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CHAPTER 2 : TAX ADMINISTRATION
Tax administration is a system of collecting taxes
in accordance with the country's tax policies. It
involves enforcement of taxes through the
following aspects of taxation (a) Assessment, and
(b) Collection
It also includes the execution of judgment and
capacity to act in all tax cases decided by the
court in favor of the Bureau of Internal Revenue
(BIR).
Tax Administrative Agencies
The Department of Finance (DOF) is principally
responsible for the fiscal policies and general
management of the Philippine Government's
financial resources. It has executive supervision
and control over other agencies, such as:
1. Bureau of Internal Revenue (BIR) is the
government agency primarily in charge to assess
and collect all taxes and charges imposed by the
NIRC, other tax laws and regulations. (Sec. 2,
NIRC)
(Every time the government prepares the
national budget, attention is focused on the BIR
because it is responsible for raising the bulk of
the country's total government revenues.)
2. Bureau of Customs (BC) and the Tariff
Commission (TC) - the main agencies tasked to
enforce the Tariff and Customs Code (TCC). The
BC also collects the taxes on imports embodied in
the NIRC.
3. Land Transportation Office (LTO) the office
responsible to collect registration fees and motor
vehicle tax.
4. Duly and lawfully authorized collectors - these
are persons, agencies or duly accredited banks
authorized by the BIR, BC, TC and LTC to collect
taxes.
5. Local offices in charge to enforce local
taxation, such as:
a) Provincial, City, Municipal and Barangay
Treasurers;
b) Provincial and City Assessors;
c) Provincial and City Board of Assessment
Appeals; and
d) Central Board of Assessment Appeals.
Other Tax Enforcers
Other governmental offices, private entities and
individuals that may have incidental functions
regarding tax enforcement are as follows:
1. The Secretary of Justice, as the Chief Legal
Officer of the government, has the authority to
ascertain the validity of tax laws subject to
review by the Courts of Justice.
2. Various offices that indirectly provide
assistance in the collection of taxes are the
following:
i. The Courts;
ii. Register of Deeds;
iii. Secretary of Public Works and Highways
Offices;
iv. Philippine Economic Zone Authority
v. Board of Investments;
vi. City Fiscals; and
vii. Notaries Public.
4. The head of the appropriate government office
and his subordinates, with respect to the
collection of energy tax;
5. Banks duly accredited by the BIR
Commissioner with respect to receipt of
payments of internal revenue taxes. (Sec. 12,
NIRC)
THE BUREAU OF INTERNAL REVENUE
The BIR is principally tasked with the
enforcement of the National Internal Revenue
Code (NIRC). Sections 2, 10, 9, 13 and 14 of the
NIRC list the following BIR officers:
1. The Commissioner of the Internal Revenue;
2. Deputy Commissioners of Internal Revenue;
3. Revenue Regional Director;
4. Revenue District Officer;

5. Revenue Examiners and Officers;
6. Division Chiefs of the BIR; and
7. BIR Collection Agents.
EO 430 dated July 28, 1987, entitled "Further
Streamlining the BIR in line with its Computerized
Integrated Tax System," designed each of the
Deputy Commissioners to head the following
functional groups:
(1) Operations Group;
(2) Legal and Enforcement;
(3) Information Systems Group; and
(4) Resource Management Group (Sec. 3, NIRC).
In 2003, however, the President appointed two
(2) more Deputy Commissioners to head the
following:
(5) Tax Reform Administration Group; and
(6) Special Concerns Group.
There are now 6 Deputy BIR, Commissioners, 4
under Section 3, Title I of NIRC and 2 under E.O.
430 of former President Gloria Macapagal Arroyo.
