c. February 26, 2014
d. February 22, 2015
23. Based on the no. 21, assuming that the BIR did not act on the protest, the last day for the
taxpayer to appeal to the Court of Tax Appeal is?
a. March 22, 2014
b. March 24, 2915
c. March 23, 2014
d. April 15, 2016
Use the following data for the next six (6) questions:
Income tax return for 2011 was filed April 2, 2012.
Tax shown on the return was P6, 000 which was paid upon filing.
Tax upon audit was P10, 000
Assessment for deficiency: April 12, 2014.
24. Last day to send notice of assessment is?
a. April 2, 2015
 b. April 15, 2015
c. April 15, 2014
d. April 12, 2017
25. If no assessment was made, the last day for the government to collect by judicial
proceedings is?
a. April 2, 2015
b. April 15, 2015
c. April 15, 2015
d. April 12, 2015
26. When is the last day for the government to issue warrant of distraint?
a. April 12, 2017 c. April 15, 2015
b. April 12, 2019 d. April 12, 2015
27. If assessment or judicial action was made on April 20, 2015, the defense of the taxpayer is?
a. He had paid the tax on time.
b. He had paid the correct amount of tax.
c. The right of the government to collect had already prescribed.
d. There was no cause of action from the very beginning.
28. If the BIR discovered on December 1, 2013 that the taxpayer had filed a fraudulent return,
the last day to send an assessment is?
a. April 15, 2014
b. December 1, 2016
c. December 1, 2023
d. April 2, 2021
29. Supposed the BIR discovered on November 1, 2013 that no return was filed. The BIR can
validly make an assessment until?
a. April 15, 2014
b. November 1, 2023
c. November 1, 2016
d. April 2, 2021
30.Donor’s tax return for donation made on January 15, 2010 was on January 31, 2010. Last day
for the BIR to assess is on?
a. February 28, 2013
b. January 31, 2013
c. February 14, 2013
 d. January 15, 2013

31. Based on no. 30, but assume the return filed was fraudulent and was discovered on March
31, 2010. The last day for the BIR to assess is on?
a. February 28, 2020
b. January 31, 2020
c. February 14, 2020
d. March 31, 2020
32. Date of death: March 2, 2012; Date the estate tax was filed: June 10, 2012; Last day for the
Bureau of Internal Revenue to make an assessment for a deficiency of estate tax is?
a. March 2, 2015
b. April 10, 2015
c. April 15, 2015
d. September 2, 2015
33. The last day to file an amended return is?
a. March 2, 2015
b. June 10, 2015
c. April 15, 2015
d. September 2, 2015
34. When a taxpayer erroneously paid a tax in installment, the prescriptive period for a claim
for refund should be counted from the:
a. Date of payment of the first installment.
b. Date of payment of the last installment.
c. Last day required by the law for the payment of the tax for a lump sum.
d. None of the choices.
35. The prescription of check or warrant refund or tax credit shall be within?
a. 4 years from the date of issue
b. 5 years from the date of issue
c. 10 years from the date of issue
d. 12 years from the date of issue
36. The following remedies are available to the government to collect taxes, except
a. Distraint and levy
b. Inquiring into bank deposit accounts of taxpayers
c. Entering into compromise of tax cases
 d. Enforcement of forfeiture of property
37. The following are administrative remedies available to a taxpayer in connection of
collection of taxes, except one
Filing of claim for tax refund or credit
Filing for petition of reconsideration or reinvestigation
Filing for criminal complaints against erring BIR officials or employees
Entering into a compromise
38. Which of the following is incorrect?
a. A tax assessment is necessary to a criminal prosecution for willful attempt to defeat and
evade payment of taxes.
b. A conviction of tax evasion is not a bar of collection of unpaid taxes
c. Criminal proceedings under the Tax Code is now a mode of collection of Internal
Revenue taxes, fees and charges.
d. If the taxpayer is acquitted, it does not exonerate him for his civil liability to pay the
taxes.
39. Statement 1: A tax amnesty that forgives tax delinquency of prior years is a legislative act of
government.
Statement 2: A tax compromise that lowers the delinquent tax due from a taxpayer is an
executive act pursuant to a legislative act of power to the Executive Department of the
government.
a. Statement 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statement 1 and 2 are true
40. Statement 1: The commissioner of the Internal Revenue has a sole authority to abate or
cancel tax, penalties, an/or interest.
Statement 2: The application for abatement or cancellation of tax, penalties, an/or interest
should be acted upon by the processing office within five (5) days from receipts of said office,
and the BIR National Office has thirty (30) days within which to act on the case.
Statement 1 and 2 are false
Statement 1 is true but statement 2 is false
Statement 1 is false but statement 2 is true
 Statement 1 and 2 are true

