Question 1: Answer: D

Question 2: Answer: A
Question 3: Answer: B
Question 4: Answer: C
Reference: Section 5.6, Revenue Regulations No.
1. Amount due, April15, 1999 (P1,000,000/4)
2. Tax due
Less: Payment, April15, 1999
Balance
Add: Interest on extended payment
(April 15 to May 15, 1999)
(P750,000 X 20'1<, X 1/12)
Total
Installment due
Add: Interest on extended payment
Amount due, May 15, 1999
3. Total
Less: Payment, April15, 1999
Balance
Add: Interest on extended payment
(May 15, 1999 to ,June 15, 1999)
(PSOO,OOO X 20%, X 1 I 12)
Total
Installment due
Add: Interest on extended payment
Amount due, May 15, 1999
4. Total
Less: Payment, April15, 1999
Balance
Add: Interest on extended payment
(P250,000 X 20'Yo X 1/ 12)
Amount due, July 15, 1999
12-99
p 1,000,000
( 250 000)
p 750.000
------"J--'=2 '500
Ll_f22~5QO
p 2.50,000
12 500
P762,500.00
( ?6? 500.00)
500,000.00
8 333.33
f~Q_~,3_3;3_.33
P250,000.00
g 333.33
P508,333.33
( 258.333.33)
250,000.00
4 166.67
f'254,,1~67
Chapter 21: Additions to Tax
30. (Adapted) GHI Corporation did not file its final adjustment income
tax return for the calendf'lT year 1998 which was due on
April 15, 1999. The BIR informed the corporation of its failure to file
its said tax return and required that it file the same, inclusive of the
25% surcharge and 20% interest per annum penalties incident to the
said omission. On May 15, 1999, it advised the corporation that its
income tax due for the said year amounted to P1,000,000.
The corporation due to its adverse financial condition at the moment
informed the Commissioner that it would be unable to pay the entire
amount, inclusive of the delinquency penalties. Hence, on
May 15, 1999, it made a partial payment of P400,000. Assuming
that the BIR demanded payment of the unpaid balance of its tax
obligation payable by June 15, 1999, how much was the amount still
due exclusive of the suggested compromise penalty for late filing and
late payment?
a. P 881, 111. 11 c. P762,500.00
b. P866,666.67 d. None of the choices
Answer: A
Reference: Section 5.6, Revenue Regulations No. 12-99
Tax due
Add: Surcharge for late payment
(P1 ,000,000 X 25'X) P250,000.00
Interest on delinquency
(April 15,1999 to May 15, 1999)
(Pl,OOO,OOO X 20% Xl/12) 16 666.67
Total
Less: Payments
Balance
Add: Interest on deficiency
(May 15, 1999 to ,June 15, 1999)
(P866,666.67 X 20'Y, X I /12)
Amount still due
Pl ,000,000.00
266 666.67
1,266,666.67
400 000.00)
866,666.67
14 444.44
E88L_1J).ll
31. (Phil. CPA Modified) Mr. Juan Kuan filed his donor's ta.X return and
paid the tax thereon in the amount of P100,000 on July 15, 2001.
The date of donation was March 16, 2001.
How much was the total penalties in the form of interest
collectible from him?
a. P 105,000 c. P5,000
b. P 100,000 d. None
Answer: C
Interest on delinquency
(April 15, 2001 to July 15, 2001)
(PlOO.OOO X 20'Yu X 3/12)
313
Chapter 21: Additions to Tax
32. (Phil. CPA Modified) Mr. Nama Thay died on October 15, 1999.
The administrator of the estate filed the estate tax return and paid
the tax shown thereon in full on April 15, 2000. In February, 2001,
the administrator received an assessment notice and demand from
the BIR to pay deficiency estate tax of P20,000 on or before
April 15, 2001.
How much was the total amount of tax payable as shown in the
assessment notice?
a. P 24,000 c. P 4,000
b. P 20,000 d. None of the choices
Answer: A
Deficiency estate tax
Add: Interest on deficiency
(April 15, 2000 to April 15, 2001)
(P20,000 X 20'%)
Total amount of tax payable per assessment
p 20,000
4 000
33. A taxpayer did not file his monthly VAT declaration for the month of
January, 2002, which was due for filing on February 20, 2002.
314
He was notified by the BIR of his failure to file the declaration, for
which reason, he filed his declaration and paid the tax only after the
said notice on June 30, 2003. The tax due per monthly VAT
declaration was P100,000.
How much was the total amount due on June 30, 2003?
a. P 172,222.23 c. P 100,000.00
b. P 177,214.62 d. None of the choices
Answer: B
Tax per return P100,000.00
Add: Surcharge for willful neglect
to file return ( 100,000 X 50%) p 50,000.00
Interest on deficiency (Feb. 20,
2002 to ,June 30, 2003) 27,214.62 77 214.62
Total amount due
Computation of interest
Feb. 20,2002 to Feb. 20,2003 (1 yea~
(PlOO,OOO X 20%)
Feb. 20, 2003 to June 20, 2003 (4 months)
(PlOO,OOO X 20% X 4/12)
June 20, 2003 to June 30, 2003 (10 days)
(P100,000 X 20% X 10/365)
Total
P17G_214.62
p 20,000.00
6,666.67
547.95
p 27.214.62
Chapter 22
REMEDIES IN GENERAL
(Authority of the Commissioner to Compromise
Tax Payments, Abate or Cancel Tax Liability
. and Refund or Credit Taxes)
<To surrcecf... you neca to fina sometfiing to fioM on to,
sometfiing to motz".vate you, sometfiing to inspire you. - 'Tony :Dorsett
Multiple Choice: Choose the best possible answer.
1. Except for the provision in Section 222, internal revenue taxes shall
be assessed within how many years after the last day prescribed by
law for the filing of the return?
a. Five (5) years c. Three ( 3) years
b. Four (4) years d. Two (2) years
Answer: C
Reference: Section 203, NIRC, as amended
2. First statement: In cases where a return is filed beyond the period
prescribed by law, the three (3)-year period shall be counted from
the day the return was filed.
Second statement: A return filed before the last day prescribed by law
for the filing thereof shall be considered as filed on such last day.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct
Answer: A

