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1. Remedies available to taxpayer before and after payment of taxes.

Administrative protest against assessment and is filed before payment; and


Claim for refund filed with the Commissioner after payment.
2. Judicial remedies available to taxpayer.
Appeal to the CTA Division within 30 days form receipt of decision on the protest
or from the lapse of 180 days due to inaction of the Commissioner otherwise it will
be final and executory.
Appeal to the CTA en Banc within 15 days from the receipt of the decision of CTA
dicision via petition for review.
Appeal to the SC within 15 days from the receipt of the decision of the CTA under
Rule 45.
By way of Special Civil Action under Rule 65
Action to contest forfeiture of chattel, at any time before the sale or destruction
thereof;
Action for damages gainst RO by reason of any act done in the performance of his
office.
Injunction to be issued by the CTA if the collection may jeopardize the interest of
the govcernment or the taxpayer.
3. Substantive remedies.
4. Discuss the No injunction to restrain tax collection rule.

No injunction to restrain tax collection


General Rule: No court shall have the authority to grant an injunction to restrain the
collection of any national internal revenue tax, fee or charge imposed by the NIRC.
[Section 218, NIRC]
Exception: CTA may suspend or restrain the collection of the tax when, in its opinion,
the collection of the tax may jeopardize the interest of the government and/or the
taxpayer. [Section 11, RA 1125]
Requisites for injunction
a. That the collection of the tax may jeopardize the interest of the government and/or
the taxpayer.

b. That the taxpayer is willing to deposit the amount equal to the taxes assessed or to
file a bond amounting to not more than twice the value of the tax being assessed.
c. That the CTA may issue an injunction only in the exercise of its appellate
jurisdiction.
5. When is the deadline for filing ITR or payment of income taxes?
For individual. It shall be filed on or before the 15 th day of April of each year
covering income for the preceding taxable year; except when April 15 falls on
Saturday, Sunday or non-working holidays, the return shall be filed in the next
working holiday and unless the Commissioner, in meritorious cases, grant a
reasonable extension of time for filing of ITR.
For corporation. A corporation may employ either calendar year or fiscal year as
basis for filing its ITR. Provided, that it will not change the accounting period
employed without prior approval of the Commissioner. The corporate quarterly
declaration shall be filed within 60 days following the close of each of the first 3
quarters of the taxable year.
Calendar year.On or before 15th of April.
Fiscal year.On or before the the 15th day of the 4th month following the close of the
fiscal year, as the case maybe.
6. What is notice of assessment?
A Notice of Assessment is a declaration of deficiency taxes issued to a Taxpayer
who fails to respond to a Pre-Assessment Notice within the prescribed period of
time, or whose reply to the PAN was found to be without merit.
7. What are the principles governing tax assessments?

Principles governing tax assessments


1. Assessments are prima facie presumed correct and made in good faith.
2. Assessments should not be based on presumptions but on actual facts.
3. Assessment is discretionary on the Commissioner who cannot therefore be
compelled to assess a tax when he or she believes that there is no basis for such
assessment.

4. The authority vested in the Commissioner to assess taxes may be delegated.


However, it is settled that the power to make final assessments cannot be
delegated.
5. Assessments must be directed to the right party.

8. Is the assessment made by the CIR subject to Judicial Review? Discuss.


9. Are tax self assessing? Discuss general rule and exception.

10. What are the requisites of valid assessments?

a. Post-reporting notice or notice for an informal conference after the tax audit.
b. Pre-assessment notice sent to the taxpayer, except in several instances.
c. The taxpayers shall be informed in writing of the law and the facts upon
which the assessment is made.
d. Assessment must be made within the prescriptive period.

11. What are the constructive methods of income determination?


a. Expenditure method
b. Percentage method
c. Unit and value method
12. What are the different kinds of assessments?

Kinds of assessment
1. Self assessment
2. Deficiency assessment
3. Illegal and void assessment
4. Erroneous assessment

Self assessment
One in which the tax is assessed by the taxpayer himself.

The amount of tax is reflected in the tax return that is filed by him and the tax
assessed is paid at the time he files the return. This system of filing of return and
payment of tax is known as the pay-as-you-file system.

Tax so assessed is known as self assessed tax.

Deficiency assessment

This is an assessment made by the tax assessor himself whereby the correct amount of
the tax is determined after an examination or investigation is conducted.

The liability is determined and is thereafter assessed for the following reasons:
1. The amount ascertained exceeds that which is shown as the tax by the
taxpayer in his return;
2. No amount of tax is shown in the return; or
3. The taxpayer did not file any return at all.

