NIRC REMEDIES

GOVERNMENT




ADMIN

TAX LIEN
DISTRAINT
LEVY
COMPROMISE &
ABATEMENT
FORFEITURE
SUSPENSION OF
BUSINESS
OPERATIONS
PENALTIES & FINES

REMEDIES

PROTEST
COMPROMISE &
ABATEMENT
TAX REFUND OR
CREDIT

TAXPAYER

JUDICIAL

ASSESSMENT and COLLECTION
Preliminaries

ASSESSMENT The term assessment may refer to:  The official action of an administrative officer in determining the amount of tax due from a taxpayer  A notice to the effect that the amount therein stated is due from the taxpayer as a tax with a demand for payment of the tax or deficiency stated therein. 1982]) .  Discretionary (MERALCO SECURITIES CORP V. SAVELLANO [ OCTOBER 23.

56[b])  Audit/investigation.ASSESSMENT  Self Assessment (Sec. 56[a])  No intervention from BIR  Deficiency Assessment (Sec.  Under declaration of income or non filing of ITR  Jeopardy Assessment  No Audit/Investigation  Reasonable belief that assessment and collection will be jeopardized by delay’ .

DELINQUENCY V DEFICIENCY  Tax Delinquency v. A deficiency tax has to go through the process of filing the protest against the assessment by the by the taxpayer and denial of such protest by the BIR. . Delinquency . 2008]  b. Deficiency .failure of the taxpayer to pay the tax due on the date fixed by law or indicated in the assessment notice or letter of demand. [Mamalateo.amount still due and collectible from a taxpayer upon audit or investigation. Tax Deficiency  a.

No.gross receipts computation  Third party information or access to records method  Surveillance and assessment method (RAMO.ratio analysis of percentages  Net worth method – theory as to the income increase  Bank deposit method.analysis of bank records  Cash expenditure method. XIII) . 01-2000.excess over expenditures  Unit and value method.ASSESSMENT  METHODS USED FOR INCOME DETERMINATION  Percentage Method.

NET WORTH METHOD .FORMULA.

 Substituted service (leaving notice with someone at taxpayer’s known address).  Service by mail .ASSESSMENT  Modes of Serving Notices:  Personal service (delivery to known address).

ASSESSMENT PROCESS PROTEST .

ASSESSMENT PROCESS LETTER OF AUTHORITY (LA) • Letter request to conduct examination/ verification of books and record • Contains • Name of RO • Tax types and taxable period covered • Audit basis • Notation that taxpayer is requested to verify the validity of such PROTEST • Mandatory Issuances of Electronic Letter of Authority • 16 Aug 2010 .

2010].[CIR v.  The Letter of Authority is the authority given to the revenue officer to perform assessment functions. . SONY PHILIPPINES [NOVEMBER 17. There must be a grant of authority before any revenue officer can conduct an examination or assessment and the revenue officer must not go beyond the authority.

officer concerned shall be subject to admin sanctions .ASSESSMENT PROCESS AUDIT. failure to Complete • Continues without the need to revalidated the LA.

ASSESSMENT PROCES PRELIMINARY ASSESSMENT NOTICE (PAN) Issued to inform taxpayer of the findings of the audit • Service to taxpayer • Assessment conducted was valid under a LA • In writing containing facts and law on which the assessment was made • Issued by the CIR/ RRD and authorized representatives .

ASSESSMENT PROCESS  FLD/FAN  NOA constituting a computation of deficiency taxes and a demand  It must be issued within the prescriptive period of assessment  It must protested by the taxpayer .

void assessment  In writing containing facts and law n which assessment was based  Assessment was validly conducted under a valid LA .ASSESSMENT  REQUISITES of FLD/FAN  Issued after a valid PAN (except when PAN is not required)  Issued by the CIR / duly authorized representative  Service to taxpayer  Within the prescribed period for making assessments ▪ Failure to comply.

the 3 year period is reckoned from date of actual filing ▪ If the return is filed before the last day.ASSESSMENT  PRESCRIPTIVE PERIOD TO ASSESS  General Rule: The government’s right to assess prescribes in 3 years from the date of the last day of filing.  However: ▪ If the return is filed after such date. then considered as filed on last day. .

