Chapter 2 TAX REMEDIES

Under the Tax Code, the powers and duties of the BIR include the assessment and
collection of all national internal revenue taxes, fees, and charges.

In this regard, after a tax return has been filed, the BIR is authorized to examine the
taxpayer and assess the correct amount of tax. However, the failure of the taxpayer to
file a return shall not prevent the BIR from examining the taxpayer.
In the event that the taxpayer failed to provide the required return or information to the
BIR, or if the BIR believes that such report is false, incomplete or erroneous, then the
assessment can be made based on the best evidence available.

AMENDMENT OF RETURNS: Any return, statement or declaration filed in any office

authorized to receive the same shall not be withdrawn, provided, that within three (3)
years from the date of such filing, the same may be modified, changed, or amended.
However, the taxpayer may no longer modify, change or amend any retum, statement
or declaration if a notice for audit or investigation of such return, statement or
declaration has been actually served upon the taxpayer.

"TENTATIVE" RETURNS: A "Tentative Tax Return" shall be considered as a final

return,
unless a final amended return is filed by the concerned
taxpayer. However, once a Letter of Authority or any other notice of audit is received,
taxpayers are barred from making amendments to the tentative tax returns filed.

This emphasizes that income tax return marked as "Tentative" may also be the subject
of examination pursuant to Section 6(A) of the Tax Code. (RMC No. 50-2013)

ASSESSMENT
An assessment refers to the determination of amounts due from a person obligated to
make payments.
The assessment process starts with the filing of tax return and payment of tax by the
taxpayer. The initial assessment evidenced by the tax return is a self-assessment of the
taxpayer. The tax is primarily computed and voluntarily paid by the taxpayer without
need of any demand from government. If tax obligations are properly paid, the Bureau
of Internal Revenue may dispense with its own assessment.
After filing a return, the Commissioner or his or her representative may allow the
examination of any taxpayer for assessment of proper tax liability. The Commissioner
can examine records or other data relevant to his or her inquiry in order to verify the
correctness of any return, or to make a return in case of noncompliance, as well as to
determine and collect tax liability. (CIR vs. Fitness by Design, GR No. 215957, Nov. 9,
2016)

ISSUANCE OF LETTER OF AUTHORITY

LETTER OF AUTHORITY (LOA): is an official document that empowers a Revenue
Officer (RO) to examine and scrutinize a Taxpayer's books of accounts and other
accounting records, in order to determine the Taxpayer's correct internal revenue taxes.
It commences the audit process and informs the taxpayer that it is under audit for
possible deficiency tax assessment. CIR Us. De La Salle University, Inc., GR
No. 196596 dated November 9, 2016)
Once an LOA is received, the taxpayer can no longer modify, change or amend any
return, statement or declaration. (Sec. 6(a], Tax Code)

A LOA would include the following information: (1) taxes covered; (2) period covered;
(3) authorized examiners; and (4) authorized signatory.

The BIR has now adopted the electronic LOA format. Taxpayers who received manual
LOA has the right to disregard it and not entertain the BiR officers who will conduct the
audit.

The LOA must be served to the taxpayer within 30 days from its date of issuance;
otherwise, it shall become null and void. The taxpayer shall then have the right to
refuse the service of this LOA, unless the LOA is revalidated.

It can be revalidated through the issuance of a new LOA. It can be revalidated only
once, if issued by the Regional Director; twice, if issued by the CIR. The suspended
LOA(s) must be attached to the new issued LOA. (RMO No. 38-88)

Absence of a LOA makes the revenue officer's examination of the books of the
taxpayer unauthorized: SEC. 6 of the Tax Code provides that the Commissioner or his
duly authorized representative may authorize the examination of any taxpayer and the
assessment of the correct amount of tax.

It is thus a necessity to issue the LOA in order to authorize the examiners to conduct an
audit/examination of the books of the taxpayer.

Period covered should only be one year: Section [Link] Revenue Memorandum Order
(RMO) No. 43-90 dated September 20, 1990, provides that "[a] Letter of Authority
should cover a taxable period not exceeding one taxable year.

The practice of issuing LOAs covering audit of "unverified prior years is hereby
prohibited. If the audit of a taxpayer shall include more than one taxable period, the
other periods or years shall be specifically indicated in the LOA."

In CIR vs. Sony Philippines, Inc., the CIR issued a LOA covering "1997 and unverified
prior years". As a result of the audit, a deficiency VAT assessment was issued based
on records from January to March 1998. The assessment was disallowed because the
revenue officers went beyond the scope of their authority for auditing a period beyond
one taxable year.
On the other hand, in CIR vs. De La Salle University Inc, the CIR issued a LOA
covering "Fiscal Year ending 2003 and Unverified Prior Years."

An assessment was issued for income tax, VAT and DST for taxable years 2001, 2002
and 2003. The Court held that the LOA issued is not entirely void.

The assessment pertaining to taxable year 2003 is valid. RMO No. 43-90 prohibits the
practice of issuing LOAs covering audit of unverified prior years. It does not say that
LOAs which contain unverified prior years is void.

The RMO requires that if a taxpayer is audited for more than one taxable year, the BIR
must specify each taxable year or taxable period on separate LOAs.

The assessment for taxable year 2003 is valid because this taxable period is specified
in the LOA. DLSU was fully apprised that it was being audited for this taxable year.
Corollarily, the assessments for taxable year 2001 and 2002 are void for having been
unspecified on separate LOAs as required under RMO No. 43-90.

eLOA/eLA: RMO No. 62-2010 discontinued the issuance of manual Letters of Authority.
Starting Aug. 16, 2010, only eLAs printed on BIR Form No. 1966 shall be issued by the
BIR for the audit/investigation of tax liabilities except estate tax cases

Letter Notice (LN): Under the no-contact-audit-approach under RMO No. 30-2003, as
supplemented by RMO No. 42-2003, even without conducting a detailed examination of
taxpayers books and records,
the computerized/manual matching of sales and purchases/expenses appears to reveal
discrepancies, the same shall be communicated through the issuance of a Letter
Notice.

Under RMO No. 32-2005, in case the discrepancies remained unresolved at the end of
120 days, the Revenue Officer assigned to handle the LN shall recommend the
issuance of a LOA to replace the LN.

Letter Notice not converted to a LOA is not sufficient: The Court cannot convert the LN
into the LOA required under the law.

A LN is entirely different and serves a different purpose than a LOA. Due process
demands, as recognized under RMO No. 32-2005, that after an LN has serve its
purpose (i.e, to notify the taxpayer that a discrepancy is found based on the BIR's
RELIEF System), the Revenue Officer should properly secure a LOA before proceeding
with the further examination and assessment of a taxpayer. (MEDICARD Philippines,
Inc. vs. Commissioner of Internal Revenue, GR No. 222743, April 5, 2017)

Tax Verification Notice: are issued for estate tax purposes. (RMO No. 69-2010)

TAX AUDIT
A Revenue Officer (RO) is allowed only 120 days from the date of receipt of the LOA to
conduct the audit and submit the required report of investigation If the RO is unable to
submit his final report of investigation within the 120. day period, he must then submit a
Progress Report to his Head Office and surrender the LOA for revalidation.

Number of times a taxpayer may be audited:

General Rule: A taxpayer can only be subjected to an audit of a taxable year only
ONCE.

Except in the following cases:

Fraud, irregularity or mistakes, as determined by the Commissioner;
Taxpayer requests for reinvestigation;
Verification of compliance with withholding tax laws and regulations;
Verification of capital gains tax liabilities.
When the commissioner chooses to exercise his power to obtain information relative to
the examination of other taxpayers under Sec.
5(B). (Sec. 235 of the Tax Code)

SUBMISSION OF DOCUMENTS: Upon receipt of the LOA, the taxpayer will also
receive a checklist of documents that the BIR will require the taxpayer to submit in
connection with the audit.
• First Notice - After 10 days from receipt of the checklist and the taxpayer did not
comply, a First Notice will be sent to the taxpayer.
• Second and Final Notice - After 10 days from receipt of the First Notice and the
taxpayer still did not comply, a Second and Final Notice will be sent to the taxpayer.

Subpoena Duces Tecum (SDT): After 10 days from receipt of the Second and Final
Notice and the taxpayer still did not comply, the authorized BIR officer shall request for
the issuance of a subpoena from the Assistant Commissioner, Enforcement and
Advocacy Service (National Office) Assistant Commissioner, Large Taxpayers Service
(Large Taxpayers Service) or Revenue Regional Directors (Regional Office). (RMO No.
45-2010)

The Assistant Commissioner, Enforcement and Advocacy Service/ Assistant

Commissioner, Large Taxpayers Service/ Revenue Regional Directors shall evaluate
the request within 2 working days (from 5 working days) from receipt. Upon issuance of
the subpoena, the revenue officer shall serve it on the taxpayer immediately (from 3
working days).

Payment of the administrative penalty shall not excuse the taxpayer summoned from
complying with the SDT.

In case the taxpayer refuses to comply with the SDT, the concerned BIR legal office
shall file a criminal case against the taxpayer for violation of Sec. 5 in relation to Secs.
14 and 266 of the NIRC and/or initiate a proceeding to cite the taxpayer for contempt.
Once the criminal complaint has been filed, no prosecuting officer of the BIR shall
cause the withdrawal or dismissal of the case, notwithstanding the subsequent
submission of documents indicated in the SDT. (RMO No. 10-2013)

Jeopardy Assessment: A "Jeopardy Assessment" is one made without the benefit of

complete or partial audit by an authorized revenue officer, who has reason to believe
that the assessment and collection of a deficiency tax will be jeopardized by delay
because of the taxpayer's failure to comply with the audit and investigation
requirements to present his books of accounts and/or pertinent records, or to
substantiate all or any of the deductions, exemptions, or credits claimed in his return.
(Sec. 3(1](a), RR No. 30-02)

This is issued basically to comply with the prescriptive period and to prevent the same
from lapsing principally from the taxpayer's fault. The RO would usually cause the
issuance of a subpoena duces tum to ensure submission of books of accounts, records
and/or documents.
Best Evidence Obtainable:

An assessment based on the best evidence obtainable is justified when any of the
following grounds provided by law is clearly established:
1. The report or records requested from the taxpayer are not forthcoming i.e., the
records are lost; refusal of the taxpayer to submit such records:
2. The reports submitted are false, incomplete or erroneous.

