RE-ASSESSMENT NOTICE impt!!!

A pre-assessment notice is served by the Government upon the taxpayer under any of the following
circumstances:
1. if the taxpayer fails to file a return where return is required;
2. if he files a return but fails to pay the tax;
3. if he files a return and pays the tax, but payment is insufficient because certain deductions claimed
are disallowed by the BIR.
After the taxpayers receipt of the pre-assessment notice, any of the following situations can
take place:

1. taxpayer accepts liability and pays the tax as appearing on the pre-assessment notice;
2. taxpayer disagrees with the pre-assessment notice and responds by explaining that he is not liable;
3. taxpayer pays the tax and later on files a written claim for refund;
4. taxpayers enters into a compromise agreement with the BIR;
5. taxpayer ignores the pre-assessment notice.
The tax code states that the period to respond shall be prescribed by implementing rules and
regulations. If the taxpayer fails to respond within such period (30 days), a final assessment shall
issue.
ORDINARY PERIOD FOR ASSESSMENT
The right of the government to asses and later on to collect the tax is subject to prescription, upon the
lapse of which it can no longer exercise this right.
Section 203, of the tax code provides that internal revenue taxes shall be assessed within 3 years after
the last day prescribed by law for the filing of the return. The same provision of law lays down the
rules as to when the 3 year prescriptive period for assessment begins:
1. if the return is filed before the last day prescribed by law for the filing thereof, it shall be
considered as filed on the last day;
2. if the return is filed on the last day prescribed by law, then it is considered as filed on such day;
3. if the return is filed beyond the period prescribed by law, the 3 year period shall be counted from
the day the return is filed.
So it is clear, that the reckoning point for the 3 year prescriptive period is flexible; if the return is filed
on or before the deadline, the reckoning point is the deadline; if filed beyond the deadline, the
reckoning point is the date the return is actually filed. The 3 year period for assessment begins to run
from such a date.
FINAL ASSESSMENT...IMPT!
A final assessment issues:
1. if the taxpayer, having received a pre-assessment notice fails to respond within the period provided
for by the rules and regulations;
2. under the 5 circumstances enumerated under section 228 of the tax code where pre-assessment
notice is not necessary
Section 228. enumerates the exceptional circumstances where a pre-assessment notice is not

necessary: IMPT!!!
1. when the finding for any deficiency tax is the result of mathematical error in the computation of the
tax as appearing on the face of the return;
2. when a discrepancy has been determined between the tax withheld and the amount actually
remitted by the withholding agent; or
3. when a taxpayer who opted to claim a refund 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;
4. when the excise tax due on excisable articles has not been paid, or
5. when an article locally purchased or imported by an exempt person, such as, but not limited to, vehicles,
capital equipment, machineries and spare parts, has been sold, traded, or transferred to non-exempt
persons.

Under the foregoing circumstances, the taxpayer shall immediately receive a final assessment without
the benefit of pre-assessment notice.
REMEDIES AVAILABLE TO THE GOVERNMENT IN THE COLLECTION OF THE INCOME TAX...VERY IMPT!!
1. ADMINISTRATIVE

a. Distraint of personal property;

b. Levy of personal property
c. Enforcement of forfeiture of property
d. Enforcement of tax lien
e. Requiring the filing of bonds
f. Requiring proof of filing income tax returns
g. Deportation of aliens
h. Inspection of books of accounts.
2. JUDICIAL

a. ordinary civil action

b. criminal action
DISTRAINT- seizure by the government of personal property, tangible or intangible, to enforce the

payment of taxes to be followed by its public sale if the taxes are not voluntarily paid.
Kinds of Distraint

a. Actual- there is taking of possession of the personal property out of the taxpayer into that of the
government;
b. Constructive- the owner is merely prohibited from disposing of his property.
LEVY- A summary administrative remedy, seizure of real property to enforce payment of taxes.

A written notice of levy, containing a description of the property upon which levy is made, the name of
the taxpayer and the amounts of the tax and penalty due from them is served upon the taxpayer.
FORFEITURE- a divestiture of property without compensation, in consequence of a default or offense.