Powers and Duties of the Bureau of Internal
Revenue
In the discharge of its functions, the BIR has the
following powers and duties as provided by
Section 2 of the National Internal Revenue Code:
1. To assess and collect all national internal
revenue taxes, fees and charges;
2. To enforce all forfeitures, penalties and fines
connected with the above;
3. to execute judgments in all cases decided in its
favor by the Court of Tax Appeals and the
ordinary courts; and
4. To administer, supervise and effect police
powers authorized by the National Internal
Revenue Code (NIRC) and other laws, such as:
a. Assigning Internal Revenue Officers to
establishments where articles subject to
excise tax are produced;
b. Providing and distributing forms, receipts,
certification, stamps and other BIR
documents to concerned officials;
c. Issuing receipts for tax collected; an
d. Submitting annual report and pertinent
information to the Congress.
Powers of the BIR Commissioner
The Commissioner of Internal Revenue (CIR) is the
Chief Official of the BIR who has the following
powers or authority as provided in the Tax Code:
1. Interpret tax laws (Sec. 4, NIRC),
2. Decide disputed tax assessments (Sec. 4,
NIRC);
3. Summon, and obtain information or
testimony of persons (Sec 5, NIRC);
4. Make assessments and prescribe additional
tax requirements (Sec. 6, NIRC);
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5. Compromise, abate and refund or credit
taxes (Sec. 204, NIRC),
6. Suspend the business operations of a
taxpayer (Sec. 115, NERCH and
7. Delegate powers. (Sec. 7, NIRC)
1. Power to Interpret Tax Laws
The Commissioner of Internal Revenue (CIR) has
the exclusive and original power to interpret
provisions of the National Internal Revenue Code
(NIRC) and other tax laws subject to review by
the Secretary of Finance. (Sec. 4. NIRC)
In the executive officials of the government, only
the CIR has the power to interpret the provisions
of the Tax Code and other tax laws.
2. Power to Decide Tax Cases
The BIR Commissioner has the power to decide
disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties
imposed arising under the Tax Code or other tax
laws, subject to the exclusive appellate
jurisdiction of the Court of Tax Appeals (CTA).
(Sec. 4, par. 2, NIRC)
Final decisions made by the CTA shall be taken
for review to higher courts within 15 days from
notice of ruling, decision or judgment of the CTA.

3. Power to Obtain Information
This power of the BIR Commissioner is intended
to ascertain the correctness of tax return, and to
determine the taxpayer's liability and compliance.
In the exercise of this power, he is authorized to:
a. Examine taxpayer's records;
b. Obtain taxpayer's financial information;
c. Summon the person liable for tax;
d. Take testimony of the person concerned
under oath; and
e. Conduct regular canvas concerning all
persons liable to pay any internal revenue
tax
The BIR can access the records of the taxpayer's
customers or suppliers to confirm accuracy of the
declared sales or purchases in the tax returns
subject to the presentation of Letter of Authority.
4. Power to Make Assessment
The powers of the BIR Commissioner to make
assessment and prescribe additional
requirements for tax administration and
enforcement are as follows:
1. Examinations of
 Returns and determination of tax due,
 Statements, reports and other
documents not submitted.
The power to assess the proper tax based on the
best evidence obtainable is appropriate only
when the report or information required by law
is withheld or when there is reason to believe
that the report filed or submitted is false,
incomplete or erroneous.
2. Authority to
 Conduct inventory and surveillance, and
prescribe presumptive gross sales and
receipts.
 Terminate taxable period.
 Prescribe real property values.
 Inquire into bank deposit accounts
 Accredit and register tax agents.
 Prescribe additional procedural or
documentary requirements.
5. Authority to Compromise, Abate and Refund
or Credit Taxes
The BIR Commissioner may compromise, abate,
refund or credit the payment of any internal
revenue tax when:
1. A reasonable doubt as to the validity of the
claim against the taxpayer exists; or
2. The tax or any portion thereof appears to be
unjustly or excessively assessed; or
3. The financial position of the taxpayer
demonstrates a clear inability to pay the assessed
tax.