This is resorted to when a taxpayer fails to obey a subpoena duces tecum and after a
criminal case has been instituted for failure to obey summons. (Sec. 23, RMC No. 23-
00)

Resort to estimation allowed: The rule is that in the absence of the accounting
records of a taxpayer, his tax liability may be determined by estimation. The petitioner is
not required to compute such tax liabilities with mathematical exactness. Approximation
in the calculation of the taxes due is justified. To hold otherwise would be tantamount to
holding that skillful concealment is an invincible barrier to proof. However, the rule does
not apply where the estimation is arrived at arbitrarily and capriciously (Commissioner
of Internal Revenue vs. Hantex Trading Co., Inc.; GR No. 136975; March 31, 2005)

Preservation of Books of Accounts and Tax Records: under RR No. 5-2014,

amending RR No. 17-2013, the period for preservation of books of accounts shall be in
this manner:
a. In the first 5 years - taxpayer shall retain hard copy;
b. Thereafter - taxpayer may retain only electronic copy.

NOTICE OF INFORMAL CONFERENCE (NOW NOTICE OF DISCREPANCY)

NOTICE OF INFORMAL CONFERENCE: is a written notice informing a taxpayer that
the findings of the audit conducted on his books of accounts and accounting records
indicate additional taxes or deficiency assessments have to be paid.

If, after the culmination of an audit, a Revenue Officer recommends the imposition of
deficiency assessments, this recommendation is communicated by the Bureau to the
Taxpayer concerned during an informal conference called for this purpose. The
Taxpayer shall then have fifteen (15) days from the date of his receipt of the Notice for
Informal Conference to explain his side.

Note, however, that under RR No. 18-2013, amending RR No. 12-99, the provision
requiring an Informal Conference was removed. Thus, if during the audit process, the
BIR determines that there is basis to assess the taxpayer for deficiency taxes, a PAN
will be issued. However still, this has been reinstated by RR No. 7-2018.

NOTICE OF DISCREPANCY: Under RR No. 22-2020, if a taxpayer is found to be liable

for deficiency tax or taxes in the course of an investigation, the taxpayer shall be
informed through a NOTICE OF DISCREPANCY which aims to fully afford the taxpayer
with an opportunity to present and explain his side on the discrepancies found.

The Revenue Officer who audited the taxpayer's records shall, among others, state in
the initial report of investigation his findings of discrepancies.

Based on the said Officer's submitted initial report of investigation, the taxpayer shall be
informed, in writing, by the RDO or by the Assessment Division/Regional Investigation
Division, as the case may be or by the Chief of Division concerned of the discrepancy
or discrepancies in the taxpayer's payment of his internal revenue taxes, for the
purpose of the "Discussion of Discrepancy."

Discussion of Discrepancy shall in no case extend beyond 30 days from receipt of

the Notice of Discrepancy. It is during this that the taxpayer is given the opportunity to
present his side of the case and explain the discrepancy found during the investigation
and submit documents to support the explanation or arguments.

If the taxpayer disagrees with the discrepancy/discrepancies detected during the

audit/investigation, the taxpayer must present an explanation and provide documents to
support his explanation. The documents must be submitted during the discussion.
Should the taxpayer need more time to present the documents, he may submit such
documents that supports his explanation within thirty (30) days after receipt of the
Notice of Discrepancy.
.
If after being afforded the opportunity to present his side through the Discussion of
Discrepancy:
1. It is still found that the taxpayer is still liable for deficiency tax or taxes and
1. The taxpayer does not address the discrepancy through payment of the
deficiency taxes, or the taxpayer does not agree with the findings,
The investigating office shall endorse the case to the reviewing office and approving
official in the National Office or the Revenue Regional Office, for issuance of a
deficiency tax assessment in the form of a Prelimanary Assessment Notice within ten
(10) days from the conclusion of the discussion.

Failure on the part of Revenue Officers to comply with the periods indicated herein shall
be meted with penalty as provided by existing laws, rules and regulations.

PRELIMINARY ASSESSMENT NOTICE

PRELIMINARY ASSESSMENT NOTICE (PAN): is a communication issued by the

Regional Assessment Division, or any other concerned BIR Office, informing a
Taxpayer who has been audited of the findings of the Revenue Officer, following the
review of these findings.

If the Taxpayer disagrees with the findings stated in the PAN, he shall then have fifteen
(15) days from his receipt of the PAN to file a written reply contesting the proposed
assessment, otherwise he shall be considered in default. Note, however, that under RR
No. 18-13, amending RR No. 12-99, a FAN/FLD will still be issued after the lapse of the
15 days from the filing ofa protest against the PAN.

The PAN is not 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 habilines for
the taxable quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on excisable 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. (Sec. 228 of the Tax Code)

Under RR No. 18-13, a FAN/FLD shall be issued outright in the above-enumerated

cases.

Contents of the PAN: The PAN must show in detail the facts and the law upon which
the assessment is based. Otherwise, the PAN will not be valid, and any resulting
assessment will be considered null and void

Absence of PAN: The issuance of the PAN is part of the due process requirement
under RR No. 18-2013. Thus, if the BIR did not issue a PAN or did not give the
taxpayer an opportunity to respond within 15 days from receipt thereof, this will be a
violation of the due process right of a taxpayer.
The sending of a PAN to taxpayer to inform him of the assessment made is but part of
the "due process requirement in the issuance of a deficiency tax assessment," the
absence of which renders nugatory any assessment made by the tax authorities.
(Commissioner of Internal Revenue us. Metro Star Superama, Inc., G.R. No. 185371
dated December 8, 2010)

The amendments under RR No. 18-13:

Under RR No. 12-99, the PAN contains this statement: "you are hereby given the
opportunity to present in writing your side of the case within fifteen (15) days from
receipt thereof. However, if you are amenable to pay xxx."

However, after the effectivity of RR No. 18-2013, a PAN now states the following: "you
are hereby given fifteen (15) days from receipt hereof to pay the aforesaid deficiency
tax liabilities in a duly authorized agent bank in which you are enrolled using the BIR
Payment Form (BIR Form 0605) attached herewith. Afterwards, submit proof of
payment thereof to the _ for updating of your records and cancellation of the herein
PAN, if warranted."

Based on the above amendment, the taxpayer is already directed to pay the deficiency
tax indicated in the PAN, unlike in the previous version of the provision where the
taxpayer is merely directed to respond with his side of
the case.

Under RMC No. 11-2014, the BIR clarified that this new practice is not violative of the
due process rights of the taxpayer, to wit:

"An ELD/FAN issued reiterating the immediate payment of deficiency taxes and
penalties previously made in the PAN is a denial of the response to the PAN. A final
demand letter for payment of delinquent taxes may be considered a decision on a
disputed assessment Isabela Cultural Corporation vs. Commissioner of Internal
Revenue, G.R. No. 135210 dated July 11, 2001). This includes a disputed PAN. So
long as the parties are given the opportunity to explain their side, the requirements of
due process are satisfactorily complied with (Calma vs. Court of Appeals, G.R. No.
122787 dated February 9, 1999)."

Issuance of the FAN without waiting for a reply on the PAN or the expiration of the
period to reply, is fatal to the assessment: The records indicate that the respondent
issued the Preliminary Assessment Notice on January 4, 2001.

However, on the same date, respondent, through registered mail, sent the Preliminary
Assessment Notice to petitioner ABCI's former address.

Assuming that there was a proper service of the Preliminary Assessment Notice on
January 15, 2001, it is clear that petitioner had until January 30, 2001 within which to
file a Reply.
Nevertheless, as early as January 19, 2001 or merely four (4) days after the Preliminary
Assessment Notice was received at petitioner's previous address, and without waiting
for the lapse of the mandatory 15-day period for petitioner to reply, respondent had
already issued the subject assessments Such actuations reveal a disposition to
prejudge petitioner as liable for assessment, even before it could be given a chance to
be heard. (A. Brown Co., Inc. vs. CIR, CTA Case No. 6357, June 7, 2004)

FORMAL LETTER OF DEMAND AND FINAL ASSESSMENT NOTICE

NOTICE OF ASSESSMENT or FORMAL ASSESSMENT NOTICE (EAN/FORMAL

LETTER OF DEMAND (FLD): 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. The Notice of Assessment shall
inform the Taxpayer of this fact, and that the report of investigation submitted by the
Revenue Officer conducting the audit shall be given due course.

Contents: The formal letter of demand calling for payment of the taxpayer's deficiency
tax or taxes shall state the facts, the law, rules and regulations, or jurisprudence on
which the assessment is based, otherwise, the formal letter of demand and the notice
of assessment shall be void.

Presumption of Regularity: Tax assessments by tax examiners are presumed correct

and made in good faith. The taxpayer has the duty to prove otherwise. In the absence
of proof of any irregularities in the performance of duties, an assessment duly made by
a Bureau of Internal Revenue examiner and approved by his superior officers will not
be disturbed. All presumptions are in favor of the correctness of tax assessments.
(Bonifacio Sy Po vs. CTA; GR No. 81446; Aug. 18, 1988)

Presumption of regularity does not apply if assessment is not based on sufficient

evidence: The prima facie correctness of a tax assessment does not apply upon proof
that an assessment is utterly without foundation, meaning it is arbitrary and capricious.
Where the BIR has come out with a "naked assessment," i.e., without any foundation
character, the determination of the tax due is without rational basis. In such a situation,
the U.S. Court of Appeals ruled that the determination of the Commissioner contained
in a deficiency notice disappears. (Commissioner of Internal Revenue vs. Hantex
Trading, Inc.)

Assessments must be based on actual facts: Assessments should not be based on

mere presumptions no matter how reasonable or logical said presumptions may be. In
order to stand the test of judicial scrutiny, the asessment must. based on actual facts.
The presumption of correctness or assessment being 1Clectoresumpio CANo. 3 6, 1a
131, 19 on another presumplin (Collector vs. Benipayo, GR No. L-13656, Jan. 31,
1962)

REQUIREMENTS OF A VALID ASSESSMENT

1. DUE PROCESS REQUIREMENTS: THE ASSESSMENT MUST BE I WRITING
AND STATE THE FACTS AND THE LAW UPON WHICH IT IS BASED:
The old requirement of merely notifying the taxpayer of the CIRs findings was changed
in 1998 of informing the taxpayer of not only the law, but also of the facts on which an
assessment would be made, otherwise, the assessment itself would be invalid (CIR vs.
Azucena Reyes G.R. No. 159694, January 27, 2006).