ASSESSMENT
 Exceptions: Section 222, Tax Code

provides for the following

instances –

 False return
 Fraudulent return
 Failure to file a return
 In such cases, the tax may be assessed or a proceeding in court

for collection may be filed without assessment at any time within
10 years from discovery of the falsity, fraud, or omission

COLLECTION
 The actual effort exerted by the government to effect

the extraction of what is due from the tax payer
 There must be an assessment first before
collection will commence. (Sec. 203)
 EXCEPTIONS:

▪ False of fraudulent return with intent to
evade tax
▪ Failure to file a return (Sec 222[1])

COLLECTION
 No court shall have the authority to grant n

injunction to restrain the collection of any national
internal revenue tax, fee or charge imposed (Sec 218)

EXCEPT when in the opinion of the CTA
 Collection of the tax would jeopardize the government

and/or the taxpayer
 Requirement to the taxpayer to deposit ath amount
claimed or to file surety bond for not more than double
the amoount with the court (RA 9282, Sec 9)

REMEDIES OF THE GOVERNMENT .

OUTLINE  REMEDIES OF THE GOVERNMENT  TAX LIEN  DISTRAINT  LEVY  FORFEITURE  SUSPENSION OF BUSINESS OPERATIONS  PENALTIES & FINES  ABATEMENT & COMPROMISE .

105])  NATURE.TAX LIEN  DEFINITION  It is a legal claim or charge on property. real or personal. established by law as security in default of the payment of tax (HSBC v.Superiority CLAIMANT Government PREDICATION on a tax lien versus Private Individual on a judgment . Rafferty [39 Phil.

TAX LIEN  PERSONAL PROPERTIES  Demandability  REAL PROPERTIES  Registration  With Register of Deeds .

. tangible. if the taxes are not voluntary paid.DISTRAINT The seizure by the government of personal property. to be followed by its public sale. or intangible. to enforce the payment of taxes.

DISTRAINT  ACTUAL  Resorted to when at the time required for payment. a taxpayer fails to pay his delinquent tax obligation  CONSTRUCTIVE  Preventive remedy resorted by the government to forestall possible dissipation of the taxpayer’s assets when delinquency takes place .

DISTRAINT OF INTANGILE PROPETIES  STOCKS AND OTHER SECURITIES  Warrant of distraint. taxpayer and back officer . service. taxpayer corporate officer of the company issuing the said stocks/securities  DEBTS AND CREDITS  Warrant of distraint. debtor/taxpayer/ possessor of credit or his agent  BANK ACCOUNTS  Warrant of garnishment. service. service.

.GARNISHMENT The taking of personal properties usually cash or sums of money owned by the delinquent taxpayer which is in the possession of a third party.

Taxpayer is intending to perform any act tending to obstruct the proceedings for collecting the tax due or which may be due from him . Delinquent taxpayer 2.CONSTRUCTIVE DISTRAINT  WHEN TO ISSUE CD 1. Taxpayer is retiring from any business subject to tax 3. Taxpayer is intending to hide or conceal his property 6. Taxpayer is intending to remove his property therefrom 5. Taxpayer is intending to leave the Philippines 4.

CD. PROCEDURE .

.LEVY  A levy refers to the seizure of real properties and interest in or rights to such properties for the satisfaction of taxes due from the delinquent taxpayer.

description of the property written notice.DISTRAINT LEVY AS TO PROPERTIES COVERED Personal Real HOW EFFECTED • Seizure. authenticated certificate. chattels or effects • • • • • • Writing. Mailing or Service thereof. Upon ROD and taxpayer . • goods.

3 weeks in a newspaper of general circulation ACQUISITION BY THE GOVERNMENT • Purchase • Forfeiture • CIR in behalf of Natl Govt • IRO conducting the sale RIGHT OF REDEMPTION NONE YES .DISTRAINT LEVY NOTICE OF SALE • Notice. • Exhibition -2 public places • Office of the Mayor • 20 days after levy • Advertisement for sale -30 days • Publication • • • Entrance of Mun/City Bldg Conspicuous places Once every week.

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SUSPENSION OF BUSINESS OPS  The CIR or his authorized representative may suspend the business operation and temporarily close the business of a VAT-registered person for understatement of taxable sales or receipts by 30% or more of his correct taxable sales or receipts for the taxable quarter. .

FORFEITURE ( confiscated articles)  The divestiture if property without compensation. in consequence of a default or offense SEIZURE FORFEITURE Tax lien In default/ offense Excess of proceeds of sale goes to the taxpayer All proceeds go to government coffers .