4. The administration and collection costs
involved do not justify the collection of the
amount due
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The BIR Commissioner may:
1. Credit or refund taxes erroneously or illegally
received or penalties imposed without authority;
2. Refund the value of internal revenue stamps
when they are returned in good condition by the
purchaser; and
3. Redeem or change unused stamps that have
been rendered unfit for use and refund their
value upon proof of destruction.
6. Power to Suspend Business Operations
The CIR or his authorized representative is
empowered to suspend the business operations
and temporarily close the business establishment
of any person for any of the following violations:
1. In the case of a VAT-registered person,
a. Failure to issue receipts or invoices;
b. Failure to file a VAT return as required under
Section 114 of NIRC; or
c. Understatement of taxable sale or receipts by
thirty percent or more of his correct taxable sales
or receipts for the taxable quarter.
2. Failure by any person to register as required
under Section 236 of NIRC.
The temporary closure of the establishment shall
be for the duration of not less than five (5) days
and shall be lifted only upon compliance with
whatever requirements prescribed by the
Commissioner in the closure order. (Sec. 115,
NIRC)

7. Authority to Delegate Power
The BIR Commissioner may delegate the powers
vested upon him under the pertinent provisions
of the Tax Code to any subordinate official with a
rank equivalent to a division chief or higher,
subject to such limitations and restrictions as
may be imposed under the rules and regulations
to be promulgated by the Secretary of Finance,
upon the recommendation of the Commissioner.
(Sec. 7, NIRC)
The following powers of the Commissioner shall
NOT be delegated:
1. The power to recommend the promulgation of
rules and regulations by the Secretary of Finance;
2. The power to issue first interpretation
regarding rulings, or to reverse, revoke or modify
any existing ruling of the Bureau;
3. The power to assign or re-assign internal
revenue officers to establishments where articles
subject to excise tax are produced or kept; and
4. The power to compromise or abate.
ADMINISTRATIVE PROVISIONS
For purposes of effectively and efficiently
performing tax collection, the Tax Code provides
the following requirements for compliance by the
taxpayer employed or engaged in business, as
the case may be:
1. Registration;
2. Printing of receipts or sales or commercial
invoices;
3. Issuance of receipts or sales or commercial
invoices;
4. Exhibition of certificate of payment at place of
business;
5. Requirements for continuance of business of
deceased person; and
6. Transfer of business to another location.
Registration Requirements
A person subject to any internal revenue tax shall
register once with the appropriate revenue office.
Any person required to file a tax return,
statement or document shall be registered and
assigned a Tax Identification Number (TIN).
Only one TIN shall be assigned to a taxpayer. Any
person who shall secure more than one TIN shall
be criminally liable.
Exceptions:
1. When a Foreign Currency Deposit Unit (FCDU),
which is merely a division of a local or foreign
bank in the Philippines, is assigned another TIN
by the BIR, for purposes of filing its tax returns
and paying final tax on its foreign currency
transactions. The peso and other transactions of
the regular banking unit of the bank shall be
declared in its regular corporate income tax
return (BIR Form 1702), using its other TIN.
2. In cases where a registered taxpayer dies, the
administrator or executor shall register the estate
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of the decedent and a new TIN shall be supplied
to the "Estate of the Deceased Person."
Registration Period.
Every person subject to any internal revenue tax
shall register once with the appropriate Revenue
District Officer (RDO)
1. Within ten (10) days from date of employment;
2. On or before the commencement of business;
3. Before payment of any tax due; or
4. Upon filing of a return, statement or
declaration as required in the Tax Code.
BIR Forms. The BIR Forms that are needed for
registration are the following:
1. BIR Form 1901- For registration of self-
employed, mixed income individuals, estates and
trusts.
2. BIR Form 1902 - For individuals earning purely
compensation income.
3. BIR Form 1903 - For registration of
corporations and partnerships.
4. BIR Form 1904 - For registration of one-time
taxpayer and persons registering under E. O. No.
98 (securing TIN to be able to transact with any
government agencies).