Such amendment is in keeping with the constitutional principle that no person shall be
deprived of property without due process (CIR us. Enron Subic, G.R. No. 166387,
January 19, 2009)

2. THE AMOUNT MUST BE DEFINITELY SET: An assessment, in the context of

the NIRC, is a "written notice and demand by the BIR on the taxpayer for the
settlement of a due tax liability that is there definitely set and fixed." Although
the disputed notice provides for the computations of respondent's tax liability,
the amount remains indefinite. It only provides that the tax due is still subject to
modification, depending on the date of payment when it provided "that the
interest and the total amount due will have to be adjusted if paid prior of beyond
April 25, 2004". (CIR us. Fitness By Design, Inc., GR No. 215957, November 9,
2016)

3. IT MUST CONTAIN A DUE DATE: The fact that there are no due dates in the
Final Assessment Notice negates the BIR's demand for payment (CIR us.
Fitness By Design, Inc., GR No. 215957, November 9, 2016)

DELIVERY and RECEIPT OF NOTICE (PAN/FAN/FDDA): BIR can notify the taxpayer
of the deficiency taxes due by means of:
1. Personal delivery - Delivering personally a copy of the PAN/EAN FDDA to the party
at his registered or known address.
2. Substituted service - Can be resorted to only if party is not present at the registered
or known adaress
3. Service by mail - Sending a copy of the notice by registered mail or by reputable
professional courier service.

Presumption of receipt: In order for the presumption to arise, the following must be
proved:
1. That the letter was properly addressed with postage prepaid; and
2. That it was mailed.

Once these facts are proved, the presumption is that the letter was received by the
addressee as soon as it could have been transmitted to him in the ordinary course of
the mail. (Gonzalo Nava vs. CIR, 13 SCRA 103, Jan. 30, 1965)

Shifting of burden to prove actual receipt: However, if the taxpayer denies receipt of
the assessment, the burden of proving by competent evidence that the notice was
indeed received by the addressee shifts to the BIR. (Republic vs. Court of Appeals, 149
SCRA 351 cited in Barcelon, Roxas Securities, Inc. us. CIR)
WHO MAY ISSUE NOTICES: The term "duly authorized representative" of the
Commissioner of Internal Revenue (CIR) who may issue the PAN/FAN/FDDA refers to
Revenue Regional Directors,
Assistant Commissioner-Large Taxpayers Service, and Assistant Commissioner-
Enforcement and Advocacy Service. (RMC No. 11-2014)

WHEN ASSESSMENT IS DEEMED MADE: an assessment is deemed made when the

demand letter or notice is RELEASED, MAILED OR SENT by the BIR to the taxpayer.
The law does not require that the taxpayer receive the notice within the three-year or
ten-year period CIR vs. Bautista [May 27, 1959)]. So, even if the taxpayer actually
received the assessment after the expiration of the prescriptive period, provided the
release thereof was effected before prescription sets in, the assessment is deemed
made on time.

PROTEST

PROTEST: is the act by the taxpayer of questioning the validity of the imposition of the
corresponding delinquency increments for internal revenue taxes as shown in the
notice of assessment or letter of demand.

Contents: either should contain: (1) nature of the protest, i.e., it

reconsideration or reinvestigation; (2) date of assessment notice; and (3) applicable
rules, law, regulations and jurisprudence. Otherwise, the protest shall be considered
void and without force and effect.

Period to File:
a. Against the PAN - the protest should be filed within 15 days from receipt of the PAN;
b. Against the FAN - the protest should be filed within 30 days from receipt of the FAN.

Failure to file a protest: If the taxpayer failed to file a protest, the assessment shall be
considered final, executory and demandable and no requests for either reinvestigation
or reconsideration shall be granted. (Sec. 3.1.4 of RR No. 12-99, as amended)

Form of Protest: a protest may be made either through:

a. Request/Motion for Reconsideration: a plea for re-evaluation of an assessment on
the basis of existing records without the need of additional evidence and may raise
either questions of law or fact, or both. The additional 60 days applicable to motion for
reinvestigation does not apply to requests/motion for reconsideration.
b. Request/Motion for Reinvestigation: a plea for re-evaluation of an assessment
based on newly discovered evidence or additional evidence.
Here, the taxpayer is given 60 days from the filing of the letter of protest to provide all
relevant supporting documents - those to support the legal and factual bases disputing
a tax assessment.

Relevant Supporting Documents: The CIR cannot demand other supporting

documents, particularly if they do not exist and eventually hold that failure to provide
within the 60-day period makes the assessment final and executory. "The term
"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.
The BIR can only inform the taxpayer to submit additional documents. The BIR cannot
demand what type of supporting documents should be submitted. Otherwise, a
taxpayer will be at the mercy of the BIR, which may require the production of
documents that a taxpayer cannot submit." (CIR vs. First Express Pawnshop Company,
Inc.; GR No.172045-46; June 16, 2009)

Non-submission of the relevant supporting documents: does not mean that the
assessment attained finality. The taxpayer merely loses its chance ol further contesting
the assessment. The non-compliance with the submission of the necessary documents
would either mean that the taxpayer no longer wishes to further submit any document
for the reason that its protest letter filed was more than enough to support its claim, or
that the petitioner failed to comply thus it can no longer give justification with regard to
its objections as to the correctness of the assessment notices. (Prulife of UK Insurance
Corporation vs. CIR, CTA Case No. 6774, Sept. 11, 2007)

Suspension of the running of prescriptive period; request for reinvestigation must

be accepted: A request for reinvestigation suspends the running of the prescriptive
period. However, if not accepted by the BIR, it does not suspend the running of the
prescriptive period. The burden of proof that the request for reinvestigation has actually
been granted rests on the BIR. Such grant may be expressed in its communications
with the BIR or implied from the action of the BIR in response to the request. Bank of
the Philippine Islands vs. Commissioner of Internal Revenue, G.R. No. 139736 dated
October 17, 2005)

On the other hand, a request for reconsideration does not suspend the running of the
prescriptive period because it only entails evaluation of existing evidence. Whereas, a
request for reinvestigation, where new or additional evidence is provided, the
prescriptive period is suspended.

Period of suspension for requests for reinvestigation: the period between the
request for reinvestigation and the revised assessment should be subtracted from the
total prescriptive period for the assessment of the tax; and, once the assessment had
been reconsidered at the taxpayers'

instance, the period for collection should begin to run from the date of
the reconsidered or modified assessment.
Period within which the Commissioner may act on the protest the Commissioner shall
have 180 days to act upon the protest from:
Date of filing in case of reconsideration; or
2.
Date of submission of the relevant supporting documents or 60 days from
filing the request for reinvestigation.
FINAL DECISION ON DISPUTED ASSESSMENT
EINAL DECISION ON DISPUTED ASSESSMENT (FDDA): If no protest against the
FAN/FLD is filed, or if a request for reinvestigation is filed but the taxpayer failed to
provide relevant supporting documents within 60 days from its filing, or when the
protest is expressly denied, an FDDA is issued stating the facts, law, regulations, rules,
jurisprudence from which the decision was based AND that it is the final decision.
A void FDDA does not render the assessment void: Clearly, a decision of the CIR on a
disputed assessment differs from the assessment itself. Hence, the invalidity of one
does not necessarily result to the invalidity of the other-unless the law or regulations
otherwise provide.
Section 228 of the NIRC provides that an assessment shall be void if the taxpayer is
not informed in writing of the law and the facts on which it is based. It is, however, silent
with regards to a decision on a disputed assessment by the CIR which fails to state the
law and facts on which it is based. This void is filled by RR No. 12-99 where it is stated
that failure of the FDDA to reflect the facts and law on which it is based will make the
decision void. It, however, does not extend to the nullification of the entire assessment.
As established, an FDDA that does not inform the taxpayer in writing of the facts and
law on which it is based renders the decision void. Therefore, its as if there was no
decision rendered by the CIR. It is tantamount to a denial by inaction by the CIR, which
may still be appealed before the CTA and the assessment evaluated on the basis of the
available evidence and documents.
(CIR us. Liquigaz Philippines Corporation, GR No. 215534, April 18, 2016)
THE TAX REVIVER
ACTIONS BY THE COMMISSIONER/DULY AUTHORIZED REPRESENTATIVE:
Within the 180 days, the Commissioner may either (1) deny, directly or indirectly, the
protest; or (2) not act on the protest.
1. DENIAL or FAILURE TO ACT BY COMMISSIONER'S DULY
AUTHORIZED REPRESENTATIVE
EXPRESS DENIAL In case of DENIAL by the Commissioner's duly authorized
representative, the taxpayer may either:
1. Appeal to the CTA within 30 days from the receipt of such denial; or
2. Elevate his protest
through request for reconsideration to the
Commissioner within 30 days from the date of receipt of the said
decision
INACTION: In case the PROTEST IS NOT ACTED UPON by the Commissioner's duly
authorized representative: within 180 days from the date of filing of the protest or date
of submission by the taxpayer of the required documents, the taxpayer may:
1. Appeal to the CTA within 30 days from the expiration of the 180-day period; or
2. Await the final decision of the duly authorized representative.
There is no appeal to the CIR from the failure of the CIR's authorized representative to
act. This option is only available if the authorized representative made a partial or whole
denial of the protest. (PAGCOR Us.
BIR, GR No. 208731, Jan. 27, 2016)
RR No. 12-99 is not inconsistent with Sec 228 of the NIRC. It merely implements Sec
228 by establishing guidelines on the nature of decision rendered by the authorized
representative of the CIR on a disputed assessment. The taxpayer is given a choice
whether to appeal a decision to the CIR or to the CTA. The decision of the authorized
representative will not attain finality if the taxpayer appeals the same to the CIR who
shall then be required to decide on the protest himself. (Moog Controls Corp. Phil.
Branch vs.

