TAXATION MACMOD

TAX REMEDIES
LECTURE NOTES

TAXATION (Tax Remedies) Note: All criminal violations may be

1. Period of Limitation upon Assessment and Collection. compromised except:
Internal revenue taxes shall be assessed within 3 a. Those already in court, or
years b. Those involving fraud
1) After the due date, or
2) From the day the return was filed, where a return d. Tax credit or refund
is filed beyond the due date. 1) No credit or refund of taxes or penalties
shall be allowed unless the taxpayer files in
Note: A return files before the due date shall be writing with the Commissioner a claim for
considered as filed on such due date. credit or refund within 2 years after the
payment of the tax or penalty.
Exercise: Determine the last day to make valid 2) A return filed showing an overpayment shall
assessment. be considered as a written claim for credit
a. Individual income tax return on compensation income or refund. (new provision)
earned in 2001 was filed on April 15, 2002. 3) A Tax Credit Certification validly issued
b. Decedent died January 1, 2001. Estate under the provision of the Tax Code may
tax return was filed on September 1, applied against any internal revenue tax,
2001. excluding withholding taxes, for which the
c. Donation was given on March 14, taxpayer is directly liable, (new provision)
2001. Donor’s tax was filed on March
31, 2001. A. REMEDIES OF THE GOVERNMENT
3. Remedies for the collection of Delinquent Taxes
2. Authority of the Commissioner of Internal a. The civil remedies for the collection of internal
Revenue. revenue taxes, fees or charges, and any increment
a. The Commissioner may: thereto resulting from delinquency shall be by:
3) Compromise the payment of any internal revenue 1) Summary proceedings:
tax. a. Distraint of personal property and
4) Abate or cancel tax liability b. Levy upon real property and interest in or
5) Credit or refund; rights to real property.
a) taxes erroneously or illegally received or
penalties imposed without authority, 2) Judicial proceedings:
b) the value of internal revenue stamps when c. Civil action or
returned in good condition by the purchaser, d. Criminal action
c) the value, upon proof of destruction, of unused
stamps that are unfit for use. b. Either of the summary or judicial or both
simultaneously may be pursuant in the discretion
b. Payment of tax may be compromised when: of the authorities charged with the collection of
1) A reasonable doubts as to validity of the claim such taxes.
against the taxpayer exists; or
2) The financial position of the taxpayer c. The remedies of distraint and levy shall not availed
demonstrates a clear in ability to pay the of where the amount of tax involved is not more
assessed tax. than P100.
Notes: (new provisions) d. The judgement in the criminal case:
1) shall not only impose the penalty but
a) Prescribed minimum compromise rates 2) shall also order payment of the taxes
1) Financial incapacity - 10% of the basic
assessed tax. 4. Actual and Constructive Distraint.
2) Other cases - 40% of the basic a. Actual distraint - The physical taking of the
assessed tax. taxpayer’s personal property to answer for his tax
deficiency.
b) Compromise settlement subject to approval of b. Constructive distraint - The service of a notice
the Evaluation Board composed of the upon the taxpayer that he could not dispose of his
Commissioner and the four (4) Deputy personal property unit he has paid his tax
Commissioners: deficiency.
1) Where the basic tax exceeds
P1,000,000 or Notes: 1. Persons who shall seize and distraint personal
2) Where the settlement offered is less property (actual distraint):
than the prescribed minimum rates. a. Amount of delinquent tax is more than P1,000,000
- Commissioner or his duly authorized
c. Tax Liability may be abated or cancelled when: representative.
1) The tax or any portion thereof appears to b. Amount of delinquent tax is P1,000,000 or less -
be unjustly or excessively assessed; or Revenue District Officer
2) The administration and collection costs 2. The commissioner or his duly authorized
involved do not justify the collection of the representative shall have the power to lift
amount due order of distraint.
5. Distinction Between Actual and Constructive Distraint
 Actual Distraint Constructive Distraint sale, the goods of effect distrained shall be restores to
a. Personal property is a. Personal property is not the owner.
physically taken physically taken
9. Redemption of Property Sold
b. The taxpayer is b. There is no findings yet a. The property sold may be redeemed by the
already delinquent of a discrepancy, only delinquent taxpayer within one year from the
that the taxpayer is due date of sale by paying:
leaving the country of 1) the amount of public taxes,
disposing of his properly 2) penalties and
the fraud of creditors or 3) interest thereon from the date of delinquency
is in the process of to the date of sale together with
liquidation. 4) 15% interest per annum of the purchase price
6. Levy on Real Property from the date of purchase to the date of
a. After the expiration of the time required to pay redemption.
the delinquent tax or delinquent revenue, real b. The owner shall not be deprived of the
property may be levied upon before, possession of the property sold and shall be
simultaneously or after the distraint of entitled to the rents and other income thereof
personal property belonging to the delinquent. until the expiration of the time allowed for
b. Levy shall be effected by writing upon a duly redemption.
authenticated certificate showing the name of