5. BIR Form 1905 - For updating/cancellation of
registration, cancellation of TIN, new copy of
certificate of registration.
Contents of Registration Form. The registration
shall contain the following:
1. Taxpayer's name and style of business;
2. Place of residence and business; and
3. Other information as required by the
Commissioner in the form.
Any person maintaining a head office, branch or
facility shall register with the RDO having
jurisdiction over the head office, branch or
facility.
Filing, Payment and Updates.
Every person who is required to register with the
BIR shall file a return and pay such taxes for each
type of internal revenue tax for which he is
obligated.
Any person registered in accordance with Sec.
236 of NIRC shall, whenever applicable, update
his registration information with the Revenue
District Office where he is registered, specifying
therein any change in tax type and other
taxpayer details (Sec. 236 [E), NIRC). This
taxpayer is required to file BIR Form 1905.
Adoption of Electronic Filing and Payment
System (EFPS).
The BIR primarily developed EFPS to provide
taxpayers a more convenient service in
processing and immediate confirmation of filing
tax returns and payment of taxes due.
This system is paperless allowing the taxpayer to
directly encode, submit his tax returns and pay
taxes due online over the internet through BIR
website.
EFPS also would minimize the government's
administrative and operational costs in
interacting with taxpayers and in collecting taxes.
(Rev. Memo. Order No. 5-2002)
Transfer of Ownership.
When any individual who has paid the annual
registration fee dies, and the same business is
continued by other person or persons interested
in his estate, the following rules shall be
observed:
1. No additional payment shall be required for
the remaining period within which the tax was
paid;
2. The person who will continue the business
should submit inventories of goods or stocks to
the BIR within 30 days from the death of the
decedent.
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3. The same requirements (1 and 2) shall be
applied in case of transfer of ownership or
change of name of the business establishment.
Transfer of Business Place.
In case a registered person decides to transfer his
place of business or his head office or branches,
it shall be his duty to update his registration
status by filing an application for registration
information update.
The transfer of registration requires no additional
registration fee to be paid by the taxpayer.
Before a taxpayer transfers his place of business
to another revenue district office, he must secure
the necessary tax clearance from the RDO where
the head office or branch is presently registered.
Cancellation of Registration.
The registration of any person who ceases to be
liable to a tax type shall be canceled upon filing
with the RDO where he is registered and where
he applies for registration information update in
a prescribed form.

Printing of Receipts, Sales or Commercial
Invoice
“sales” or “commercial invoice” is a document
issued by the seller of goods to the buyer.
“receipt” is a document issued for sales of
services.
Before receipts, sales, or commercial invoices can
be printed, there are certain requirements that
need to be fulfilled. These requirements are as
follows:
1. BIR's Authority to Print
All persons who are engaged in business shall
secure from the BIR an Authority to Print receipts
or sales or commercial invoices before a printer
can print the same.
BIR Form 1906 is to be accomplished by all
taxpayers every time printing of receipts and
invoices is needed. Such form is to be
accomplished with the RDO having jurisdiction
over the head office or branch.
Other requirements
The printed receipts or sales invoices should:
a) Be serially numbered
b) Contain the name, business style, TIN and
business address of the person or entity to
use such receipts or invoices;
c) Contain information that may be required
by rules and regulations to be promulgated
by the Secretary of Finance, upon
recommendation of the Commissioner.
Issuance of Receipts, Sales or Commercial
Invoice
The following rules are followed in the issuance
of receipts or invoices:
1. The time for issuance of receipts or invoices
should be the time when transaction is
effected.
2. All persons subject to any internal revenue
tax are required to issue receipts or sales
invoices when the value of merchandise sold
or service rendered is twenty-five pesos
(P25.00) or more.
3. Receipt/ invoice is not required
4. Regardless of amount, a receipt must be
issued
5. The receipt should indicate the name,
business (if any), address of the purchaser,
customer or client
6. The original receipt shall be issued to the
purchaser, and the issuer shall keep the
duplicate in his place of business for three
years.