Illegal and void assessment


This is an assessment wherein the tax assessor has no power to act at all. Erroneous
assessment
Erroneous assessment
This is an assessment wherein the assessor has the power to assess but errs in the exercise
of the power.
13. What is a jeopardy assessment?
Is a tax assessment made by an authorized Revenue Officer without the benefit of
complete or partial audit, in light of the ROs belief that the assessment and
collection of a deficiency tax will be jeopardized by delay caused by the
Taxpayers failure to:
Comply with audit and investigation requirements to present his books of
accounts and/or pertinent records, or

Substantiate all or any of the deductions, exemptions or credits claimed in his


return.
14. Differentiate Delinquency Tax and Deficiency Tax.
Deficiency is the amount still due and collectible from a taxpayer upon audit or
investigation while Delinquency is the 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.
15. What are the powers of Commissioner in the assessment of taxes?
a. Examination of returns and determination of tax due.
b. Assessing the proper tax on the best evidence obtainable.
c. Authority to conduct inventory-taking, surveillance and to prescribe
presumptive gross sales and receipts.
d. Authority to terminate taxable period.
e. Authority to prescribe real property values.
f. Authority to inquire into bank deposit accounts.
g. Authority to accredit and register tax agents.
h. Authority to prescribe additional procedural or documentary requirements.

16. What is the best evidence obtainable rule?


The law allows the BIR access to all relevant or material records or data in the
person of the taxpayer. It places no limit or condition on the type or form or
medium by which the record subject of the order of the BIR is kept.(CIR vs. Hantex
Trading Co., Inc.)
The purpose of the law is to enable the BIR to get at the taxpayers records in
whatever form they may be kept. Ibid.
17. What is the prescriptive period for assessment and collection?
a. 3 years from the date of filing of the return
i.
If the return was filed before the last day of filing, the 3 year
period will start after the last day for filing the return.
ii.
If the return was filed after the mandated period of filing, the 3
year period of assessment will start from the date of filing the
return.
b. 10 years from the day of discovery or omission under the foloowing
instances:
i.
ii.

Failure to file a return


Return file was false or fraudulent with the intention to evade the
tax.

c. Before the expiration of the 3 year period, the BIR Commissioner and
the Taxpayer may agree in writing on the assessment period.
No prescriptive period for assessment when the government opts to collect
without assessment.
The Tax code does not provide for a prescriptive period for the collection of
taxes under sec 203.
Two views regarding the prescriptive period for collection:
1st View: 5 years from final assessment for normal assessment. (Sababan Taxation
Law review 2008 p. 182)
2nd View: Within 3 years form the isuuance of an assessment notice where there
was a return filed, for normal assessment.
5 years from the date of final assessment, for abnormal assessment.

18. When is a return considered fraudulent?


A return considered fraudulent when there is deliberate and substantial
1. Understatement of taxable sales, receipts or income; or
2. Overstatement of allowable deductions or business expenses.
Term substantial implies that the overstatement or understatement is more than
30% of the actual sales or deductions.
19. When is an amendment considered substantial?
20. What are the grounds for suspension of the running of prescriptive periods?
When the CIR is Prohibited from making the assessment or beginning the distraint
or levy or proceeding in court, and for 60 days thereafter.
When the taxpayer requests for a reinvestigation which is granted by the CIR.
When the taxpayer cannot be located in the address given by him in the return,
UNLESS he informs the CIR of any change in his address.
When the warrant of distraint or levy is duly served, and no property is located.
When the taxpayer is out of the Philippines.

21. What are the grounds for a valid waiver of suspension of prescriptive period?
22. What are the instances wherein notice of Informal Conference may be dispensed with?

23. What are the instances wherein PAN may be dispensed with?
PAN may not be required in the following cases:
(a) 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; or
(b) When a discrepancy has been determined between the tax withheld and the
amount actually remitted by the withholding agent; or
(c) 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; or
(d) When the excise tax due on exciseable articles has not been paid; or
(e) When the 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.
24. What are the legal requirements that must be complied with to claim the reward?
Any person, except an internal revenue official or employee, or other public
official or employee, or his relative within the sixth degree of consanguinity, who
voluntarily gives definite and sworn information, not yet in the possession of the
Bureau of Internal Revenue, leading to the discovery of frauds upon the internal
revenue laws or violations of any of the provisions thereof.
25. How much is the amount of reward?
The following amounts or rates are followed.
a. 10% based on revenues, surcharge imposed or collected, for giving
voluntary sworn information to the BIR
b. 10% based on tax imposed, including surcharges and penalties, or 1
million pesos, whichever is lower for the violations of tax code.
c. 10% based on the fair market value, or 1M, whichever is lower, for the
discovery and seizure of smuggled goods.
The cash reward of informers shall be subject to income tax, collected as a final
withholding tax, at the rate of 10%.