DENTAL OR FAILURE TO ACT BY THE COMMISSIONER

EXPRESS DENIAL: If the protest or administrative appeal is DENIED, in whole or in
part by the Commissioner (note that in administrative appeals. the denial came from the
Commissioner's authorized representative), he shall issue a FDDA, and the taxpayer
may appeal to the CTA within 30 days from date of receipt of the said decision.
Otherwise, the assessment shall become final, executory and demandable.
Actions of the Commissioner that are tantamount to denial:
A demand letter for payment of delinquent taxes. Oceanic Wireless Network, Inc. vs.
CIR, CTA and CA, GR No. 148380, Dec. 9, 2005)
2. Receipt of warrants of distraint and levy is "proof of the finality of the assessment"
and renders hopeless a request for reconsideration," being
"tantamount to an outright denial thereof and makes the said request deemed rejected."
(CIR vs. Algue, Inc., GR No. L028896, Feb, 17, 1988)
3. Filing of a complaint for collection of deficiency taxes. (Yabes us. Flojo, GR
No. L-49654, July 20, 1982)
4. Issuance and receipt of a Final Notice Before Seizure providing for the
"last opportunity to pay", otherwise the taxpayer's properties would be subjected to
distraint and levy. (CIR us. Isabela Cultural Corporation, GR
No. 135210, July 11, 2001)
INACTION: If the protest or administrative appeal is NOT ACTED UPON by the
Commissioner within 180 days counted from the date of filing of the protest, the
taxpayer may:
1. Appeal to the CTA within 30 days from the expiration of the 180-day period; or
2. Await the final decision of the Commissioner on the disputed assessment and appeal
such final decision to the CTA within thirty (30) days after the receipt of a copy of such
decision.
It must be emphasized, however, that in case of inaction on protested assessment
within the 180-day period, the options of the taxpayer are mutually exclusive and the
resort to one bars the application of the other. (Sec.
3.1.4 of RR No. 12-99, as amended by RR No. 18-13)
91
THE TAX REVIEWER
JUDICIAL APPEAL
In case of denial by the Commissioner or his duly authorized representative, or in case
of inaction within 180 days (where the taxpayer opted not to await the decision), the
taxpayer must file his judicial appeal with the Court of Tax Appeals within 30 days from
(i) the receipt of such denial or (2) the expiration of the 180-day period.
INACTION DEEMED A DENIAL: In case of disputed assessments, the inaction of the
Commissioner of Internal Revenue within the one hundred eighty day-period under
Section 228 of the NIRC shall be deemed a denial for purposes of allowing the taxpayer
to appeal his case to the Court lof Tax Appealsl and does not necessarily constitute a
formal decision of the Commissioner of Internal Revenue on the tax case; (Sec. 3(a]12]
of the Revised Rules of the CTA)
Procedures from CTA division up to the Supreme Court:
Section 7 of R.A. No. 9282, which amends the jurisdiction of the CTA, and the Revised
Rules of the CTA provides the following procedures for judicial appeal:
1. A party adversely affected by a ruling of a division of the CTA may file a motion for
reconsideration or new trial before the same division of the
CTA within 15 days.
2. A party adversely affected by a ruling of a division of the CTA after a motion for
reconsideration may file a petition for review with the CTA en bane within 15 days.
3. A party adversely affected by a ruling of the CTA en banc may file a petition for
review on certiorari with the Supreme Court within 15 days
Effect of failure to file the judicial appeal on time: will render the assessment final,
executory and demandable.
The failure to timely perfect an appeal cannot simply be dismissed as a mere
technicality, for it is jurisdictional. Thus:
Nor can petitioner invoke the doctrine that rules of technicality must yield to the broader
interest of substantial justice. While every litigant must be given the amplest opportunity
for the proper and just determination of his cause,

within the reglementary period is not a mere technicality. It raise a jurisdictional problem
as it deprives the appellate court of jurisdiction over the appeal. The failure to file the
notice of pe wallin the preselemenan period is akin to the failure to pay the appeal fee
within the prescribed period.
In both cases, the appeal is not perfected in due time. (CIR us. Fort Bonifo
Development Corporation; GR No. 167606; Aug. 11, 2010)
Judicial Appeal on Final and Executory Assessment:
General Rule: Once the assessment has become final and executory, the taxpayer in a
collection case cannot go into the merits of the assessment.
Exceptions:
Non-service of PAN (CIR us. Metro Star Superama, Inc., G.R. 185371,
December 2010)
Waiver on part of the Government (Republic vs. Ker, 18 SCRA 208 196])
No valid waiver of the prescriptive period on the part of the taxpayer (Philippine
Journalists, Inc. vs. CIR, G.R. No. 162852, 16 December 2004, 47
SCRA 214);
4. Defense that the decision has attained finality is not raised by the CIR - deemed a
waiver of such defense. (Republic vs. Ker, 18 SCRA 208)
5. The question raised was the prescription of the right of the BIR to collect which is an
entirely separate issue from the validity of the assessment.
((Marcos II vs. CA, G.R. No. 120880)
WITHDRAWAL OF APPEAL: When an appeal is withdrawn, the assailed decision
becomes final and executory. (Central Luzon Drug Corporation Is CIR; GR No. 181371;
March 11, 2011)
REMEDIES FOR COLLECTION OF DELINQUENT TAXES
COLLECTION
It is only allowed when there is already a final assessment made for the determination
of the tax due and must be made within 5 years from such finality; or 10 years from
discovery in case of false or fraudulent retum or omission to file one.
93
THE TAX REVIEWER
Under Section 205 of the Tax Code, the BIR has the following options for
collection:
Distraint of personal property;
Levy of real property;
Civil action;
Criminal action; and Enforcement of a Tax Lien.
These remedies of the BIR are NOT mutually exclusive, meaning distraint or levy may
be availed of even if a civil or criminal action has been filed. In the same vein, the
distraint/levy of property will not preclude the filing of a civil or criminal action.
However, the remedies of distraint and levy shall not be availed of where the amount of
tax involve is not more than one hundred pesos (P100).
The judgment in the criminal case shall not only impose the penalty but shall also order
payment of the taxes subject of the criminal case as finally decided by the
Commissioner.
DISTRAINT
It is the seizure of personal property, tangible or intangible, to enforce the payment of
taxes. It is a summary remedy where the seized property may eventually be sold in a
public sale, if the deficiency is not voluntarily paid.
KINDS OF DISTRAINT:
1. • Actual distraint - where the possession of the property is transferred from the
taxpayer to the government;
2. Constructive distraint - where the taxpayer is prohibited from disposing his property.
PROPERTY SUBJECT OF DISTRAINT: In general, all goods, chattels or effects and
other personal property belonging to the taxpayer or in which the taxpayer has an
interest may be seized and distraint in such quantity sufficient to satisfy the tax or
charge, the increments and the expenses of the distraint and the cost of the
subsequent sale.

Bank Deposits: may properly be the subject of a garnishmen, notwithstanding the Bank
Secrecy Law, since the procedure does not include
inquiry into the account.
WHEN APPLICABLE:
1. The taxpayer must be delinquent (except in constructive distraint) in the payment of
tax;
There must be a subsequent demand for its payment (assessment);
The taxpayer must fail to pay the tax at the time required;
4. The period within which to collect the tax has not yet prescribed; and
5. Amount of tax exceeds P100.
CONSTRUCTIVE DISTRAINT
WHEN APPLICABLE: When, in the opinion of the CIR, the taxpayer is Retiring from
any business subject to tax; or Intends to leave the Philippines; or Remove his property
therefrom; or
Hide or conceal his property; or
Perform any act tending to obstruct the proceedings for collecting the tax due or which
may be due from him.
Note that delinquency is not required before a constructive distraint may be effected.
LEVY
DISTRAINT VS. LEVY
DISTRAINT
Personal property only
Pre-emption only (no right of redemption)
LEVY
Real property only
Pre-emption and redemption (w/in
year
sale)
forfeiture in
available.
favor
Sec. 215 provides that forfeiture
government in case there is no
is available in case there is no
bidder/bid is insufficient, but bidder/bid is insufficient.
BIR may purchase the property.
95
THE TAX REVIEWER
DISTRAINT
LEVY
There is constructive distraint
There is NO constructive levy
When Applicable: before or simultaneous with, or after distraint of personal property
belonging to the delinquent taxpayer.
Forfeiture: in case there is no bidder for real property, or if the highest bid is for an
amount insufficient to pay the taxes, penalties and costs, the offier conducting the sale
shall declare the property forfeited to the Goverment in satisfaction of the claim in
question and within 2 days thereafter, shall make a return of his proceedings and the
forfeiture shall be spread upon the records of his office.
The Register of Deeds, upon registration with his office of any such declaration of
forfeiture, shall transfer the title of the property forfeited to the Government without the
necessity of an order from a competent court.
The forfeiture need not be for the whole tax liability which could merely be for an
amount equivalent to the fair market value of the property. (Castro us.
Collector, 4 SCRA 1193)
Redemption: The owner of the property may redeem said property within 1 year from
the date of forfeiture by paying:
1. Full amount of taxes and penalties, together with interest thereon; and
2. Costs of sale.
Otherwise, the forfeiture shall be absolute. (Sec. 215, NIRC)
Rights of Owner During Period of Redemption: the owner shall not be deprived of the
(1) possession of the property and (2) shall be entitled to the rents and other income
thereof until the expiration of the time allowed for its redemption (Sec. 214, NIRC)
Resale of Forfeited Properties: the CIR may, upon giving of not less than 20 days'
notice, sell and dispose of the forfeited properties at a public auction, or with prior the
approval of the Secretary of Finance, dispose the same at a private sale.