7. The purchaser or the issuer should keep his
copy of receipts for a period of three years
in his place of business from the chose of the
taxable year in which such invoice or receipt
was made
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Tax Returns
Tax Returns refers to a formal report prepared by
the taxpayer or his agent in a prescribed form
showing an enumeration of taxable amounts and
description of taxable transactions, allowable
deductions, amount of tax and tax payable to the
government.
Examples:
BIR Form Nos. 1700 and 1701 - Annual Income
Tax Returns for Individual.
BIR Form No. 1702 - Annual Income Tax Return
for Corporations and Partnerships.
BIR Form No. 1800 - Donor's Tax Return.
BIR Form No. 1801 - Estate Tax Return.
Certificate of Payment
Certificate of payment means a written
certificate executed by the Authority indicating
the amount that the Trade Contractor is entitled
to be paid in connection with each Trade
Contractor Application for Payment.
TAX REMEDIES
Tax remedies are procedures or actions available
both to the government to collect taxes and to
the taxpayer to avoid abuses in the payment of
taxes.

Due to the "lifeblood doctrine," the government
applies various tax remedies to collect taxes in
defraying its expenses.
The tax remedies afforded by law to the taxpayer
are supported by the "due process of law" of the
Constitution.
Assessment
By nature, internal revenue taxes are self-
assessing. When the taxpayer earns income, he
has the responsibility to compute, file and pay his
tax to the BIR. Hence, the taxpayer creates his
tax liability even without the government's
assessment.
The tax assessment as used in the Tax Code
involves the following:
1. Determining of the correctness of tax due in
accordance with the prevailing tax laws;
2. Giving a written notice of the finding to the
taxpayer;
3. Issuing a demand for the payment of tax
liability or tay deficiency within a specified period.
a tax assessment is a formal letter made by the
BiR demanding the taxpayer to settle his tax
liability within the indicated period. It is based on
actual facts and not on hearsay evidence and it
must be directed to the right party subject to tax
investigation.
It is the beginning and the necessary step to the
issuance of a warrant of distraint or levy, and to
establish a case for judicial action.
Presumption of Correctness
Basically, 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.
Who Makes Assessment
After the return has been filed, the BIR
Commissioner or his duly authorized
representative may authorize the examination of
any taxpayer and the assessment of the correct
amount of tax.
Failure on the part of the taxpayer to file a return
shall not prevent the Commissioner from
authorizing the examination of any taxpayer.
Assessment Period
Assessment period refers to the span of time
allowed by law to the BIR to investigate a
taxpayer's tax discrepancy to enforce collection
of taxes.
When to Effect Tax Assessment
Government tax assessment could be made:
1. Before a tax return is filed.
2. After a fraudulent tax return is uncovered.
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Kinds of Tax Assessment
1. Self-Assessment - this tax assessment is
made by the taxpayer himself reflecting the
amount of tax due in the ITR which he has
to pay at the time of filing his tax return.
2. Prospective Assessment - also called a
preliminary assessment notice (PAN) which
informs the taxpayer about the findings by
the tax examiner regarding the taxpayer's
tax deficiency. The taxpayer is usually given
15 days from notice to explain his side.
3. Disputed Assessment - a tax assessment
that is being questioned by the taxpayer as
to its validity or legality and asks the same
to be cancelled. The taxpayer or its
authorized representative or tax agent may
protest administratively against the
aforesaid Formal letter of Demand (FLD)
and Final Assessment Notice (FAN) within
thirty (30) days from the date of receipt
thereof. This may be done through (a)
request for reconsideration or (b) request
for reinvestigation.
4. Final Assessment - an official assessment
which was not disputed or properly
appealed by the taxpayer within the
prescribed period and has become final and
executory.
The taxpayer is barred from disputing
the correctness of the issued

assessment by introduction of newly discovered
or additional evidence.