41. The commissioner of Internal Revenue cannot:

Abate or cancel tax liability.
Compromise payment of internal revenue taxes.
Credit or refund taxes erroneously or illegally collected.
Compromise criminal aspect of tax violations if already filed in court
42. Which of the following may not be compromise?
a. Delinquent accounts
b. Cases under administrative protest after issuance of the Final Notice of Assessment to
the taxpayer still pending to the BIR.
c. Civil cases being disputed.
d. Withholding tax cases where there is no doubt on the taxpayer’s obligation to withhold.
43. Compromised may be entered into based on the following ground:
1st ground: Doubtful validity of the assessment.
2nd ground: Financial incapacity.
a. Both grounds are correct.
b. Both grounds are incorrect.
c. Only the first ground is correct.
d. Only the second ground is correct.
44. Which of the following offer to compromise a delinquent account shall be accepted on the
ground of unreasonable doubt as to the validity of assessment?
I. The taxpayer failed to file an administrative protest on account of alleged failure to
receive notice of assessment.
II. The taxpayer failed to file a request for reinvestigation or reconsideration within 30 days
from receipt of final assessment notice.
III. The taxpayer failed to elevate to the Court of Tax Appeals (CTA) an adverse decision of
the Commissioner of Internal Revenue.
I, II, and III
I and II only
 I and III only
I only

45. Statement 1: Criminal violation of NIRC may be compromised even those already filed in
court.
Statement 2: Criminal violation of NIRC may be compromised except those involving fraud.
a. Statement 1 & 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statement 1 & 2 are true
46. Which of the following violations cannot be subjected to compromise penalties?
Failure to keep/preserve books of accounts and accounting records.
Failure to keep book of accounts of records in a native language or in English.
Failure to have books of accounts audited and have financial statements attached to income
tax return certified by independent CPA.
Keeping two sets of books of accounts or records.
47. Which of the following offer to compromise a disputed assessment on the ground of
reasonable doubt as to the validity of the assessment may be accepted?
I. Jeopardy assessment
II. Arbitrary assessment based on presumption
III. Assessment issued on or after January 1, 1998 where demand notice allegedly failed to
comply with formalities prescribed in the tax code
a. I, II, and III
b. I and II only
c. I and III only
d. None of the above
48. A tax assessment made by an Authorized Revenue Officer without the benefit of complete
or partial audit, in light of the RO’s belief that the assessment and collection of a deficiency tax
will be jeopardized by delay caused by the taxpayer’s failure to comply with the audit and
investigation requirements to present his books of account and/or pertinent records, or
substantiate all or any of the deductions, exemptions, or credits claimed in his return.
 a. Jeopardy assessment
b. Arbitrary assessment based on presumption
c. Assessment issued on or after January 1, 1998 where demand notice allegedly failed to
comply with formalities prescribed in the tax code.
d. Assessment made based on “Best Obtainable Rule”