the taxpayer and the amount to the tax and 10. Further Distraint or Levy
penalty due from him a description of the The remedy by distraint of personal property and levy
property of the upon which levy is made. on realty may be repeated if necessary until the full
c. Written notice of the levy shall be mailed to or amount due, including all expenses, is collected.
served upon the:
a. After the expiration of the time required to pay
the delinquent tax or delinquent revenue, real 11. Injunction not Available to Retrain Collection of Tax
property may be levied upon before, a. No court shall have the authority to grant an
simultaneously or after the distraint of injunction to restrain the collection of any
personal property belonging to the delinquent. national internal revenue tax, fee or charge
b. Levy shall be affected by writing upon a duly imposed by the Tax Code.
authenticated certificate showing the name of b. The Court of Tax Appeals can issue injunctions
the taxpayer and the amount to the tax and while in the exercise of its appellate
penalty due from him a description of the jurisdiction in cases pending before it. This is
property upon which levy is made. an exception to injunction rule.
c. Written notice of the levy shall be mailed to or c. The CTA may enjoin collection of taxes if in its
served upon the: opinion the same may jeopardize the interest
1. Register of Deeds of the province or city of the government and/or the taxpayer.
where the property is located and
2. upon the delinquent taxpayer, 12. Tax Lien
3. or if he is absent form the Philippines, to a. A legal claim or charge on property, either real
his agent of the manager of the business or personal, as security from the payment of a
in respect to which the liability arose tax obligation.
4. or if there is none, to the occupant of the
property in question. 13. Remedy for Enforcement of Statutory Penal Provisions
The remedy of enforcement of statutory penalties
7. Distinctions: Among Warrant of Distraint, Warrant of of all sorts shall be by criminal or civil action, as
Levy and Warrant of Garnishment. the particular situation may require, subject to the
approval of the Commissioner.
Distraint Levy Garnishment
a. As to Personal Real property Personal 14. Period for Assessment and Collection (Summarized).
subject property owned by property a. Return file as not false or fraudulent
matter owned by and and in owned by 1) Collection with prior assessment
in possession possession of the taxpayer a) Assessment shall be made within 3 years
of the the Taxpayer but in the from the date of Filing of return or from
Taxpayer. possession of the last day required by law for filing, if
a third party. the return was filed before such last day.
b. As to Purchased by Forfeited to Purchased by b) Collection shall be made within 5 years
disposition the the Government (new provision) from the date of
for want of Government Government then resold assessment, either by:
bidders or then resold to then sold to to meet (1) Summary proceedings, or
bids meet meet the deficiency. (2) Judicial proceedings
inadequate deficiency. deficiency. 2) Collection without prior assessment.
to satisfy a) No proceeding in court without assessment
tax for the collection shall be begun after
deficiency. expiration of the 3-year period.
c. As to No Advertiseme No b. Return filed was false or fraudulent with intent
advertisem advertisemen nt once a advertiseme to evade tax or no return was filed.
ent for sale t is required.
week for nt is 3) Collection with prior assessment
three weeks. required. a) Assessment shall be made at any time
8. Released of Distrained Property Upon Payment Prior to within 10 years after discovery of the
Sale falsity, fraud or omission.
If any time prior to the consummation of the sale all
proper charges are paid to the officer conducting the
 b) Collection shall be made within 5 years Q2 - Last day to issue valid warrant of distraint to
(new provision) from the date of collect the tax. __________
assessment, either by: Q3 - Assume issuance of warrant of distraint was
(1) Summary proceedings or collected on October 10, 2009, is the
(2) Judicial proceedings. issuance valid?
_______________________________
4) Collection without prior assessment.
a) A proceeding in court for the collection of d. Mr. Cruz filed an income tax return for the
tax my be filed without assessment, at any calendar year 2000 on March 10, 2001. The BIR
time within 10 years after the discovery of issued a deficiency income tax on April 10, 2002,
the falsity, fraud or omission. which has become final. When is the last day for
the BIR to collect? ________________
c. If before the expiration of the 3-year period, both the
Commissioner and the taxpayer have agreed in writing e. Date of decedent’s death - July 5, 2001.
to its assessment after such time Date the estate tax return was filed - January 2,
1. Assessment may be made within the period 2002. ________________
agreed. Last day for the BIR to make as assessment
2. The period so agreed upon may be extended by _________________________
subsequent written agreement before the
expiration of the period previously agreed upon. B. REMEDIES OF THE TAXPAYER
3. Collection shall be made within the period agreed
upon in writing before the expiration of the 5 year 17. Assessment defined.
period following the assessment by: Assessment is a notice to the taxpayer requiring
a) Summary proceedings, or payment within a specified time of the tax due from
b) Judicial proceedings him including interest and civil penalties.