5. Deficiency Assessment - an assessment
made by a tax assessor showing the correct
amount of tax after tax audit.
6. Jeopardy Assessment - an assessment
without the benefit of complete or partial
tax audit intended to prevent the delay of
the assessment and collection of taxes
cause by the taxpayer's failure to comply
with tax investigation requirements and
substantiate his records with proper
documents.
7. Illegal or Void Assessment - an assessment
made by a BIR officer without authority or an
assessment made in violation of law.
Ways to Contest the Validity of an Assessment
The taxpayer may dispute or protest the validity
of an assessment which may involve the question
of fact or law or both by the following written
motions or requests:
1. Motion for Reconsideration.
The taxpayer requests the BIR to review the
existing records without the need of additional
evidence.
2. Motion for Reinvestigation.
The taxpayer requests the BIR to have a second
look based on the newly discovered or additional
evidence which must be submitted within sixty
(60) days from the date of filing of the protest.
3. Motion for Withdrawal.
The taxpayer requests the BIR or Court to remove
a tax plea bargain he entered because he was
pressured to accept the agreement which he
believes not in his best interest.
4. Motion for Cancellation.
The taxpayer request the BIR or Court to stop the
tax assessment due to prescription and violation
of due process of law.
COLLECTION OF TAXES
By nature, the government's power to impose
taxes carries with it the power to enforce
contribution. As the lifeblood of the government,
taxes are not optional and the taxpayer thereof
must make payment promptly.
Collection Remedies Available to Government
 tax payments are not voluntarily observed
within the prescribed period by reason of
delinquency
 the law provides the government various
remedies to enforce effective collection of
internal revenue taxes, fees, and charges
and increments thereto where the taxpayer
is delinquent.
 The government can use administrative
remedies and judicial remedies in the
collection of taxes.
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Collection remedies are methods used by the
government to recover unpaid debts or taxes
from individuals or businesses.
Administrative remedies in the collection of
taxes are available at the administrative level.
The administrative remedies for the collection of
the delinquent taxes are;
a. Distraint of personal property;
b. Levy of real property; and
c. Other administrative collection remedies.
Judicial remedies are means of enforcing tax
collection through court litigations which may be
1. Civil action; and
2. Criminal action.
Distraint of Personal Property
Distraint of Personal Property is the seizure by
the government of personal property (tangible or
intangible) to enforce the payment of taxes,
followed by its public sale if taxes accruing
thereto are not voluntarily paid.
This remedy shall not be availed of if the amount
of tax involved is not more than P100.
Kinds of Distraint
1. Constructive distraint - the government
prohibits the taxpayer from disposing his
personal property to enforce collection of taxes.

2. Actual distraint - the government takes
possession of the taxpayer's personal property
and sells the same through public auction to
settle the latter's unpaid tax liabilities.
Release of Distrained Property upon Payment
Prior to Sale.
If, at any time prior to the consummation of the
sale, all proper charges are paid to the officer
conducting the sale, the goods or effects
distrained shall be restored to the owner.
Purchase by Government at Sale Upon Distraint.
When the amount bid for the property under
distraint is not equal to the amount of the tax or
when the amount of bid is substantially lower
than the actual market value of the articles
offered for sale, the BIR Commissioner or his
deputy may purchase the same in • behalf of the
National Government for the amount of taxes,
penalties, and costs due thereon.
Further Distraint.
The remedy of distraint of personal property may
be repeated if necessary until the full amount
due and all expenses are collected.
Levy of Real Property
Levy of Real Property is the seizure by the
government of immovable property in order to
enforce the payment of taxes. As in distraint, the
property may be sold at a public sale if, after
seizure, the taxes are not voluntarily paid
This remedy shall not be availed of if the amount
of tax involved is not more than P100.
Levy shall be effected in writing upon the
certificate detailing a description of the property
upon which levy is made. A failure of notice is a
fatal defect.