49. What is the prescribed minimum percentage of compromise in case of doubtful validity of
assessment?
40% of the basic tax assessed
20% of the basic tax assessed
30% of the basic tax assessed
10% of the basic tax assessed
50. Statement 1: No credit or refund of the taxes or penalties shall be allowed unless the
taxpayers files in writing with the Commissioner a claim for credit or refund within two (2) years
after the payment of the tax or penalty.
Statement 2: A return filed showing an overpayment shall be considered as a written claim
for credit refund.
a. Statement 1 & 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statement 1 & 2 are true
51. Statement 1: Internal revenue taxes shall be assessed within three (3) years after the due
date.
Statement 2: Internal revenue taxes shall be assessed within three (3) years from the day
the return was filed, where a return was filed beyond the due date.
a. Statement 1 & 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statement 1 & 2 are true
52. What constitute prima facie evidence of a false and fraudulent return?
a. A substantial under declaration of taxable sales, income or receipts as determined by
BIR commissioner.
 b. Failure to report sales in an amount exceeding 30% of that declared per tax returns
constitutes substantial under declaration of sales.
c. A claim of deduction in an amount exceeding 30% of actual deduction of actual
deduction constitutes overstatement of deductions.
d. All of the above.
53. Which of the following cases falls within the jurisdiction of the Court of Tax Appeals?
a. Criminal action for violation of the National Internal Revenue Code.
b. Question of whether or not to impose a deficiency tax assessment upon a taxpayer.
c. Appeal from undisputed tax assessment.
d. Action for refund of real property tax.
54. The books of accounts must be kept in
a. Any language depending on the preference of the taxpayer
b. English language only
c. Native language or English only
d. Native language, English or Spanish
55. The seizure by the government of personal property to enforce payment of taxes followed
by a public sale, if taxes were not voluntarily paid is called?
a. Distraint c. Levy
b. Forfeiture d. None of the above
56. Which of the following cases falls within the jurisdiction of the Court of tax Appeals?
a. Criminal action for violation of the NIRC
b. Question on whether not to impose a deficiency tax assessment upon a taxpayer
c. Appeal from undisputed tax assessment
d. Action of refund of a real property
57. The distinction between actual distraint and constructive distraint is that:
Actual distraint may be made on the property of any taxpayer whether delinquent or not
while constructive distraint is made on the property only of a delinquent taxpayer
In actual distraint, there is a taking of possession, while in constructive distraint, the
taxpayer is merely prohibited from disposing of the property
Actual distraint is affected by requiring the taxpayer to sign a receipt of the property or by
the revenue officer preparing and leaving list of the distrained property or by the service of
a warrant of distraint or garnishment
Answer not given.
58. Where any national internal revenue tax is alleged to have been erroneously or illegally
collected the taxpayer should first:
a. File a claim for refund or credit
b. File an action for refund with the Regional Trial Court
c. File an action for refund with the Court of Tax Appeals
d. Answer not given

59. Which statement is correct? In case of a tax erroneously collected:

A case for refund may be filed with the court simultaneously with the filing of a claim for
refund with the Bureau of Internal Revenue
A case for refund may be filed with the court even without filing a claim for refund with the
Bureau of Internal Revenue
A claim for refund must first be filed with the Bureau of Internal Revenue and a decision of
the Bureau must, under any circumstance, be awaited before a case for refund may be filed
with the court
A claim for refund must first be filed with the Bureau of Internal Revenue, in a given
situation, a case for refund may be filed with the court without awaiting the decision of the
Bureau.
60. The following are administrative remedies available to a tax payer in connection with
collection of taxes, except one:
a. Filing for tax refund or credit.
b. Filing for petition for reconsideration or reinvestigation.
c. Filing of criminal complaint against erring BIR officials or employees.
d. Entering into a compromise.
61. Pre-assessment notice shall not be required except:
a. When the finding for any deficiency tax is the result of mathematical error.
b. When the finding of discrepancy has been determined between the tax withheld and
the amount actually remitted by the withholding agent.
c. When the excise tax due of imported articles has not been paid.
d. When the value added tax due of imported articles has not been paid.
62. Which of the following is within the authority of the BIR Commissioner
 a. To inquire into bank deposit accounts
b. To terminate taxable period
c. To prescribed real property values
d. All of the above
63. Following are the powers of the BIR Commissioner, except:
a. To make assessment and prescribe additional requirements for tax administration and
enforcement;
b. To obtain information and to summon, examines and take testimony of persons;
c. To register and accredit tax agents;
d. To promulgate tax laws.

