Webinar

Tax Remedies
Dr. Virginia Lim
Sunday, July 19, 2020

1. The powers of the Commissioners of the Internal Revenue (NIRC)

a. Has no less than 25 powers.
b. 5 – exclusive power; non-delegable authorities.
- Power to cancel tax liability.
- When allowed to cancel tax liability
 No assessment, no legal basis.
 Cost of tax liability – will be a cost to the government.
- FRIA law (exception) if a businessman applies for business
rehabilitation for the adjustment of the date of payment of liabilities.
With property, but no cash for payment. Petition for Corporate
Rehabilitation. If approved, tax liabilities can be waived by BIR.
- President has the power to tax, but the condoning power is not
applied to taxation – only to criminal cases.
- BIR does not exercise the power of taxation but only to implement
(Only Congress)

- Revenue regulations – if questioned – applied for request for review of IRR
with the Secretary of Finance.
- If the commissioner sustained the validity of the revenue regulation – file
petition for review with the CTA (no more RTC) -> Division - > MR ->
CTA en Banc -> MR -> SC
- BIR Ruling are mere interpretation of the decision of the
Commissioner. Not laws/legal basis. Assail the BIR Ruling in CTA
division via Petition for Review.
- BIR is authorized to prepare/amend a tax return (self-serving document, those
taxes in the IR) – the government is not bound by the Tax Return (initiates the
government’s investigation). If amended by the Commissioner all
data/computation must be supported by valid pieces of evidence.
- If Taxpayer not cooperating -> investigation through best evidence
obtainable.
- In case of erroneous return – (within 3 years from submission provided no
investigation yet)
a. Amend the erroneous Return – Consequence of amending a Return:
the amended return will not be discarded (will still form part of the
record of the case);
b. Submit a supplemental Return.
- Third party rule – the power to obtain pieces of evidence through third party.
Past investigation is not a criminal case, but administrative case. The burden of
proof is on the taxpayer (no right to meet the witnesses).
- Change the period of tax payment. As when there is an evasion, the
Commissioner can order the outright payment of tax after due assessment.

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 - Summon/examine and take testimonies of people. Can issue subpoena related
thereto.
- Assessment (Commissioner and/or regional director) – if there is discrepancy –
Letter of Notice. Determines and fixes liability. The Notice serves as a demand
letter. Must be personally served upon the person of the TP or his authorized
representative on the business or principal address, no other.
- BIR has 3 years to assess return reckoned from one day after due date if the
tax was paid early or actual payment whichever is later.
- If there is fraudulent return (underdeclared over 30%) - assessment is 10
years. (findings of fraud, and omission to file a return)
- All income undeclared from the period to assess can be assessed within 10
years from discovery. Reckoned from discovery.
- Assessment can be suspended (3 or 10): TP is out of the country; TP
cannot be located in given address; TP file for motion for reinvestigation
and granted; Commissioner is prohibited from doing assessment when
there is TRO.
- Letter of authority:
- Notice of Informal Conference (Mandatory) – within 30 days, present self
for conference.
- Preliminary Assessment Notice (PAN) (Mandatory) liabilities are
recomputed. – shall be disputed within 15 days.
- Prospective assessment (not appealable to the CTA since this is
interlocutory) – can be disputed with legal bases.
- Protest denied – Final Assessment Notice/ Formal Assessment Notice
with final demand letter, within 30 days.
- FAN Valid without PAN ; 1) when the issue involves special taxing.
(break)
- CBAA – Real property tax.
- No more CA, but CTA.
-
2. Remedies of Taxpayers.
- Collection of taxes:
- When the assessment has become final (no appeal). 3 years from due date (if
without assessment)
- If there is assessment, finding of discrepancies, with notice, chance to dispute
etc. An uncontested assessment ripens to a collection case. (CTA Has no
jurisdiction over an uncontested assessment)
- Within five years from assessment, not disputed.
- With dispute,
- Collection without assessment – 3 years from due date.
- With assessment, no dispute – ripens to a collection case, five years from
assessment.
- With assessment, dispute, five years from the finality of the assessment
(failure to appeal with the CTA on a timely manner).
- Collection can be suspended if the TP is out of the country, if there is
injunction.

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 - Regional director is an alter ego of Commissioner; hence, decision may be
appealed directly with the CTA.

Invalid payments in taxation.

1. Overpayment.
2. Illegal payment where collection has no legal basis.
3. Erroneous payment. Payment made to the wrong person, place, wrong return, etc.
4. Penalties imposed without authority.

REMEDIES: (alternative) within 2 years.

- Tax refund
- Tax credit

Reckoning point.
1. Individual TP – from the payment if the tax was paid early, or from due date if the
tax was paid late.
2. Corporate TP involving Income Tax – from the day final adjustment return was
submitted.
3. Corporate TP involving Withholding Taxes – from the last withholding tax payment
of the year.
4. Juridical Persons operating in Economic zones – 6 years from the payment.

Doctrine of twin prescriptive period. Claim is withing 2 years, in case of appeal, it shall be
made within the said two-year period. (applies to local, real property taxes and tariff. NOT
APPLIED ON V.A.T.

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