The levy, as a remedy on realty, may be repeated
if necessary until the full amount due, including
all expenses, is collected
Redemption of Property Sold.
Within one year from the date of sale, the
delinquent taxpayer, or anyone for him, shall
have the right of paying to the RDO the amount
of the public taxes, penalties thereon from the
date of delinquency to the date of sale, together
with interest on said purchase price at the rate of
15% per annum from the date of purchase to the
date of redemption.
OTHER COLLECTION REMEDIES
Other remedies to enforce collection of taxes are
as follows:
1. Imposition of injunction;
An injunction is a restraining order issued by the
court having jurisdiction over the filed suit
intended to forbid the continuance of the action
of law for purposes of due process
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2. Enforcement of tax lien;
A tax lien is a legal claim granted to the
government to secure the proper payment of the
tax, surcharges, interest and costs on all property
subject to levy or distraint.
3. Enforcement of forfeiture;
Forfeiture of Confiscated Article implies taking of
property without compensation as a result of an
offense committed.
4. Entering into compromise of tax case;
Compromise is a contract whereby the parties, by
reciprocal concessions, avoid litigation or put an
end to one already commenced.
The following shall be considered in a tax
compromise agreement:
1. The taxpayer must have a tax liability;
2. There must be an offer by the taxpayer or
Commissioner of an amount to be paid by the
taxpayer; and
3. There must be acceptance by the
Commissioner or taxpayer, as the case may be, of
the offer in settlement of the original claim.
5. Requiring the filing of bonds;
Posting of Bonds
Posting of bonds is mostly applicable to customs
duties and excise taxes.
Exporter's Bond. Exporters of good that would
be subject to excise tax, if sold or removed for
consumption in the Philippines, shall submit
proof of exportation satisfactory to the
Commissioner.

Manufacturers' and Importers' Bond.
Manufacturers and importers of articles (alcohol
and tobacco products) subject to excise tax shall
post a bond subject to the following conditions:
1. Initial bond
2. Bond for succeeding years of operation
6. Requiring proof of filing of income tax returns;
business or occupation or practice a profession
can be issued to a taxpayer required by law to
file an income tax return,
7. Giving of rewards to informers;
leads to the discovery of frauds thereby resulting
in revenue recoveries,
8. Making arrest, search and seizure;
internal revenue officer has the authority to
make arrests and seizures for the violation of
internal revenue code
9. Deportation of aliens;
Any alien is subject to deportation if he
knowingly and fraudulently evades the payment
of any Internal Revenue Tax,
10. Inspection of books of accounts;
As authorized by the CIR, the Internal Revenue
Officers (IRO) are authorized to examine and
inspect books of accounts and other accounting
records of taxpayers.
A Letter of Authority is a request to the taxpayer
to permit the bearer thereof to conduct the
necessary examination of said books and records,
and signed either by the BIR Commissioner his
deputy, officials of the investigating division,
Regional Director, Assistant Director, or the
Revenue District Officer.
11. Use of national tax register; and
The National tax register is a record of the
names of persons residing in each city or
municipality kept and maintained by every
revenue regional director of every regional
district.
It is available for use by any internal revenue or
other tax-collecting officer as aid in the collection
of taxes.
12. Imposition of civil and criminal action.
A civil action is one that is brought to enforce,
redress or protect private rights. In general, all
types legal action other than criminal
proceedings are civil actions.
For tax purposes, this refers to civil actions
instituted by the government to collect national
internal revenue taxes in the ordinary courts.
A criminal action is a penal prosecution. It is an
action, suit or cause instituted to punish an
infraction of the criminal laws.
Due dates refer to the last day for filing return
and payment of tax.
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Additions to Tax
The government may impose surcharges and
interest in addition to basic taxes to ensure tax
collection once a taxpayer neglects to pay his
taxes.
