Remedies in Taxation

Content:
Assessment of internal revenue taxes
Taxpayer’s remedies
Government remedies for collection of delinquent taxes

Assessment of internal revenue taxes

An assessment is the notice to the effect that the amount therein stated is due from a taxpayer, as
a tax with a demand for payment of the same within a stated period of time.
[CIR v. CTA, G.R. No. L-21483 (1969)]

Presumption of correctness
An assessment is presumed correct and made in good faith in the performance of official duties
and failure to present proof of error will prosper such assessment.

I-Taxpayer Remedies

1.Administrative Remedies (BIR)

A remedy before payment.

2.Tax refund or recovery of erroneously or illegally collected taxes (within 2 years after
payment of tax penalty)

Tax refund vs Tax credit

Tax refund- reimbursement of tax

Tax credit- Government issues a tax certificate or a tax credit memo covering the amount
determined to be reimbursed, which can be applied after verification.

2 requirements to establish Tax refund or Tax Credit

1. That there is actual collection of tax by the Government
2. There is a legal basis for the granting of such refund or credit

Judicial Remedies (Court)

Civil Action
Criminal Action
Filing a criminal complaint against erring BIR officials and employee

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II-Government Remedies

The remedies may be pursued singly, independently and simultaneously.

Administrative Remedies
a. Enforcement of tax lien

When the taxpayer neglects or refuses to pay his internal revenue tax liability after demand, the
amount so demanded shall be a lien in favor of the Government, from the time of assessment
until paid with interest, penalties, and costs that may accrue in addition thereto upon all property
and rights of the taxpayer.

B. Compromise
When can there be a compromise?
a. Reasonable doubt as to the validity of the claim against the taxpayer;
b. Financial position of the taxpayer demonstrates clear inability to pay the assessed tax.
(subject to a minimum compromise rate of 10% of the basic tax assessed)

c.Distraint or levy
It is a summary, extrajudicial way of enforcing tax remedy.
Distraint (goods)
Levy (properties)

Concept of Constructive distraint:

Constructive distraint is resorted to when:

1. The taxpayer is retiring from any business subject to tax;

2. Intends to leave the Philippines;
3. Removes his property therefrom; and
4. Performs any act tending to obstruct the proceeding of tax collection.

D. Civil action
Collectibity arises when:
1. When the tax is assessed and it becomes final and unappealable because the taxpayer fails
to file an administrative protest with the BIR within 30 days from the receipt of the
assessment; and
2. When the administrative protest filed by the taxpayer is denied or not acted upon within
180 days from the submission of the document.

E. Criminal action (sec 205 (b))

F. Forfeiture
G. Suspension of business operation
H. Enforcement of administrative fines

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Judicial Remedies
a. Ordinary civil action
b. Criminal action

Prescription of the Government’s right to assess taxes:

Within 3 years after the last day prescribed by law for the filing of the return; or from the day of
the return, whichever is earlier.

Prescription of period of the Government to collect taxes:

GR: 5 years from the date of assessment
ETR: in case of false or fraudulent return (10 years)

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