26. Differentiate tax refund and tax credit.


Tax Refund, taxpayer asks for the restitution of the money paid as tax whereas,
Tax Credit the taxpayer asks that the money so paid be applied to his existing tax
liability
Tax Refund the Two year period to file claim with the CIR starts after the payment
of the tax or penalty, on the other hand, Tax Credit, the 2 year period starts from
the date such credit was allowed.
As to forfeiture a refund check or warrant issued, which shall remain unclaimed or
uncashed within 5 years from the date the said warrant or check was mailed or
delivered shall be forfeited in favor of the government and the amount thereof
shall revert to the general fund, whereas, a tax credit certificate issued, which
shall remain unutilized after 5 years from the date of issue, shall, unlees
revalidated, be considered invalid, and shall not be allowed as payment for
imternal revenue tax liabilities of the taxpayer, and the amount covered by the
certificate shall revert to the genral fund.

27. Discuss the irrevocability rule.


(Sec. 76) a taxable corporation with excess quarterly income payments may apply
for either a tax credit or tax refund, but not both. Failure to indicate a choice,
however, will not bar a valid request for refund, should this option be chosen by
the taxpayer later on. Once the carry-over option is taken, actually or
constructively, it becomes irrevocable.

28. Discuss the administrative remedies of the government for the collection of delinquent
taxes under the NIRC.
Assessment
Collection
29. Differentiate actual and constructive distraint.
a. Procedure. In constructive distraint- the BIR does not take the physical
possession of the personal property while in actual distraint the personal
property is physically taken.
b. Basis. In constructive distraint there is no finding yet of discrepancy, only
that the taxpayer is leaving the country or disposing of his property in
fraud of creditors or is in the process of liquidation while in actual distraint
the taxpayer is already delinquent in the payment of his taxes.
c. Disposition of the personal property. In constructive distraint, the personal
property is merely held as security to answer for any future tax

delinquencies while in actual distraint the personal property is taken to be


sold in order to satisfy the tax delinquencies.
d. Purpose of constructive distraint is protection of government revenues and
ensure that there are properties of the government could proceed against
after a determination of the amount of deficiency taxes while in actual
distraint the deficiency taxes are already determined.

30. Differentiate distraint, levy and garnishment.


Distraint refers to the seizure of personal property, tangible or intangible, by the
government to effect collection of taxes including penalties.
Levy of real property refers to the seizure of real property of the taxpayer by the
government in order to enforce payment of taxes.
Garnishment is the taking of personal properties, usually cash or sums of money,
owned by a delinquent taxpayer which is in the possession of a third party.

31. What are cases that may be compromised


The following are the cases that may be compromised:
1. Delinquent accounts
2. Cases under administrative protest after issuance of the FAN to the taxpayer
which are still pending
3. Civil tax cases disputed before the courts
4. Collection cases filed in courts
5. Criminal violations other than those already filed in court or those involving
criminal tax fraud
32. What are the cases that cannot be compromised?
The following are cases which cannot be compromised:
1.
2.
3.
4.
5.

Withholding tax cases


Criminal tax fraud cases
Criminal violations already filed in court
Delinquent accounts with duly approved schedule of installments payments
Cases where final reports of reinvestigation or reconsideration have been
issued to which the taxpayer is agreeable
6. Cases which become final and executory after final judgment of a court
7. Estate tax cases where compromise is requested on the ground of financial
incapacity of the taxpayer.

33. Discuss the grounds for compromise and the requisites.


(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.
The compromise settlement of any tax liability shall be subject to the following
minimum amounts:
For cases of financial incapacity, a minimum compromise rate equivalent to
ten percent (10%) of the basic assessed tax; and
For other cases, a minimum compromise rate equivalent to forty percent (40%) of
the basic assessed tax.
Where the basic tax involved exceeds One million pesos (P1,000.000) or where the
settlement offered is less than the prescribed minimum rates, the compromise
shall be subject to the approval of the Evaluation Board which shall be composed
of the Commissioner and the four (4) Deputy Commissioners.
34. What is the extent of the Commissioners power to compromise criminal violations?
All criminal violations may be compromised except: (a) those already filed in
court, or (b) those involving fraud.
35. Distnguish compromise and abatement.
Compromise is a contract whereby the parties involved, by reciprocal
concessions, avoid litigation or put an end to one already commenced. It
involves reduction of the taxpayers liability, while abatement involves the
cancellation of the entire tax liability of a taxpayer.
As to the grounds:
Commissioner may compromise payment of IRT when a reasonable doubt as to
the validity of the claim against the taxpayer exists; or the financial position of the
taxpayer demonstrates a clear inability to pay the assessed tax.
Commisioner may Abate or Cancel a Tax Liability, when:the tax or any portion
thereof appears to be unjustly or excessively assessed; or the administration and
collection costs involved do not justify the collection of the amount due.
36. Discuss the jurisdiction of the CTA.
1. Exclusive Appelate Jurisdiction of CTA Division
a.) Decisions of the Commissioner of Internal Revenue