64. The authority of the Secretary of Finance in conjunction with the Commissioner of Internal
Revenue, except:
a. To promulgate all needed rules and regulation for the effective enforcement of internal
revenue laws cannot be controverted.
b. To issue rules and regulations, as well as administrative opinions and rulings deserve
respect by the court.
c. Both a and b
d. Neither a or b
65. Statement 1: The BIR is authorized to issue a warrant of garnishment against bank account
of a taxpayer for the collection of an assessment despite the pendency of protest against tax
assessment.
Statement 2: An assessment is not necessary before a taxpayer may be prosecuted for
willfully in attempting in any manner to evade or defeat any tax imposed by the NIRC.
Statement I and II are false.
Statement I and II are true.
Only statement I is false.
Only statement I is true.
66. In one of the following conditions, the Commissioner of BIR may be authorized to abate or
cancel a tax liability:
a. The administration and collection costs involved do not justify the collection of the
amount due.
b. A reasonable doubt exists as to the validity of the claim against the taxpayer.
 c. The financial position of the taxpayer demonstrates a clear inability to pay the
assessment tax.
d. All of the above
67. Which of the following assessment is true? The Bureau of Internal Revenue shall have a
Commissioner and
a. 1 deputy commissioner
b. 4 deputy commissioners
c. 3 deputy commissioners
d. 10 deputy commissioners

68. The following are the authority of the Commissioner to reduce revenue taxes, except:
Compromise the payment of any internal revenue tax when a reasonable doubt as the
validity of claim against the taxpayer exists.
Compromise the payment of any internal revenue when the financial condition of the
taxpayer demonstrates a clear ability to pay assessed tax.
Abate tax liability when a portion thereof appears to be unjustly or excessively assessed.
Credit or refund taxes erroneously or illegally received or penalties imposed without
authority.
69. Statement 1: The Commissioner of Internal Revenue may, at any time, order inventory
taking of goods of any taxpayer in order to determine his internal revenue tax liability;
Statement 2: The Commissioner of Internal Revenue, after comparison with other
taxpayers in similar business, may prescribe a minimum amount of gross receipts, sales amd
taxable base of a taxpayer under investigation;
a. Both statements are correct
b. Both statements are wrong
c. First statement is correct, but second statement is wrong
d. First statement is wrong, but second statement is correct
70. Statement 1: A trader manufacturer must submit an inventory list to the Bureau of Internal
Revenue within thirty (30) days after the close of his accounting period;
Statement 2: The Commissioner of Internal Revenue may prescribe the method of
inventory valuation of a taxpayer, but he can do this once only every three (3) years.
 a. Both statements are correct
b. Both statements are wrong
c. First statement is correct, but second statement is wrong
d. First statement is wrong, but second statement is correct
71. Which of the following violations cannot be subjected to compromise penalties?
a. Failure to keep/ preserve books of accounts and accounting records.
b. Failure to keep books of accounts of records in a native language or in English.
c. Failure to have books of accounts audited and have financial statements attached to
income tax return certified by independent CPA.
d. Keeping two sets of books of accounts or records.

72. Books of accounts to be used by a taxpayer for his existing business must first be approved
by the BIR, when?
Before the end of taxable year.
10 days before the start of the last quarter.
On the 15th day of the 4th month following the close of the taxable year.
None of the above
73. The Commissioner of Internal Revenue cannot:
a. Abate or cancel tax liability.
b. Compromise payment of internal revenue taxes.
c. Credit or refund taxes erroneously or illegally collected.
d. Compromise criminal aspect of tax violations if already filed in court
74. 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 fined connected with national internal
revenue taxes.
d. The assessment and collection of some customs duty.
75. When may the BIR terminate the taxpayer’s taxable year?
I. When the taxpayer is retiring from business subject to tax
II. When the taxpayer intends to leave the Philippines
III. When the taxpayer removes his property from the Philippines
IV. When the taxpayer hides or conceals his property
V. When the taxpayer performs any act tending to obstruct the proceeding for collection of
taxes
a. III and IV only
b. I, II and IV only
c. Any of the above
d. All of the above