In case of chattels and removal of fixtures of any sort, forfeiture is enforced by seizure and sale or
destruction of the specific forfeited property. The forfeiture of real property is enforced by a judgment
of condemnation and sale in a legal action or proceeding, civil or criminal, as the case may require.
TAX LIEN- a legal claim or charge on property either real or personal established by law as a security

in default of the payment of taxes. The tax, together with interest, penalties and cost that may accrue
in addition thereto is a lien upon all property and rights to property belonging to the taxpayer. The lien
however, shall not be valid against any mortgagee, purchaser or judgment creditor until legal notice of
such liens should be filed by the Commissioner of internal revenue in the Office of the Register of
Deeds of the province or city where the property of the taxpayer is located. The lien attaches when
the taxpayer neglects or refuses to pay the tax after demand, but relates back from the time when
assessment was made by the Commissioner.
REQUIRING THE FILING OF BONDS- Filing of performance bond to secure the payment of taxes or

compliance with certain provisions of tax laws and regulations. This may be required by the BIR for the
issuance of a tax clearance.
REQUIRING PROOF OF FILING INCOME TAX RETURNS. Before a license to engage in trade or

business or occupation or to practice a profession can be issued to a person, partnership, association or

corporation, he must submit to the officer issuing such license or permit, proof that he has filed his
income tax return during the preceding year and that income taxes due have been paid thereon.
DEPORTATION OF ALIENS- any alien who

1. knowingly and fraudulently evades the payment of any internal revenue tax or
2. willfully refuses to pay such tax and its accessory penalties after the decision on the tax liability
rendered by the Commissioner of Internal Revenue, or the CTA or any competent judicial tribunal shall
have become final and executor, is subject to deportation. The penalty of deportation is not a bar to
any proceeding taken by the government to enforce collection of tax delinquency.
INSPECTION OF BOOKS OF ACCOUNTS
JUDICIAL ACTION
1. Civil Action- After the assessment made by the Commissioner of Internal Revenue has become final and
executory for failure of the taxpayer to dispute the same and appeal the disputed assessment to the Court
of Tax Appeals, the government may institute civil actions to collect internal revenue taxes in the Regional
Trial Court and the Metropolitan Trial Court, City and municipal courts.
2. Criminal Action- maybe pursued by the authorities for the collection of delinquent taxes. An assessment
of a tax deficiency is not necessary to a criminal prosecution for tax evasion. The crime is complete when
the violator has knowingly and willfully filed a fraudulent return or neglected to file a return with intent to
evade the tax. If the taxpayer is acquitted, the government may still collect the tax in a civil action, because
the payment of a tax is an obligation imposed by statute and does not arise from a criminal act.
Prescriptive period for collection.
Where an assessment was made, the period for collection by judicial action or by distraint or levy is within 3
years after the date of assessment. Where no assessment was made and a return was filed, and the same is
not false or fraudulent, the period for collection by a proceeding in court is within 3 years after the return
was due or filed whichever is later, except:
Where a return required to be filed was not filed, or even if filed the same is false or fraudulent, and made
with the intent to evade the tax, the period is ten years after discovery of the omission to file the return or
from the discovery of the falsity or fraud. The other exception relative to the prescriptive periods for
assessment are also applicable.
Where the government makes another assessment on the basis of a reinvestigation requested by the
taxpayer, or a revised assessment because of an amended return or as a result of a reinvestigation asked
for by the taxpayer, the period is counted from the last assessment or the last revised assessment.
Where the action is brought to enforce a compromise agreement into between the commissioner and the
taxpayer, the prescriptive period is ten years from the time the cause of action accrues as fixed in the civil
code.
The running of the statute of limitation on the making of an assessment, the beginning of
distraint or levy or any proceeding in court for collection is suspended: IMPT!!!!!
1. for the period during which the Commissioner of Internal Revenue is prohibited from making tax
assessment or beginning the distraint or levy or any proceeding in court and for sixty days thereafter;
2. when the taxpayer requests for a reinvestigation which is granted by the commissioner;
3. when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is
being assessed or collected, unless the taxpayer informs the Commissioner of any change in address;

4. when the warrant of distraint and levy is duly served upon the taxpayer, his authorized representative, or
with a member of his household with sufficient discretion and no property could be located; and
5. When the taxpayer is out of the Philippines.