Reference: Section 203, NIRC, as amended .

~
I Section 203. Period of Limitation Upon Assessment and

Collection. - Except as provided in Section 222, internal revenue taxes

shall be assessed within three (3) years after the last day prescribed by
law for the filing of the return, and no proceeding in court without
assessment for the collection of such taxes shall be begun after the
1
.

expiration of such period: Provided, That in a case where a return is 1

filed beyond the period prescribed by law, the three (3)-year period shall I'

be counted from the day the return was .filed. For purposes of this
Section, a return filed before the last day prescribed by law for the filing I
thereof shall be considered as filed on such last day. I
315
Chapter 22: Remedies in General
3. A decedent dies on January 1, 2009. The estate tax return is filed on
September 1, 2009. When is the last day to make a valid
assessment?
a. April 15, 2010 c. July 1, 2012
b. July 1, 2009 d. September 1, 2012
Answer: D
The due date for filing the estate tax retum in this case is July 1, 2009
(within 6 months after death.) Since the retum is filed on September 1,
2009 which is beyond the period prescribed by law, the three (3)-year
period shall be counted rom the da the retum is iled.
4. A donation was made on March 14, 2009. The donor's tax return
was filed on March 31, 2009. When is the last day to make a valid
assessrrien t?
a. March 14, 2012 c. April 14, 2012
b. April 13, 2012 d. September 14, 2012
Answer: B
The due date for filing the donor's tax retum in this case is April 13, 2009
(within 30 days after the date of donation.) Since the retum is filed
before the due date prescribed by law, it shall be considered as filed on
such due date. Hence, the 3-year period will be counted from the due
date.
5. (Phil. CPA) As a general rule, the prescriptive period for assessment
of a return filed after the date the return was due or was filed,
whichever is later, is within:
a. three (3) years. c. ten ( 1 0) years.
b. five (5) years. d. fifteen (15) years.
Answer: A
6. The Commissioner of Internal Revenue has the authority to do all of
the following except:
a. compromise the payment of any internal revenue tax.
b. cancel or abate tax liability.
c. credit or refund tax.
d. review the decisions of the Court of Tax Appeals.
Answer: D
Reference: Section 204, NIRC as amended
316
------- ----------------------------