i. Cases involving disputed assessments, refunds of internal revenue


taxes, fees or other charges, penalties in relation thereto, or
ii. Other matters arising under the NIRC or other laws administered by
the BIR.
b.) Inaction by the Commissioner of Internal Revenue where the NIRC provides
a specific period of action
i. Cases involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties in relation thereto, or
ii. Other matters arising under the NIRC or other laws administered by
the BIR.
c.) Decisions of the Commissioner of Customs
i. Cases involving liability for customs duties, fees or other money
charges, seizure, detention or release of property affected, fines,
forfeitures or other penalties in relatin theret, or
ii. Other matters ariosing under the customs law or other laws
administered by the BOC.
d.) Decision of the Secretary of Finance on customs cases elevated to him
automatically for review from decisions of the Commissioner of
Customswhich are adverse to the govt.
e.) Decision of the Sec. of Trade and Industry
2. Exclusive Appelate Jurisdiction of CTA en banc
a.) Decisions, orders or resolutions of the RTC in local tax cases originally
decided or resolved by them in the exercise of their original jurisdiction.
b.) Decisions of the CBAA in the exercise of its appellate jurisdiction cases
involving the assessment and taxation of real property originally decided
by the provincial or city board of assessment appeals.
3. Jurisdiction over cases involving criminal offenses Division
a.) Exclusive original jurisdiction over all criminal expenses arising from
violations of the NIRC or TCC and other laws administered by the BIR or
the BOC ( principal amt. of taxes and fees, exclusive of charges and
penalties claimed is P1,000,000 or more.)
b.) Exclusive appellate jurisdiction in criminal offenses over:
i. Appeals from the judgments, resolutions or orders of the RTC in
tax cases, including tax collection, originally decided by them.
ii. Petitin for review of the judgments, resolutions or orders of the
RTC in the execise of their appellate jurisdiction over tax cases
originally decided by the MTCs or MCTCs
4. Jurisdcition over Tax collection cases
a.) Exclusive original Jurisdiction in tax collection cases involving final, and
executory assessments for taxes, fees, charge, and penalties (principal
amt. of taxes and fees, exclusive of charges and penalties claimed is
P1,000,000 or more.)
b.) Exclusive appellate jurisdiction over

i.
ii.

Appeals from the judgments, resolutions or orders of the RTC in


tax cases, originally decided by them.
Petition for review of the judgments, resolutions or orders of the
RTC in the execise of their appellate jurisdiction over tax cases
originally decided by the MTCs or MCTCs

37. What is a large taxpayer for VAT, for Excise tax, for corporate income tax and for
Withholding tax?
'Large taxpayer' means a taxpayer who satisfies any of the following criteria;
(1) Value-Added Tax (VAT) - Business establishment with VAT paid or payable of at
least One hundred thousand pesos (P100,000) for any quarter of the preceding
taxable year;
(2) Excise tax - Business establishment with excise tax paid or payable of at least
One million pesos (P1,000,000) for the preceding taxable year;
(3) Corporate Income Tax- Business establishment with annual income tax paid or
payable of at least One million pesos (P1,000,000) for the preceding taxable year;
and
(4) Withholding tax- Business establishment with withholding tax payment or
remittance of at least One million pesos (P1,000,000) for the preceding taxable
year.
Provided, however, That the Secretary of Finance, upon recommendation of the
Commissioner, may modify or add to the above criteria for determining a large
taxpayer after considering such factors as inflation, volume of business, wage
and employment levels, and similar economic factors.

38. Distingush lien from distraint.


Tax lien is a legal claim or charge on property, either real or personal, as security
for the tax obligation while distraint applies only to personal properties.

39. Distinguish forfeiture from seizure.


a. Ownership. In forfeiture, ownership is transferred to the government,
taxpayer retains ownership of property seized.
b. Disposition of proceeds of sale. In forfeited property, excess not returned
to taxpayer, reverse is true with seizure.

40. When may a taxpayer be placed under the constructive distraint?


When it shall come to the knowledge of the Commissioner that a taxpayer is:
1. Retiring from business subject to tax
2. Intending to
a. Leave the Philippines or remove his property therfrom; or
b. Hide or conceal his property
3. Performing any act tending to
a. Obstruct the proceedings for the collection of the tax for the pat or
current quarter or year; or
b. Render the same totally or partly ineffective unless such proceedings
are begun immediately
Illustrate in diagram format the procedure for filing a protest start from payment or filing
of ITR.