15. Suspension of Running of Statute of Limitation 18. Protesting of Assessment.

a. The running of the 3-year period or the 10- a. When the Commissioner or his duly authorized
year period on the making of assessment and representative finds that proper taxes should be
the beginning of distraint or levy or a assessed, he shall notify the taxpayer of his
proceeding in court for collection, in respect to findings.
any deficiency, shall be suspended: b. A preassessment notice shall not be required in
1) For the period during which the Commissioner the following cases: (new provision):
is prohibited from making the assessment or 1) When finding for any deficiency tax is the
beginning distraint or levy or a proceeding in result of mathematical error in the
court and for 60 days thereafter. computation of the tax as appearing on the
2) When the taxpayer requests for reinvestigation face of the return or
which is granted by the Commissioner. 2) When a discrepancy has been determined
3) When the taxpayer cannot be located in the between that tax withheld and the amount
address given by him in the return filed upon actually remitted by the withholding agent; or
which, tax is being assessed or collected 3) When the taxpayer who opted to claim a
(except if the taxpayer informs the refund or tax credit of excess creditable tax
Commissioner of any change in address). for a taxable period was determined to have
carried over and automatically applied the
16. Exercises: same amount claimed against the estimated
a. Income tax return for 1996 income was filed tax liabilities for the taxable quarter or
April 2, 2000. Tax per return was P20,000. quarters of the succeeding taxable year; or
Tax per BIR audit was P50,000. 4) When the excise tax due on excisable articles
Q1 - Last day for assessment. _______________ has not been paid; or
Q2 - Suppose assessment was made on April 17, 5) When an article locally purchased or imported
2003, what is the defense of the taxpayer? by an exempt person, such as but not limited
____________________________________ to, vehicles, capital equipment, machineries
Q3 - Suppose the return filed was fraudulent and and spare parts, has been sold, traded or
was discovered by BIR on June 5, 2002, when transferred to non-exempt persons.
is the last day for assessment?
____________________________________ c. The taxpayer shall be informed in writing of
b. Income tax return for 2000 was filed June 10, the law and the facts on which the assessment
2001. is made; otherwise, the assessment shall be
Q1 - Last day to made valid assessment. void (new provisions)
_________________________ d. Within a period to be prescribed by the
Q2 - Suppose assessment was made on June 30, implementing rules and regulations, the
2004, will it be valid? ________________ taxpayer shall be required to respond to said
Q3 - Suppose no return was filed for 2000 income, notice. If the taxpayer fails to respond to said
and the failure to file a return was known to notice, the Commissioner or his duly
the BIR on January 5, 2002, when is the last authorized representative shall issue an
day for assessment? assessment based on his findings.
___________________________________
c. Income tax return for 2000 income was filed 19. Remedy Against an Assessment
April 12, 2001. Deficiency tax of P100,000 was a. Protest the assessment administratively.
assessed on October 1, 2003. Warrant of The taxpayer shall file a request for
distraint was issued on June 5, 2004. reconsideration or reinvestigation with the BIR
Q1 - Last day to made valid assessment. within 30 days from receipt of the assessment
____________________________ notice.
 b. Submit all relevant supporting documents to the done either simultaneously or one after
BIR. the other within the 2-year period to
Within 60 days from filing of protest, all relevant protect the interest of the taxpayer.
supporting documents should be submitted;
otherwise the assessment shall become final. 21. The Commissioner may, even without written claim
c. Appeal to Court of Tax Appeals (CTA), and case therefore, refund or credit any tax, where the face of
will be raffled to a CTA division the return upon which payment was made, such
Appeal to the CTA within 30 days: payment appears clearly to have been erroneously
1) From receipt of the adverse (unfavourable) paid.
decision of the CIR; or a. If the Commissioner made the taxpayer asking
2) From the lapse of the 180-day period from for refund believe that he would be credited
filing of the protests supporting documents. for the overpayment.
Note: b. If there is an agreement between the taxpayer
a. There is now a 180-day rule for the BIR to and the agent of Commissioner that they
decide on an administrative appeal. would wait for the decision of the SC to guide
b. Failure to appeal to Court of Tax Appeals shall them in the settlement of the question or
make the BIR’s decision final, executory and questions involved in the fraud.
demandable. 23. Forfeiture of Refund
d. In case of an adverse decision of the CTA division. A refund check certificate issued, which shall remain