A surcharge is a civil penalty imposed by law in
addition to the main tax required to be paid due
to the delinquency or misinterpretation of taxes
The term “delinquency” means failure on the
part of the taxpayer to pay the tax due on the
date fixed by law or indicated in the assessment
notice or letter of demand.
Surcharges
The payment of surcharge is mandatory and the
BIR is not vested with any authority to waive the
collection thereof.
Tax surcharges are classified as simple neglect
and willful neglect.
A. Simple Neglect - 25% surcharges
A simple neglect surcharges of 25% in addition to
tax assessed to be paid shall be imposed when
the taxpayer:
1. Fails to file any return and pay the tax due on
the date prescribed
2. Files income tax returns with an internal
revenue officer other than with whom the return
is required to be filed;

3. Fails to pay deficiency tax within the time
prescribed for its payment in the notice of
assessment, or
4. Fails to pay the full or part of the amount of
tax shown on any return required to be filed, or
the full amount of tax due for which no return is
required to be filed, on or before the prescribed
date for its payment
B. Willful Neglect - 50% of the tax or the
deficiency tax.
A willful neglect surcharges of fifty percent in
addition to tax assessed to be paid shall be
imposed when the taxpayer:
1. Presents false or fraudulent return to the BIR,
2. Willfully (intentionally) neglects to file the
return with the period described by the Tax Code
or by the rules and regulations.
Interests on Deficiency Tax vs. Delinquency Tax
DEFICIENCY- is the amount still due and
collectible from the taxpayer upon audit or
investigation; while delinquency is the
nonpayment of tax on time after issuance FLD
and FAN
Administrative Remedies
The administrative remedies usually availed by
the taxpayer are the following:
1. Tax Avoidance - Before the payment of tax,
the taxpayer can reduce or totally escape the
payment of tax through legally permissible
means such as applying for tax exemption in the
sale of his principal residence classified as capital
asset or choosing the lesser tax rate applicable to
the taxable transaction.
Tax avoidance is valid if used by the taxpayer in
good faith. The law does not forbid it and it does
not constitute tax fraud.
2. Amendment of Tax Returns - As a rule, a tax
return once filed cannot anymore be withdrawn
but it can still be modified for as long as (a) the
amendment is made within three (3) years from
the date of the filing of such return; and (b) no
notice for audit or investigation of such return
has been served to the taxpayer
Tentative Annual Income Tax Returns
It shall be the policy of the BIR to consider a
“tentative ITR” as a final return, unless a final
amended return is filed by the concerned
taxpayer.
3. Demand for the letter of authority (LA) - it
authorizes or empowers a particular Revenue
Enforcement Officer (REO) to go over,
4. Protesting an Assessment - the taxpayer can
contest the assessment within 30 days from the
receipt of the notice of assessment.
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5. Applying for No Audit Program (NAP) - for a
taxpayer to qualify for the NAP
6. Entering into a Compromise - the taxpayer
may offer an amount which is lesser than the
amount of tax liability assesed to him.
JUDICIAL REMEDIES
1. Civil Action
a. Appeal to the Court of Tax Appeals (CTA) - If
the is denied in whole or in part, or is not acted
upon within 180 days from submission of
documents
b. Secure Injunction Order from CTA - The
taxpayer may secure injunction against
administrative collection by distrain or levy of
when collection of taxes would jeopardize his
interest subject to the posting of bond
C. Appeal from CTA to the Supreme Court (SC) -
This should be filed within 15 days from the
receipt of the decision of the CTA
2. Criminal Action
The taxpayer could file a complaint against erring
BIR officials and employees who commit any of
the delinquencies specified in the Tax Code, like
extorting, conspiring to violate the provisions of
the Code, etc
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3. Other Judicial Remedies

a. Action for Damages against Revenue Officers

- An action may be brought against any Internal
Revenue Officer to recover damages by reason of
any act done in the performance of official duty.

b. Action to Contest Forfeiture of Chattel - The

owner desiring to contest the validity of the
forfeiture