CIR-Discretion (Sec 268[B].auction (Sec 268[B]. violation of NIRC. Tax Code) .TAX CODE)  SOLD/DESTROYED  All other articles subject to excise tax.FORFEITURE OF GOODS (Sec 225. liquors. Tax Code)  DESTROYED  Distilled spirits. Tax Code)  SOLD  Forfeited chattels and removable fixtures. cigars and other manufactured products of tobacco and all apparatus used in or about the illicit production of such articles –if sale/consumption of the same is injurious to public health of prejudicial to the enforcement of the law( Sec 262.

REMEDIES OF THE TAXPAYER .

OUTLINE  REMEDIES OF THE TAXPAYER  PROTEST  COMPROMISE AND ABATEMENT  REFUND or CREDIT .

PROTEST PROTEST .

It may also involve a question of fact or law or both (see RR No.PROTEST  Request for Reconsideration –  refers to a plea for reevaluation of an assessment on the basis of existing records without need of additional evidence. 12-85) . It may involve both a question of fact or of law or both  Request for Reinvestigation –  refers to a plea for reevaluation of an assessment on the basis of newly discovered evidence or additional evidence that a intends to present in the investigation.

The taxpayer must not only show the errors of the BIR but also the correct computation  It must be filed within the reglementary period of 30 days from receipt of the notice of assessment .REQUIREMENTS FOR A VALID PROTEST  1. Must contain the information required  3. Must be in writing and addressed to the CIR  2.

Nature of the request. Date of receipt of assessment notice or letter of demand f. Itemized statement of the finding to which the taxpayer agrees (if any) as basis for the computation of the tax due. which must be paid immediately upon filing of protest g. Name of the taxpayer and address for the immediate past 3 taxable years b. Amount and kind of tax involved and the assessment notice and number e. Itemized schedule of the adjustments to which the taxpayer does not agree . Taxable periods covered by the assessment d.CONTENTS OF PROTEST        a. specifying the newly discovered evidence he intends to present c.

2009]  Relevant supporting documents” should be understood as those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. FIRST EXPRESS PAWNSHOP [JUNE 16. 2012. 820 (CTA CASE NO. TELENGTAN BROTHERS AND SONS. 2009]. FIRST EXPRESS PAWNSHOP [JUNE 16. which may require the production of documents that a taxpayer cannot submit (CIR V. . the taxpayer will be at the mercy of the BIR.CIR V. The BIR can only inform the taxpayer to submit additional documents. Otherwise.. The BIR cannot demand what type of supporting documents should be submitted. CTA EB CASE NO. 7390) JUNE 11. INC. LA SUERTE CIGAR AND CIGARETTE FACTORY. CIR VS.

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COMPROMISE AND ABATEMENT REMEDIES AVAILABLE TO BOTH GOVERNMENT AND TAXPAYER .

COMPROMISE  Compromise. (FINANCIAL INCAPACITY) .to reduce the amount of tax payable  Grounds for a compromise:  (1) A REASONABLE DOUBT as to the validity of the claim against the taxpayer exists. or  (2) The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.

COMPROMISE  Limits of the Commissioner’s power to compromise:  (1) For cases of financial incapacity: a minimum compromise rate equivalent to ten percent (10%) of the basic assessed tax  (2) For other cases: a minimum compromise rate equivalent to forty percent (40%) of the basic assessed tax .

the compromise must be approved by the Evaluation Board (composed of the Commissioner and 4 deputy commissioners) .000).000. or where the settlement offered is less than the prescribed minimum rates.COMPROMISE  Note: When the basic tax involved exceeds One Million Pesos (P1.

(e.to cancel the entire amount of tax payable  When the Commissioner may abate or cancel a tax liability:  (1) The tax or any portion thereof appears to be UNJUSTLY or EXCESSIVELY ASSESSED.ABATEMENT  Abatement.g. when the costs of collection are greater than the amount of tax due) . or  (2) The ADMINISTRATION and COLLECTION COSTS do not justify the collection of the amount due.

TAX REFUND or CREDIT .

TAX REFUND or CREDIT .

TAX REFUND or CREDIT .

TABLE OF COMPARISON OF REMEDIES .

TABLES OF COMPARISON OF REMEDIES .