RULES APPLICABLE TO BOTH DISTRAINT AND LEVY

1. Repetition: Remedies of distraint and levy may be repeated if necessary, until the full
amount due, including all expenses, is collected. (Section 217 of the Tax Code)
2. Before Sale in Levy and Distraint: the taxpayer may discontinue the proceedings by
paying the taxes due together with the penalties and interest. Otherwise, the sale of the
levied or distrained property may Injunction Not Available: 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 this Code.
CIVIL AND CRIMINAL ACTIONS
Aside from the summary remedy of distraint and levy, the BIR may also avail of the
remedy of collecting delinquent taxes through the filing of a civil or criminal action. (Sec.
205|b] of the Tax Code)
Assessment not a pre-requisite for a criminal action for tax evasion: An assessment of
a deficiency is not necessary to a criminal prosecution for willful attempt to defeat and
evade the income tax. A crime is complete when the violator has knowingly and willfully
filed a fraudulent return with intent to evade and defeat the tax. The perpetration of the
crime is grounded upon knowledge on the part of the taxpayer that he has made an
inaccurate retum, and the government's failure to discover the error and promptly to
assess has no connections with the commission of the crime (Ungab vs. Cusi, 97
SCRA
877). In plain words, for criminal prosecution to proceed before assessment, there must
be a prima facie showing of willful attempt to evade taxes (CIR vs.
LA. 20/ OCKA 20001
Acquittal in tax evasion case not a bar for the filing of civil action for collection: the
conviction or acquittal obtained from a criminal action for tax evasion shall not be a bar
to the filing of a civil suit for the collection of taxes.
(Sec. 254 of the Tax Code)
Criminal actions include the civil aspect: "Any provision of laws or Rules of Court to the
contrary notwithstanding, the criminal action and the corresponding civil action for the
recovery of Tax Credit shall at all times be
97
THE TAX REVIEWER
simultaneously instituted within the same proceedings and no right to reserve such
similar, RA 1125, as ely form the criminal action will be recognized." (Sec. 711), RA
1125, as amended by RA 9282)
In criminal actions, the judgment of the court shall not only impose the penalty but
likewise one CRAYSe. 25, the taxes subject of the criminal case as finally decided by
the CIR. (Sec. 205, Tax Code)
TAX LIEN
TAX LIEN: is a charge on all leviable property of the taxpayer to secure the proper
payment of the tax, surcharges, interests and costs. (Sec. 219 of the Tax Code) It
attaches:
1. With respect to personal property -when the taxpayer neglects or refuses to pay tax
after demand and not from the time the warrant is served;
2. With respect to real property - from time of registration with the register of deeds;
Notice to affect third parties: the lien is not valid against any mortgagee purchaser, or
judgment creditor until notice of such lien shall have been filed in the proper register of
deeds of the province or city where the property of the taxpayer is located. (Sec. 219,
Tax Code)
Distinguished from distraint: in the latter, the property seized must be that of the
taxpayer, although it need not be the property in respect to which the tax is assessed; a
tax lien, however, is directed to the property subject to the tax regardless of its owner.
Preference of credit: a tax lien due on specific property are absolutely preferred claims
against an insolvent taxpayer.
A tax (not due on specific property) due the national government come ninth and taxes
due cities or municipalities come 10h in the order of preference of credits on the other
assets of the debtor. (Art. 2244, Civil Code)
Likewise, the claim of the government predicated on a tax lien is superior to the claim of
the laborers who won in a labor dispute, notwithstanding the provision in the labor code
on worker's preference (CIR vs. NLRC, 218 SCRA
42）、
Extinguishment of tax lien:
1. By payment or remission of the tax
By prescription of the right of government to assess or collect
By failure to file notice of such tax lien in the office of Register of Deeds By destruction
of property subject to tax lien
By replacing it with a bond.
COMPROMISE
COMPROMISE: is a contract whereby the parties, by reciprocal concessions, avoid
litigation or put an end to one already commenced. (Art. 2028, New Girl Code)
GROUNDS FOR COMPROMISE OF CIVIL LIABILITY:
1. Where the assessment is of doubtful validity;
2. When the financial position of the taxpayer demonstrates clear inability to pay the
tax.
Under RR No. 30-02, the following can be compromised:
1. Delinquent accounts;
Cases under administrative protest after issuance of the Final Assessment Notice to the
taxpayer which are still pending in the Regional Offices, Revenue District Offices, Legal
Service, Large Taxpayer Service (LTS), Collection Service, Enforcement Service and
other offices in the National Office;
Civil tax cases being disputed before the courts;
Collection cases filed in courts;
5. Criminal violations, other than those already filed in court or those involving criminal
tax fraud.
WHAT CANNOT BE COMPROMISED
The following cases cannot be the subject of a compromise:
1. Withholding tax cases, unless the applicant-taxpayer invokes provisions of law that
cast doubt on the taxpayer's obligation to Withhold
99
THE TAX REVIEWER
i can acous is dus peone cite or maines
5, Case inal epot of reinesiato reconsiderin have ben
issued resulting to reduction in the original assessment and the taxpayer is agreeable
to such decision by signing the required agreement form for the purpose. On the other
hand, other protested cases shall be handled by the Regional Evaluation Board (REB)
or the National Evaluation Board (NEB) on a case to case basis
6. Cases which become final and executory after final judgment of a court, where
compromise is requested on the ground of doubtful validity of the assessment
7. Estate tax cases where compromise is requested on the ground of financial
incapacity of the taxpayer
WHEN ALLOWED: A compromise of the tax liability (civil) is possible at any stage of
the litigation, even during appeal, although legal propriety demands that prior leave of
court should be obtained.
A compromise of criminal liability, however, is proper only if done prior to the filing of
the information with the court.
MINIMUM AMOUNTS:
Under the Tax Code:
1. For cases of financial incapacity, 10% of the basic tax assessed;
2. For other cases, 40% of the basic tax assessed.
Under RR No. 30-02, the following are the minimum amounts:
1. If ground is doubtful validity - 40% of the basic tax assessed.
If compromise is lower than the minimum, the taxpayer must file written request citing
factual and legal bases and approval of the National Evaluation Board (NEB) is
required.
2. If ground is financial incapacity -
• Taxpayer earns compensation income only and the income is P10,500 if single, or
P21,000 if married - 10%

⚫ Taxpayer has no source of income whatsoever -10%

⚫ Taxpayer has zero or negative net worth -10% Dissolved corporations -20%

⚫ Non-operating for 3 years or more-10%

Non-operating for less than 3 years -20% Declared insolvent or bankrupt -20%

Earnings deficit resulting in 50% capital impairment -40%

APPROVAL: of the National Evaluation Board, composed of the Commissioner and 4

deputy commissioners, shall be necessary if a. The basic tax exceeds P1,000,000; or
b. The settlement offered is less than the prescribed minimum rates.

OFFER OF FULL PAYMENT: The compromise offer shall be paid by the taxpayer upon
filing of the application for compromise settlement. No application for compromise
settlement shall be processed without the full settlement of the offered amount. In case
of disapproval of the application for compromise settlement, the amount paid upon filing
of the aforesaid application shall be deducted from the total outstanding tax liabilities.

Compromise of Assessed Taxes based on Best Evidence Obtainable Under Sec.

204(A) of the NIRC as implemented by Sec. 3 of RR 30- 2002, the Commissioner may
compromise the payment of any internal revenue tax when there is "doubtful validity of
the assessment" where a reasonable doubt as to the validity of the claim against the
taxpayer exists, when it is shown that the delinquent account or disputed assessment is
one resulting from a jeopardy assessment.

The doubtful validity of an assessment may be accepted when it is shown that

the disputed assessment is:

1. A Jeopardy Assessment (assessment without the benefit of a complete or be based

on

partial audit); or

2. An Arbitrary Assessment (assessment appearing to presumptions and there is

reason to believe that it is lacking

factual basis); or

legal and/or

3. The "Best Evidence Obtainable Rule" and there is reason to believe that the same
can be disputed by sufficient and competent evidence. (Sec. 3 of RR No. 30-2002)

However, in RMC No. 34-2014, the BIR clarified that if the assessment is based on
Best Evidence Obtainable Rule, should not be automatically considered as a doubtful
assessment. Scrutiny as to the surrounding circumstances that led to the issuance of
such an assessment (eg, assessments based on Revenue Memorandum Circular No.
23-2000, RMC No. 99-2010, etc.) should be thoroughly evaluated. The taxpayer's
failure to present or submit the required documents necessary to make the assessment
of its tax liability makes it incumbent to the Bureau to resort to the application of the
best evidence obtainable method to recover unpaid taxes due the government.
Therefore, any assessment made as a result thereof is presumed prima facie correct
and sufficient for all legal purposes.

ABATEMENT

ABATEMENT: is the cancellation or withdrawal of an assessment made by the BIR. As

it stands, however, based on RMO No. 20-07, the BIR now only processes application
for abatement of surcharges, interest and compromise penalties. Under this RMO,
application for abatement of basic tax assessed are not covered by any existing
regulations and therefore will not be processed.
GROUNDS:

1. The tax or any portion thereof appears to have been unjustly or excessively
assessed; or

2. The administration and collection costs involved do not justify collection of the
amount due

DELEGATION OF THE POWER TO ABATE AND COMPROMISE:

WHAT MAY BE DELEGATED? The power to abate/compromise may be delegated by

the Commissioner to the Regional Evaluation Board, in the

following cases: 1. Assessments issued by Regional Offices involving basic deficiency

taxes

of P500,000; 2. Minor criminal violations

REGIONAL EVALUATION BOARD: shall be composed of the Regional

Director as Chairman, the Assistant Regional Director, the heads of the Legal,
Assessment and Collection Divisions and the Revenue District Officer having
jurisdiction over the taxpayer. (Sec. 7[cl. Tax Code)

CIVIL PENALTIES

SURCHARGE: is a civil penalty imposed by law as addition to the deficiency tax

required to be paid.

When due:

1. 25% in case of failure to

a. File the return and pay the tax on time;

b. File the return with the proper internal revenue officer (wrong venue); c. Pay the
deficiency tax within the time prescribed for its payment in the notice of assessment; or

d. 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
date prescribed for its payment

2. 50% in case: a. Of willful neglect to file the return within the period prescribed; or

b. A false or fraudulent return is willfully made.

The following are prima facie evidence of a false or fraudulent return: a. A substantial
underdeclaration of sales, receipts or income;

b. A substantial overstatement of deductions.

Substantial underdeclaration/overstatement shall mean more than 30% of the actual

sales/deductions.

INTEREST: at the rate of 12% per annum on any unpaid amount of tax Under the
TRAIN, interest is now twice the market rate. As of 2013, the BSP has pegged the
market rate at 6%.

Therefore, interest for deficiency or delinquency is now 12% (effective Jan. 1 2018).
(Prior to the TRAIN the rate of interest is 20% per annum)

Deficiency Interest: is imposed on any deficiency in the tax due which shall be due from
the date prescribed for its payment until full payment thereof.

Delinquency Interest 12% (or 20%, prior to the TRAIN) in case of failure to

pay: a. The amount of tax due on any return required to be filed; or The amount of tax
due for which

b. no return is filed; c. A deficiency tax, or any surcharge or interest thereon on the due
date appearing in the notice and demand of the Commissioner. (Sec. 249)

Deficiency plus Delinquency Interests: Under the TRAIN, delinquency and deficiency
interest shall in no case be imposed simultaneously.

ADMINISTRATIVE PENALTIES: in case of failure to file an information return,

statement or list, or keep any record, or supply any information required by the Tax
Code or by the Commissioner on the date prescribed therefor, unless it is shown that
such failure is due to reasonable cause and not to willful neglect, there shall upon
notice and demand by the Commissioner, One Thousand Pesos (P1,000) for each such
failure, but not to

exceed Twenty Five Thousand (P25,000) during a calendar year. (Sec. 250)

COMPROMISE PENALTIES: a certain amount of money which the taxpayer pays to

compromise the criminal liability of a tax violation. The penalty is paid in lieu of criminal
prosecution and cannot be imposed in the absence of a showing that the taxpayer
consented thereto.

Consent of the taxpayer is necessary: A compromise in extra-judicial settlement of the

taxpayer's criminal liability for his violation is consensual in character, hence, may not
be imposed on the taxpayer without his consent. Hence, the BIR may only suggest
settlement of the taxpayer's liability through a compromise.
PRESCRIPTIVE PERIODS

1. ASSESSMENTS:

a 3 years, counted from:

1. After the last day prescribed by law for the filing of the return ii. After the last day the
return was filed, if filed beyond the period prescribed by law.

A proceeding in court may be filed only after the assessment. b. Exceptions to the 3-
year period: When there is a fraudulent with intent to evade tax. In this case, the

i.

prescriptive period is 10 years from discovery. Fraud is a question of fact and the
circumstances constituting fraud mag be alleged and proved. Fraud is never lightly to
be presumed because is a serious charge. (CIR vs. Ayala Securities, GR No. L-29485,
Nov. 21 1980)

Fraud is never imputed. The SC will not sustain findings of fraud circumstances which,
at most, create only suspicion. The mete understatement of a tax is not itself proof of
fraud for the purpose of tax evasion. The fraud contemplated by law is actual and not
constructive. it must be intentional fraud, consisting of deception willfully and
deliberately done or resorted to in order to induce another to give up some legal right.
Negligence, whether slight or gross, is not equivalent to fraud with intent to evade the
tax contemplated by law. It must amount to intentional wrongdoing with the sole object
of avoiding the tax. (CR vs. Javier, 276 Phil. 914, 1991) upon

Presumption: The following are prima facie evidence of a false or fraudulent return: A
substantial underdeclaration of sales, receipts or income;

A substantial overstatement of deductions.

Substantial underdeclaration/overstatement shall mean more than 30% d the actual

sales/deductions.

ii. When the taxpayer filed a false return

A mere showing that the returns filed by the taxpayer were false notwithstanding the
absence of intent to defraud, is sufficient to warrant the application of the ten (10) year
prescriptive period.

iii. When the taxpayer failed to file the tax return.

Failure to file a specific return required by law cannot be compensated by filing of a
different return: The Supreme Court held that an income tax return cannot be
considered as a return for compensating tax for purposes of computing the period of
prescription under the Tax Code, and that the taxpayer must file a return for the
particular tax required by law in order to avail himself of the benefits of the 3-year
prescriptive period; otherwise, if he does not file a return, an assessment may be made
within 10 years from discovery thereof. (Butuan Sawmill, Inc. vs. CTA, GR No. L-
20601, Feb. 28, 1966)

Prescriptive Period for 1 to 3 above: 10 years from discovery of the omission, falsity or
fraud.

Rationale for the 10 year assessment period: The ordinary period of prescription of 5
years (now 3 years) within which to assess tax liabilities under Sec. 331 of NIRC should
be applicable to normal circumstances, but where the government is placed at a
disadvantage so as to prevent its lawful agents from proper assessment of tax liabilities
due to false return, fraudulent returns intended to evade payment of tax or failure to file
returns, the period of 10 years provided in Sec. 332(a) of NIRC, from time of discovery
of the falsity, fraud or omission even seems to be inadequate and should be the one
enforced (Aznar vs. CTA, & CIR, August 23, 1974- G.R. 20569)

iv. When the running of the statute of limitations is suspended (see discussion below)

2 COLLECTION: by distraint or levy or by a proceeding in court within 5 years following

the assessment of the tax, or 10 years without assessment in case of false or
fraudulent returns with intent to evade the tax or failure to file a return.

3. CRIMINAL LIABILITY: 5 years from the commission or discovery of the violation,

whichever comes later. (Sec. 281, NIRC)

COUNTING OF PERIOD Both Article 13 of the Civil Code and Section 31, Chapter VIII,
Book I of the

Administrative Code of 1987 deal with the same subject matter computation of legal
periods. Under the Civil Code, a year is equivalent to the 365 days whether it be a
regular year or a leap year. Under the Administrative Code of 1987, however, a year is
composed of 12 calendar months. Needles to state, under the Administrative Code of
1987, the number of days is irrelevant.

There obviously exists a manifest incompatibility in the manner of computing legal

periods under the Civil Code and the Administrative Code of 1987. For this reason, we
hold that Section 31, Chapter VIII, Book 1 of the Administrative Code of 1987, being the
more recent law, governs the computation of legal periods. Lex posteriori derogat priori.

A calendar month is "a month designated in the calendar without regard to the number
of days it may contain." It is the "period of time running from the beginning of a certain
numbered day up to, but not including the corresponding numbered day of the next
month, and if there is not a sufficient number of days in the next month, then up to and
including the last day of that month." To illustrate, one calendar month from December
31, 2007 will be from January 1, 2008 to January 31, 2008; one calendar month from
January 31, 2008 will be from February 1, 2008 until February 29, 2008.

Applying Section 31, Chapter VIII, Book I of the Administrative Code of 1957 to this
case, the two-year prescriptive period (reckoned from the time respondent filed its final
adjusted return on April 14, 1998) consisted of 24 calendar months, should be on April
14, 2000. (CIR us. Primetown Property Group, Inc.; G.R. No. 162155; August 28, 2007)

SUSPENSION OF THE RUNNING OF PRESCRIPTIVE PERIOD

The running of the Statute of Limitations provided in Sections 203 and 222 on the
making of assessment and the beginning of distraint or levy of proceeding in court for
collection, in respect of any deficiency, shall be suspended:

a. For the period during which the Commissioner is prohibited from making the
assessment or beginning distraint or levy or a proceeding in court and for sixty (60)
days thereafter;

b. When the taxpayer requests for a reinvestigation which is granted by the

Commissioner,

Request must be granted: Even setting aside the difference between a request for
reinvestigation and reconsideration, the Tax Code very plainly requires that the request
for reinvestigation had been granted by the BIR Commissioner to suspend the running
of the prescriptive periods for assessment and collection.

That the BIR Commissioner must first grant the request for reinvestigation as a
requirement for suspension of the statute of limitations is even supported by existing
jurisprudence.

In Republic us. Abecedo, the Court held that the act of requesting a reinvestigation
alone does not suspend the period. The request should first be granted, in order to
effect suspension. (BPI vs. CIR, GR No. 139736, Oct. 17, 2005)

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: EXCEPT: if

the taxpayer informs the Commissioner of any change in address, the

running of the Statute of Limitations will not be suspended;

Notice is not required if BIR was aware of the whereabouts of the taxpayer. It is true
that, the running of the Statute of Limitations shall be suspended 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. In addition, Section 11 of RR No. 12-85 states that, in
case of change of address, the taxpayer is required to give a written notice thereof to
the Revenue District Officer or the district having jurisdiction over his former legal
residence and/or place of business.

However, the Supreme Court held that the above applies only if the BIR Commissioner
is not aware of the whereabouts of the taxpayer.

In CIR vs. BASF Coating + Ink Phils., Inc., the records of the BIR, through documents
accomplished and signed by officers of the BIR, clearly showed the taxpayer's new
address. Moreover, the BIR examiners conducted examination and investigation in the
said address.

Furthermore, the BIR sent numerous letters, including the results of th examination, to
the new address.

Hence, despite the absence of a formal written notice of responden change of address,
the fact remains that the BIR became aware of th taxpayer's new address as shown by
documents replete in its records. A a consequence, the running of the three-year period
to assess responder was not suspended and has already prescribed. (CIR vs. BASF
Coating Ink Phils. Inc., GR No. 198677, Nov. 26, 2014)

d. When the warrant of distraint or levy is duly served upon the taxpaye his authorized
representative, or a member of his household we sufficient discretion, and no property
could be located; and e. When the taxpayer is out of the Philippines. (Sec. 223 of the
NIRC)

f. When there is a valid waiver

*REQUISITES FOR A VALID WAIVER: The waiver must be

i. In writing:

ii. Agreed to by both the BIR and the taxpayer;

iii. Before the expiration of the ordinary prescriptive period assessment and collection;
and

for the

iv. The period of the waiver must be definite (e.g., Until December 31

2020).

ESTATE TAX: In case the Commissioner allows an extension for the paymet of estate
taxes (2 or 5 years), the running of the Statute of Limitations in assessment as provided
in Section 203 of the Tax Code shall be suspende for the period of any such extension.
REFUND

GROUNDS FOR REFUND:

1. Tax is erroneously or illegally collected. 2. Sum collected is excessive or in any

manner wrongfully collected. 3. Penalty is collected without authority.

Taxes are erroneously paid when a taxpayer pays under a mistake of fact, su as, he is
not aware of an existing exemption in his favor at the time thus payment is made.
Taxes are illegally collected when payments are made under duress or when there is
no obligation to pay the same.

The Commissioner may refund or credit any tax where on the face of the return upon
which payment was made such payment appears clearly to have been erroneously
paid.

PRESCRIPTIVE PERIOD: The filing of an administrative case for refund or a case in

court must be done within (2) years from the date of payment of the tax or penalty
regardless of any supervening cause that may arise after payment.

Exception: The Commissioner may, even without a written claim therefore, refund or
credit any tax, where on the face of the return upon which payment was made, such
payment appears clearly to have been erroneously paid.

Tax paid in installments: the 2-year period is reckoned from the date the last

or final installment or payment, because for tax purposes, there is no payment

until the whole or entire tax liability is fully paid (Collector vs. Prieto, G.R. No.

L-11976, August 29, 1961)

End of taxable year vs. date of filing of the final adjusted return: the 2-year period is
counted from the filing of the final adjusted return and the payment of the tax due
thereon, NOT from the end of the taxable year (contrary to a VAT refund which is
counted from the close of the taxable quarter).

The rationale in computing this period is the fact that it is only then the corporation can
ascertain whether it made profits or incurred losses in its business operations (ACRA
Investments vs. Court of Appeals, G.R. No. 96322, December 20, 1991).