The petitioner must first file a motion for unclaimed or uncashed within 5 years from the date of
reconsideration or a motion for new trial with the the said warrant or check was mailed or delivered,
same division within 15 days from receipt of the shall be forfeited in favor of the Government and the
said adverse. In case of denial of the said motion. amount shall revert to the general fraud.
e. Appeal to the Court of Tax Appeals en banc within 24. Forfeiture of Tax Credit
15 days after receipt of the denial of the motion A tax credit certificate issued, which shall remain
the CTA division. In case of adverse decision of unutilised after 5 years from the date of issue, shall,
the CTA en banc. The petitioner must first file a unless revalidated, be considered invalid, and shall not
motion for reconsideration or for new trial with be allowed as payment for internal revenue tax
the CTA en banc before the former could appeal liabilities of the taxpayer, and the amount covered by
with the Supreme Court. the certificate will revert to the general fund.
f. Appeal to the Supreme Court within 15 days after 25. Transitory Provision
receipt of unfavourable final decision of the CA, A tax credit certificate issued by the Commissioner of
raising questions of law. his duly authorized representative prior to January 1,
20. Remedy Against an Erroneously or Illegally Paid tax 1998, which remains unutilised or has a creditable
a. File a formal claim or refund with the BIR balance as of said date, shall be presented for
within 2 years from the date of payment of the revalidation with the Commissioner or his duly
tax. authorized representative on or before June 30, 1998.
b. Within 30 days (and within 2 years from the 26. Exercises:
payment made) from receipt of final a. 2000 net income of private educational institution
unfavourable decision on the claim of refund, was P200,000.
file an appeal with CTA division, raising Tax per return filed on April 10, 2001 P70,000
questions of facts and/or law. Correct tax (P200,000 x 10%) 20,000
c. In case of an adverse decision of the CTA Excess tax erroneously paid P 50,000
division. The petitioner must first file a motion
for reconsideration or a motion for new trial Q1 - Last day to file claim for refund with
with the same division within 15 days from Commissioner of Internal Revenue
receipt of the said adverse decision. In case of ___________________________________
denial of the said motion. Q2 - Last day to institute judicial action
d. Appeal to the Court of Tax Appeals en banc _________________________________
within 15 days after receipt of the denial Q3 - Suppose the claim for refund was filed on
motion the CTA division. In case of adverse September 10, 2002 and was denied by the
decision of the CTA en banc. The petitioner Commissioner of Internal Revenue.
must first file a motion for reconsideration or Decision of the CIR denying the refund was
for new trial with the CTA en banc before the received by the taxpayer on January 10,
former could appeal with the Supreme Court. 2003, what is the remedy of the
e. Appeal to the Supreme Court within 15 days taxpayer?______________
after receipt of unfavourable final decision of Q4 - Suppose claim for refund was filed on
the CA, raising questions of law. September 10, 2002 and the decision of the
CIR denying the claim was received by the
Note: a. If the tax is paid in instrallment, the two- taxpayer on April 15, 2003, can the
year period shall be counted from the taxpayer appeal to the CTA? -
date of payment. __________________________
b. The filing of the claim for refund with the Q5 - Last day to appeal to Court of Tax Appeals?
BIR and the Institution of judicial action _________________________
with the CTA to recover the tax can be
 MULTIPLE CHOICE

1. Which is not a taxpayer’s remedy after paying a tax? a. When the taxpayer is retiring from business subject
a. Claim for Tax credit to tax
b. Claim for Tax refund b. When he intends to leave the Philippines
c. Motion for reinvestigation c. When he removes his property from the Philippines
d. Criminal action against corrupt revenue officer d. When he suddenly transfers the principal office of
the business
2. Which is not a government remedy in tax collection?
a. Inquiry into taxpayer’s bank deposit 12. Taxpayer received assessment from BIR on February 22,
b. Compromise 2010. He filed motion for reconsideration on March 22,
c. Distraint and Levy 2010 which was denied by BIR. Remedy of taxpayer is?
d. Forfeiture a. Appeal to Court of Tax Appeals on or before April 22,
2010
3. Preliminary assessment notice is not required in the b. Appeal to Court of Tax Appeals on or before April 30,
following cases, except: 2010
a. Tax deficiency is due to mathematical error c. Appeal to Court of Tax Appeals on or before April 21,
b. Tax deficiency is due to unpaid VAT 2010
c. Tax deficiency is due to unpaid excise taxes d. Appeal to Court of Appeals on or before April 7,
d. Tax deficiency is due to withholding tax 2010