Chapter 22: Remedies in General

7. The Commissioner may compromise the payment of any internal
revenue tax, when:
I -there is a reasonable doubt as to the validity of the claim
against the taxpayer
II - the financial position of the taxpayer demonstrates a clear
inability to pay the assessed tax.
a. Both I and II are correct c. Only I is correct
b. Both I and II are incorrect d. Only II is correct
Answer: A
Reference: Section 204 (A), NIRC, as amended
8. (Phil. CPA) The Commissioner of Internal Revenue cannot:
a. abate or cancel tax liability.
b. compromise payment of internal revenue taxes.
c. credit or refund taxes erroneously or illegally collected.
d. compromise the criminal aspect of tax violations already filed
in court.
Answer: D
Reference: Section 204 (A) and B), NIRC, as amended
All criminal violations may be compromised except: {a) those already
led in court, or (b those involvin raud.
9. Which of the following cases may not be compromised?
a. Delinquent accounts
b. Cases under administrative protest after issuance of the Final
Notice of Assessment to the taxpayer still pending in the BIR
c. Civil tax cases being disputed before the courts
d. Criminal violations involving criminal tax fraud.
Answer: D
Reference: Section 2, Revenue Regulations No. 30-2002
The following cases may, upon taxpayer' compliance with the basi$ set
forth under Section 3 of Revenue Regulations No. 30-2002, be the
subject matter of compromise settlement, viz:
1). Delinquent accounts;
2). Cases under administrative protest after issuance of the Final
Notice of Assessment 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;
3). Civil tax cases being disputed before the courts;
4). Collection cases filed in courts;
5). Criminal violations, other than those already filed in court or those
involving criminal tax fraud.
Chapter 22: Remedies in Genral
10. Which of the following cases may not be compromised?
a. Withholding tax cases
b. Delinquent accounts with duly approved schedule of
installment payments
c. Estate tax cases \\here compromise is requested on the
ground of financial incapacity of the taxpayer
d. All of the choices.
Answer: D
~
1 Section
Reference: Section 2~ Revenue Regulatio!!~--~o. 30-2002 _

2. Cases which may be compromised. The following cases i

may, upon taxpayer' compliance ruith the basis .set forth under Section J !
f Reuenue Regulutions No .. 30-2002, be the subjf'ct matter of
ompromise settlement, uiz:
1 1. ~nx
I XXX
5. X.XX
I
Exceptions:
(1) withholding tax cases, unless the applicant-taxpayer invokes
provision of law that cost doubt on the taxpayer's obligation to

withhold; ~ ;: (4)

Cn"rninal tax fraud cases confirmed as such by the Commissioner of

lntenwl Rezwnue or his duly authorized representatiue;
Cn"minal violations already filed in court;
Delmquent account with duly approved schedule of installment
payments:
I
I
(5)

I 6) l( 7;

Cases where final reports of reinvestigation or reconsideration have

been issued resulting to reduction in the on"ginal assf'ssment and
the taxpayer is agreeablE' to such decision by signing the required
agreement fonn for the purpose;
Cases which become final and executory after final judgment of a
court, where compromise is requested on the ground of doubrj!Jl
validity ofthe assessment; ,
Estate tax cases where compromise is requested on the ground of I
financial incapacity of_the taxpaye!_._~~- -n--~-~-----.--1
1 1. Which of the following offer to compromise a disputed assessment
may be accepted on the ground of reasonable doubt as to the validity
of the assessment?
318
a. Jeopardy assessment
b. Arbitrary assessment based on presumption
c. Assessment issued on or after Jarmarv 1, 1998 \Yhere
demand notice allegedly failed to comply with formalities
prescribed in the Tax Code
d. All of the choices
Chapter 22: Remedies in General
Answer: D
Reference: Section 3, Revenue Regulations No. 30-2002
I Section 3. Basis for acceptance of compromise settlement. - The
Commissioner may compromise the payment of any internal revenue tax
on the following grounds:
1. Doubtful validity of the assessment. - The offer to compromise a
delinquent account or disputed assessment on the ground of
reasonable doubt as to the validity ofthe assessment may be
accepted when it is shown that:
a) The delinquent account or disputed assessment is one resulting
from a jeopardy assessment; or
b) The assessment seems to be arbitrary in nature, appearing to be
based on presumption and there is reason to believe that it is
lacking in legal and/ or factual basis; or
c) The assessments were issued on or after January 1, 1998, where
the demand nrJtice allegedly [ailed to comply with formalities
prescribed in the Tax Code; or
d) Assessments made based on the "Best Evidence Obtainable Rule"
and there is reason to believe that the same can be disputed by
sufficient and competent evidence; or
e) The assessment was issued within the prescriptive period [or
assessment as extended by the taxpayer's execution of Waiver of
the Statute of Limitations the validity or authenticity of which is
being questioned or at issue and there is strong reason to believe
and evidence to prove that it is not authentic; or
f) The assessment is based on an issue where a court of competent
jurisdiction made an advance decision against the Bureau, but for
which the Supreme Court has not decided upon withfinality (RR
No. 8-2004); or
g) The taxpayer [ailed to file an administrative protest on account of
the alleged failure to receive notice of assessment and there is
reason to believe that the assessment is lacking in legal and/ or
factual basis; or
h) The taxpayer [ailed to file a request [or reinvestigation or
reconsideration within 30 days from receipt of final assessment
notice and there is reason to believe that the assessment is lacking
in legal and/ or factual basis; or
i) The taxpayer [ailed to elevate to the Court of Tax Appeals {CTA/ an
adverse decision o[the Commissioner o[Intemal Revenue, or his
duly authorized representative, in some cases, within 30 days from
receipt of such adverse decision and there is reason to believe that
the assessment is lac kin in le al and/ or actual basis
319
-----,
Chapter 22: Remedies in General
12. Which of the follov:ing offer to compromise a delinquent account shall
be accepted on the ground of reasonable doubt as to the validity of
the assessment?
a. The taxpayer failed to file an administrative protest on
account of the alleged failure to receive notice of assessment
b. The taxpayer failed to file a request for reinvestigation or
reconsideration within 30 days from receipt of final
assessment notice
c. The taxpayer failed to elevate to the Court of Tax Appeals
(CTA) an adverse decision of the Commissioner of Internal
I~evenue
d. All of the choices
Answer: D
Reference: Section 3, Revenue Regulations No. 30-2002
13. What is the technical term for a tax assessment made by an
authorized Revenue Officer (RO) without the benefit of complete or
partial audit, in light of the RO's belief that the assessment and
collection of a deficiency tax \vill be jeopardized by delay caused by
the taxpayer's failure to comply v;ith audit and investigation
requirements to present his books of accounts and/ or pertinent
records, or substantiate all or any of the deductions, exemptions or
credits claimed in his return'?
a. Jeopardy assessment
b. Arbitrary assessment based on presumption
c. Assessment issued on or after January 1, 1998 \\here
demand notice allegedly failed to comply with formalities
prescribed in the Tax Code
d. Assessment made based on "Best Evidence Obtainable Rule"
Answer: A
Reference: Section 3. 1 (a), Revenue Regulations No. 30-2002
14. Which of the following offers to compromise a disputed assessment
on the ground of reasonable doubt as to the validity of the
assessment may be accepted?
320
a. Assessment made based on "Best Evidence Obtainable Rule"
b. Assessment issued within the prescriptive period for
assessment as extended by the taxpayer's execution of the
Waiver of the Statute of Limitations
c. Assessment based on an issue where a court of competent
jurisdiction made an advance decision against the BIR, but for
which the Supreme Court has not decided upon with finality
d. All of the choices
Chapter 22: Remedies in General
Answer: D
Reference: Section 3, Revenue Regulations No. 30-2002
as amended by Revenue Regulations No. 8-2004
15. The offer to compromise based on financial incapacity may be
accepted upon showing the following, except when:
a. the corporation ceases operation or is already dissolved.
b. the taxpayer is suffering from surplus or earnings deficit
resulting to impairment in the original capital by 50%.
c. the taxpayer is a compensation income earner with no other
source of income and the family's gross monthly
compensation income does not exceed Pl 0,500, if single, or
P21,000, ifmarried.
d. the taxpayer does not waive in writing his privilege of the
secrecy of bank deposits.
Answer: D
Reference: Section 3. 2, Revenue Regulations No. 30-2002
offer to compromise based on financial incapacity may be accepted
n showing that:
The corporation ceased operation or is already dissolved;
, 2) The taxpayer is suffering from surplus or earnings deficit resulting to
I
impairment in the original capital by at least 50%; 1
13) The taxpayer is suffering from net worth deficit, and in case of an I
individual taxpayer he has no leviable/ distrainable assets other than
family home; I
4) The taxpayer is a compensation income earner with no other source of
income and whose monthly salary is PlO,SOO or less, if single, or
P21, 000 or less, if married, and has no leviable/ distrainable assets
other than family home;
5) The taxpayer has been declared by any competent tribunal or
authorit or bod or overnment a enc as bankru t or insolvent.
16. The Commissioner shall not consider any offer for compromise
settlement on the ground of financial incapacity under the following
situations, except when:
a. the taxpayer has Tax Credit Certificate issued, on hand, or in
transit.
b. the taxpayer has a pending claim for tax refund or tax credit
with the BIR, Department of Finance One-Stop Shop Tax
Credit and Drawback Center and/ or other courts.
c. the taxpayer has an existing finalized agreement or prospect
of future agreement with any party that resulted or could
result to an increase in the equity of the taxpayer at the time
of the offer for compromise or at a definite future time.
d. the taxpayer is suffering from a net worth deficit.
321
Chapter 22: Remedies in General
Answer: D
Reference: Section 3. 2, Revenue Regulations No. 30-2002
The Commissioner shall not consider any offer for compromise settlement
on the ground of financial incapacit!d under the following situations:
1) Taxpayer with Tax Credit Certificate (TCC) issued, on hand, or in
transit;
2) Taxpayer with pending claim [or tax refund or tax credit with the BIR,
Department of Finance One-Stop-Shop Tax Credit and Drawback Duty
Center (Tax Revenue Group or Investment Incentive Group) and/ or the
court;
3) Taxpayer with existing finalized agreement or prospect of future
agreement with any party that resulted or could result to an increase
in the equity of the taxpayer at the time of the offer for compromise or
at a definite future time;
4) Taxpayer does not waive in writing his privilege of the secrecy of bank
deposits.
17. For cases involving financial incapacity, which of the following is not
subject to 10% compromise rate based on the basic assessed tax?
a. Taxpayer is an individual whose sole source of income is from
employment, and whose monthly salary is P10,500 or less, if
single, and P21 ,000 or less, if married
b. Taxpayer is an individual without any source of income
c. Taxpayer has a zero net worth or negative net worth
d. Taxpayer is suffering from surplus or earning deficit resulting
in impairment in the original capital by at least 50%
Answer: D
Reference: Section 4, Revenue Regulations No. 30-2002
18. For cases involving financial incapacity, which of the following is not
subject to 20% compromise rate based on the basic assessed tax?
322
a. Dissolved corporation
b. Already non-operating companies for a period of less than 3
years
c. Already non-operating companies for 3 years or more as of the
date of application for compromise settlement
d. Taxpayer is declared insolvent or bankrupt
------------------