Period to file JUDICIAL claim for refund is within the same 2-years: The administrative
claim for refund filed before the BIR and the judicial claim after denial by the BIR must
BOTH be filed within the 2-year period. This is different from a VAT refund covered by
Sec. 112, which makes the 120-day period (now 90 under the TRAIN) for the CIR to
decide mandatory as held by the SC, which may go beyond the 2-year period. In VAT
refunds under Sec. 112, only the ADMINISTRATIVE claim for refund needs to be filed
within the 2-year period.

As such, the SC has repeatedly held that the claim for refund with the B and the
subsequent appeal to the CTA must be filed within the 2-year period "If, however, the
Collector takes time in deciding the claim, and the period 2 years is about to end, the
suit or proceeding must be started in the CTA before the end of the 2-year period
without awaiting the decision of the Collector." (CIR vs. Victorias Milling Co., & CTA
January 03, 1968-GR.L 24108)

The time for bringing an action for a refund of income tax, fixed by statute, is not
extended by the delay of the Collector (now Commissioner) of Intera Revenue in giving
notice of the rejection of such claim (Koppel (Phil), Inc. CIR, G.R. No. L-10550,
September 19, 1961)

Based on the foregoing, an administrative claim for refund may be filed in the

morning and the judicial claim therefor filed in the afternoon, provided they

are both within 2 years from date of payment.

Note, however, that the administrative claim is a pre-requisite for the filing of the judicial
claim, since no suit or proceeding may be maintained in any court for refu

4. Present proof of payment of the tax.

Nature; Burden of Proof: a tax refund partakes of the nature of an exemption and is
strictly construed against the claimant. The burden of proof is on the taxpayer claiming
the refund that he is entitled to the same (Commissioner of Internal Revenue vs. Tokyo
Shipping Co., Ltd., G.R. No. 68282, May 26, 1995, 244 SCRA 332)

Payment under protest: is NOT a pre-requisite for filing a refund, unlike in

real property taxes (Sec. 252, Local Government Code) and customs duties (Sec.

2308, Tariff and Customs Code).

EXCESS PAYMENTS OF TAX:

If the sum of the quarterly tax payments made during the said taxable year is greater
than the total tax due on the entire taxable income of that year, the taxpayer may either:
(1) carry-over the excess credit (Tax Credit); or (2) be credited or refunded with the
excess amount paid (Tax Refund). The taxpayer will signify his choice by ticking the
corresponding box in the return.

TAX CREDIT V. TAX REFUND

TAX CREDIT

Works by applying the refundable amount, as shown on the final adjustment return
(FAR) of a given taxable year, against the estimated quarterly income tax liabilities of
the succeeding taxable year.

There is no prescriptive period for the carrying over of the same (CIR vs. BPI, G.R. No.
178490, July 7, 2009); It may be repeatedly carried over to succeeding taxable years
until fully utilized.

No grant or approval is required from the Commissioner but subject to BIR audit as to
proof of existence

TAX REFUND

Any tax on income that is paid in excess of the amount due the government may be
refunded, provided that a taxpayer properly applies for the refund (Philam Asset
Management, Inc. vs. CIR, G.R. Nos.

156637/162004, December 14, 2005). Prescribes after two years from the filing of the
FAR (Sec. 229, NIRC).

Needs to be granted by the Commissioner. And if so granted, may be payable in case

(actual) refund) or may be in the form of s Tax Credit Certificate, which can be used to
reduce tax liability

IRREVOCABILITY RULE

Once the option to carry-over and apply the excess quarterly income ta against the
income tax due for the taxable quarters of the succeeding taxable years has been
made, such option shall be considered irrevocable for the taxable period" and no
application for cash refund or issuance of a tax cred certificate shall be allowed
therefor. (Sec. 76 of the Tax Code)

"That taxable period" shall pertain only to the period where there wer excess payments
of tax. Accordingly, if in the succeeding period, there is sel excess quarterly payments
over the income tax due for the year, that amount (excluding that of the previous year)
may be applied for a TCC or refund

In case the taxpayer files a refund for the excess tax initially opted to be

credited, and the same is denied, he may still continue to claim the same as

tax credit.
When the taxpayer made no "tick" in the return and subsequently filed refund: Despite
the failure of [the taxpayer] to make the appropriate marking in the BIR from, the filing
of its written claim effectively serves as a expression of its choice to request a tax
refund, instead of a tax credit. Ta assert that any future claim for refund will be instantly
hindered by a failur to signify one's intention in the final adjusted return is to render
nugatory the clear provision that allows for a 2-year prescriptive period. Whe
circumstances show that a choice of tax credit has been made, it should be respected.
But when indubitable circumstances clearly show that another choice-a tax refund - is in
order, it should be granted.

Multiple choice

1. Broadly defined, this informs the taxpayer that he or she has tax liabilities.

🤣a. Assessment
b. Investigation
c. Letter of authority
d. Litigation

2. Statement 1: An assessment can be orally made. Statement 2: An assessment

should contain the the assessment is based.

a. Only Statement 1 is true.

🤣b. Only Statement 2 is true.
c. Both statements are true.
d. Both statements are not true.

3. Statement 1: Assessments are presumed to be correct.

Statement 2: Assessments are discretionary on the part of the on the Commissioner.

a. Only Statement 1 is true.

b. Only Statement 2 is true.
🤣c. Both statements are true.
d. Both statements are not true.

4. This occurs when self-assessed tax per return filed by the taxpayer prescribed date
was not paid at all or only partially paid.

a. Deficiency tax
🤣b. Delinquency tax
c. Deficit tax
d. Delayed tax

5. Which of the following can be the subject of a collection suit immediately. without the
need of a prior assessment?
🤣a. Delinquency tax
b. Deficiency tax
c. Both a and b
d. Neither a nor b

6. It is defined as a delinquency tax assessment made without the benefit of a complete

or partial investigation by an authorized revenue officer.

a. Hasty assessment
🤣b. Jeopardy assessment
c. Delinquency assessment
d. Impartial assessment

7. It is an official document that empowers a Revenue Officer (RO) to examine and

scrutinize a taxpayer's books of accounts and other accounting records, in order to
determine the taxpayer's correct internal revenue tax liabilities.

a. Preliminary Assessment Notice (PAN)

b. Warrant of Inspection (WOI)
🤣c. Letter of Authority (LA)
d. Arrest Warrant (AW)

8. Statement 1: A Preliminary Assessment Notice (PAN) need not be in Statement 2: If

voluntary payments are made prior to the issuance of PAN, then a PAN need not be
issued. writing.

a. Only Statement 1 is true.

🤣b. Only Statement 2 is true.
c. Both statements are true.
d. Both statements are not true.

9. In which of the following cases will a PAN not be required?

a. There is deficiency income tax due.

🤣b. There is a mathematical error in the computation of taxes.
In cases involving documentary stamp tax
d. When there is discrepancy between tax payable and tax due

10. Within how many days should a taxpayer reply to the PAN?

a. Ten (10) days.

🤣b. Fifteen (15) days.
c. Twenty (20) days.
d. Thirty (30) days.

11. A Final Assessment Notice (FAN) shall be issued within the expiration of the period
to file the reply to the PAN or after r receipts
reply to the PAN.

a. Ten (10) days.

🤣b. Fifteen (15) days.
c. Twenty (20) days.
d. Thirty (30) days.

12. Mommy Divine Company received a Preliminary Assessment Notice August 1,

2020. As Mommy Divine was preparing her reply, Mone Divine already received a Final
Assessment Notice on August 11,22 Rule on the validity of the Final Assessment
Notice.

a. The FAN is void. BIR should have waited for the reply to the PA
b. The FAN is void. The right to due process of Mommy Divine has bee violated.
c. The FAN is valid. Mommy Divine's period to file her reply expire
🤣d. The FAN is valid. Reply to the PAN is not mandatory in nature on August 6, 2020.

13. Within how many days should a taxpayer protest to the FAN?

a. Ten (10) days.

b. Fifteen (15) days.
c. Twenty (20) days.
🤣d. Thirty (30) days.

14. Which kind of protest requires the submission of additional supporti documents?

a. Request for reconsideration

🤣b. Request for reinvestigation
c. Request for reconveyance
d. Request for recognition

15. Within how many days must additional supporting documents isubmitted?

a. Fifteen (15) days from filing of a request for reinvestigation. mem.10

b. Thirty (30) days from filing of a request for reinvestigation.
🤣c. Sixty (60) days from filing of a request for reinvestigation.
d. Ninety (90) days from filing of a request for reinvestigation.

16. Upon receipt of the protest in a request for reconsideration, within how many days
must the duly authorized representative or the Commissioner of Internal Revenue
decide?

a. 90 days.
b. 120 days.
🤣c. 150 days.
d. 180 days.
17. It is the decision of the Commissioner of Internal Revenue on the protest of the
taxpayer against an assessment.

🤣a. Final Decision on Disputed Assessment (FDDA)

b. Final Decision on Contested Assessment (FDCA)
c. Final Decision on Protested Assessment (FDPA)
d. Final Decision on Questioned Assessment (FDQA)

18. It is defined as the contract between the government and the taxpayer to at a lower
amount. settle the liability

a. Abatement
b. Compromise
c. Settlement
🤣d. Remission

19. Which of the following is a ground for compromise?

a. Tax return of the taxpayer has been lost.

b. The prescriptive period to assess taxes has already expired.
🤣c. A reasonable doubt as to the validity of the claim against the taxpayerexists.
d. The taxpayer is out of the country and cannot be served with summons by the
government.

20. What is the minimum compromise rate if the ground for compromise is financial
incapacity?

a. 10% of the basic assessed tax.

b. 20% of the basic assessed tax.
c. 30% of the basic assessed tax.
🤣d. 40% of the basic assessed tax.

21. In criminal tax cases, compromise should be made:

🤣a. Before institution of criminal action

b. Before arraignment
c. Before conviction of a violation of tax laws
d. Before imprisonment

22. Statement 1: Civil cases already filed before the courts may no!

longer be the subject of compromise. Statement 2: Criminal tax fraud cases cannot be
the subject of compromise.

a. Only Statement 1 is true.

b. Only Statement 2 is true.
🤣c. Both statements are true.
d. Both statements are not true.

23. When the administration and collection costs involved do not justify the

collection of the amount due, the tax due may be:

a. Compromised
🤣b. Abated
c. Surcharged
d. Cancelled

24. What is the prescriptive period for assessing taxes?

a. Three (3) years from due date

b. Three (3) years from actual filing
c. Three (3) years from due date or actual filing, whichever is earlier
🤣d. Three (3) years from due date or actual filing, whichever is later

25. What is the prescriptive period in cases of fraudulent filing?

a. Ten (10) years from due date or actual filing, whichever is earlier.
b. Ten (10) years from due date or actual filing, whichever is later.
c. Ten (10) years from discovery of fraud.
🤣d. Ten (10) years from commission of fraud.

26. Mimiyuuuh Company filed its annual income tax return for the calendar year 2020
on April 12, 2021. The BIR assessed Mimiyuuuh of deficiency taxes on April 14, 2024,
without alleging fraud. Mimiyuuuh, in its protest, contended that the period for BIR to
assess has already prescribed. Is Mimiyuuuh correct?

🤣a. Yes, the right of BIR to assess has prescribed on April 12, 2023.
b. Yes, the right of BIR to assess has prescribed on April 12, 2024.
c. No, the right of BIR to assess will only prescribe on April 15, 2024.
d. No, the right of BIR to assess will only prescribe on April 15, 2025.

27. Harry Potter Company filed its donor's tax return for a donation made on March 1,
2020, on March 20, 2020. On April 13, 2020, Harry Potter Company filed an amended
donor's tax return declaring a gross gift which is 40% greater than the previously
declared gross gift. When is the last day for BIR to assess Harry Potter Company for
deficiency donor's tax assuming there is no fraud?

a. March 1, 2023.
b. March 20, 2023.
c. March 31, 2023.
🤣d. April 13, 2023.

28. When is an amendment of a return considered substantial?

a. When there is underdeclaration exceeding 20%
🤣b. When there is underdeclaration exceeding 25%
c. When there is underdeclaration exceeding 30%
d. When there is underdeclaration exceeding 40%

29. Statement 1: If the taxpayer cannot be located in the address given to him in his
return, the period of prescription is tolled. Statement 2: If the taxpayer is out of the
Philippines, the period of prescription is tolled.

🤣a. Only Statement 1 is true.

b. Only Statement 2 is true.
c. Both statements are true.
d. Both statements are not true.

30. A final decision on disputed assessment (FDDA) may be the subject of a Petition for
Review within

🤣a. 30 days from the issuance of decision

b. 30 days from receipt of the taxpayer of the FDDA
c. 60 days from the issuance of decision
d. 60 days from receipt of the taxpayer of the FDDA

31. Statement 1: A void assessment renders the FDDA void.

Statement 2: A void FDDA renders the assessment void.

a. Only Statement 1 is true.

b. Only Statement 2 is true.
c. Both statements are true.
🤣d. Both statements are not true.

32. A Petition for Review against a FDDA shall be filed with:

🤣a. A Division of the Court of Appeals

b. Court of Appeals en banc
c. A Division of the Court of Tax Appeals
d. Court of Tax Appeals en banc

33. The Court of Tax Appeals is composed of a Presiding Justice and associate
Justices.
a. Seven
b. Eight
🤣c. Nine
d. Ten
34. Upon notice of an adverse decision by the Court of Tax Appeals Division, the
taxpayer must file:

a. A Petition for Review within 15 days to the Court of Tax Appeals banc.
b. A Petition for Review within 30 days to the Court of Tax Appeals banc.
c. A Motion for Reconsideration or Motion for New Trial within 15 days to the Court of
Tax Appeals Division.
🤣d. A Motion for Reconsideration or Motion for New Trial within 30 days to the Court of
Tax Appeals Division.

35. If the decision of the Court of Tax Appeals en banc is adverse to the taxpayer, the
taxpayer may lodge an appeal with:

a Court of Appeals b. Supreme Court

b. Supreme Court
c. International Criminal
🤣d. Court of Heaven

36. Fearless Corporation received an assessment notice from the Bureau of Internal
Revenue on 9 April 2021, assessing the corporation of deficiency income taxes for
taxable year 2017. Fearless Corporation follows the calendar year, and Fearless
Corporation has filed its annual income tax return for year 2017 on 7 April 2018. The
Bureau of Internal Revenue has sent the assessment notice on 5 April 2021 but was
only received by the taxpayer 9 April 2021. Has the assessment prescribed?

a. Yes. The assessment has prescribed on 7 April 2021, and the taxpayer was only
able to receive the assessment notice on 9 April 2021.
🤣b. No. The assessment is set to prescribe on 7 April 2021, and the BIR was able to
send the assessment notice on 5 April 2021.
c. No. The assessment is set to prescribe on 15 April 2021, and the taxpayer was able
to receive the assessment notice on 9 April 2021.
d. No. The assessment is set to prescribe on 15 April 2021, and the BIR was able to
send the assessment notice on 5 April 2021.

37. The rate of interest for late payment of taxes is set by the law at:

🤣a. The legal interest rate.

b. Twelve (12) percent
c. Six (6) percent.
d. Twenty (20) percent.

38. What are the two kinds of interest under the Tax Code?

a. Deficiency and deficit interest

🤣b. Deficiency and delinquency interest
c. Delinquency and demerit interest
d. Delinquency and deficit interest
39. The computation of deficiency interest is reckoned from:

a. Deadline for the payment of the tax due

🤣b. Receipt of assessment notice
c. Finality of the assessment
d. Receipt of the FDDA

40. All of the following would necessitate the imposition of the 50% surcharge, except:

a. Willful neglect to file the return within the period prescribed.

b. False return is willfully made.
🤣c. Fraudulent return is willfully made.
d. Failure to file with the proper internal revenue officer

41. When will tax surcharge amounting to 50% of tax due be imposed?

a. In case of false or fraudulent return is willfully made.

b. In case of failure to pay the full or part of the amount tax shown on any return
required to be filed, or before the date prescribed for payment.
c. Filing a return with an internal revenue officer other than those to
whom the return is required to be filed.
🤣d. Failure to file any return and pay the tax due thereon.

42. What is the prescriptive period of assessment of tax in case of false or fraudulent
return?

🤣a. Within 3 years from the last date of filing required by law or actual filing of return
whichever is later.
b. Within 5 years from the discovery of falsity or fraud.
c. Within 3 years from the discovery of falsity of fraud.
d. Within 10 years from the discovery of falsity or fraud.

43. What is the jurisdictional amount for filing civil action for collection of taxes to Court
of Tax Appeals?

a. If the principal amount of taxes is P300,000 or less exclusive of charges and

penalties.
b. If the principal amount of taxes is P400,000 or less exclusive of charges and
penalties.
🤣c. If the principal amount of taxes is at least P1,000,000 exclusive of charges and
penalties.
d. If the principal amount of taxes is at least P500,000 exclusive of charges and
penalties.

44. Which of the following is not an administrative remedy of BIR Commissioner to

collect tax?
a. Distraint of personal property
b. Civil case to collect a sum of money
🤣c. Formal Protest
d. Levy of real property

45. It refers to the pleading filed by the taxpayer in response to the

Preliminary Assessment Notice issued by BIR Commissioner.

a. Request for reconsideration

🤣b. Request for reinvestigation
c. Formal protest
d. Reply

46. Which of the following tax cases may be the subject matter of compromise
agreement?

a. Estate tax case on ground of financial incapacity

b. Withholding tax case
c. Criminal tax case involving fraud
🤣d. Criminal tax case not yet filed in court

47. In which scenario is previous issuance of preliminary assessment notice mandatory

for the validity of the issued final assessment notice with formal letter of demand?

a. When the tax deficiency is due to mathematical error

🤣b. When the amount of tax withheld is higher than the amount of tax remitted to BIR
c. When the tax deficiency pertains to value added tax
d. When the amount of tax refunded is still claimed as tax credit.

48. Which of the following documents issued by BIR Commissioner must be duly
protested by the taxpayer to prevent the finality of assessment?

🤣a. Final assessment notice with formal letter of demand assessment notice
b. Preliminary
c. Both A and B.
d. Neither A nor B.

49. Which type of formal protest filed by a taxpayer before B Commissioner requires the
taxpayer to submit documentary evidence to BIR Commissioner?

a. Request for reconsideration

b. Request for reinvestigation
c. Both A and B
🤣d. Neither A nor B
50. What is the prescriptive period for filing claim for tax refund of national internal
revenue taxes?

a. Within 5 years from the date of payment of tax

🤣b. Within 3 years from the date of payment of tax
c. Within 10 years from the date of payment of tax
d. Within 2 years from the date of payment of tax

51. Which of the following is a ground for abatement of tax?

a. Financial incapacity of taxpayer

b. Reasonable doubt as to validity of claim against the taxpayer
🤣c. The tax appears to be unjustly or excessively assessed
d. None of the above

52. What is the prescriptive period for collection of national internal revenue taxes?

a. Within 5 years from the finality of assessment of tax

🤣b. Within 10 years from the finality of assessment of tax
c. Within 2 years from the finality of assessment of tax
d. Within 3 years from the finality of assessment of tax

53. Which court may enjoin the collection of national internal revenue taxes?

🤣a. Court of Tax Appeals

b. Supreme Court
c. Either A or B
d. Neither A nor B

54. Which case may be filed by the government even the tax assessment case is still
pending? Civil action to collect the tax

b. Criminal action for tax evasion

🤣c. Both A and B d. Neither A nor B

55. What is the remedy available to the taxpayer if the 180-day period given by law to
BIR Commissioner to decide on the formal protest filed by taxpayer has already lapsed
without any action on the part of BIR

Commissioner? a. Wait for the decision of BIR Commissioner

b. Appeal before the CTA Division within 30 days from the lapse of the

180-day period

c. Either A or B
🤣d. Neither A nor B

56. Under National Internal Revenue Code, which of the following government officer
has the power to cancel a tax liability?

a. BIR Commissioner

b. Revenue District Officer

🤣c. BIR Deputy Commissioner

d. Revenue Regional Director

57. Where the basic tax involved exceeds P1,000,000, who has the authority

to approve the tax compromise?

🤣BIR Commissioner
b. Revenue District Officer

eRevenue Regional Director

d. National Evaluation Board consisting of BIR Commissioner and 4 Deputy

Commissioners

58. Which of the following tax cases may be subject to tax compromised? Estate tax
civil case on the ground of financial incapacity

b. Tax civil cases finally decided by Supreme Court on the ground of reasonable doubt
as to the assessment

c. Withholding tax cases

🤣d. Criminal tax cases without fraud and not yet filed in court