4. Which is incorrect about assessment? 13. Based on no. 12, But Court of Appeals decided in favor
a. It fixes the tax liability of a taxpayer of the taxpayer, Remedy of BIR is: (decision received on
b. It is an action to collect a tax July 20, 2010)
c. If not contested within 30 days from receipt it a. Appeal to Supreme Court within 15 days from July
becomes final and executory 20, 2010
d. It is void if done beyond the prescriptive period b. Appeal to Court of Tax Appeals-En Banc within 15
days from July 20, 2010
5. Nelson filed his ITR for 2009 on October 15, 2010. The c. Appeal to Court of Tax Appeals-En Banc within 30
last day for BIR to assess is on? days from July 20, 2010
a. October 15, 2020 c. April 15, 2013 d. None since government cannot appeal if lost in Tax
b. October 15, 2013 d. October 14, 2013 cases

6. Donor’s tax return for a donation made on January 15, 14. Based on no. 12, Court of Tax Appeals-En Banc decided
2010 was filed on January 31, 2010. Last day for BIR to in favor of BIR. Remedy is: (decision received by both
assess is on? parties on November 15, 2010)
a. February 28, 2013 c. February 14, 2013 a. BIR to appeal to Supreme Court within 15 days from
b. January 31, 2013 d. January 15, 2013 November 15, 2010
b. Taxpayer to appeal to Supreme Court within 15
7. Based on no. 6, but assume the return filed was days from November 15, 2010
fraudulent and was discovered on March 31, 2010. The c. Taxpayer to appeal to Supreme Court within 30
last day for BIR to assess is on? days from November 15, 2010
a. February 28, 2020 c. February 14, 2020 d. Taxpayer to appeal to Court of Appeals within 30
b. January 31, 2020 d. March 31, 2020 days from November 15, 2010

8. Piolo paid his income tax liability for 2009 on January 15. Based on no. 12, but the assessment became final and
15, 2010. It was found out later on June 30, 2010 that executory. The last day for BIR to collect is on:
he overpaid by more than P100,000. The last day to file a. March 22, 2015 c. February 22, 2015
a claim for tax refund is? b. March 22, 2020 d. April 22, 2015
a. April 15, 2013 c. June 30, 2012
b. April 15, 2012 d. June 30, 2013 16. Which statement is incorrect?
a. Taxes can be compromised due to financial
9. Assuming his claim for tax refund was denied and the incapacity of the taxpayer
denial was received on April 30, 2013. The proper b. Taxes can be compromised if doubt exists on the
remedy available to the taxpayer is? amount due
a. Appeal to Court of Tax Appeals on or before May 15, c. Taxes can be abated if they appear to be unjust or
2013 excessive
b. Appeal to Court of Tax Appeals on or before May 20, d. Taxes can be abated if doubt exists on the collectible
2013 amount
c. File a motion for reconsideration on or before May
30, 2013 17. Miramar’s income tax for 1999 was P75, 000, as shown
d. No more remedy since the 2 year period already in her income tax return (ITR). She filed her return only
expired on July 15, 2001 and paid the total amount upon filing
the return. The total amount payable is:
10. Who is not an agent of the BIR Commissioner in a. P113, 750 c. P98, 750
collecting taxes? b. P112, 500 d. P97, 500
a. The commissioner of Customs and his subordinates
for internal revenue taxed on imported goods. 18. Taxpayer was assessed deficiency income tax of P200,
b. The head of the appropriate government office and 000 payable on or before June 15, 2000. Within the
his subordinate for collection of energy tax. period however, he was only able to pay P100, 000 and
c. Banks duly accredited by the BIR for receipt of the balance only on August 30, 2000. The total tax due
internal revenue taxes. that he is liable should be:
d. Municipal/City mayors for collection of local taxes. a. P129, 155 c. P258, 333.33
b. P125, 000 d. P 250, 000
11. BIR Commissioner can terminate the taxable year in the
following cases except: