GROUP 1 Tax Remedies

GROUP 1 REPORT
REMEDIES OF THE TAXPAYER PROTESTING UNDER NATIONAL INTERNAL

REVENUE TAXES
A person adversely affected by the action taken by BIR can avail of:
1. Administrative remedies
2. Judicial remedies
..to question the enforcement of tax collection. Exhaustion of Administrative remedies

must first be made before seeking judicial remedies.
PROCEDURAL REMEDIES AVAILABLE TO THE TAXPAYER
A. ADMINISTRATIVE REMEDIES:
1. TAX AUDIT
 This includes the examination of books o accounts and other accounting

records of the taxpayers by revenue officers (RO) to determine the correct
tax liability.
 The RO is allowed only 120 days to conduct the audit and submit the
required report of investigation from the date of receipt of a Letter of
Authority (LA)
 If RO is unable to submit his final report o investigation within the 120 day
period, he must then submit a Progress report to his Head of Ofice, and
surrender the LA for revalidation.
 If the RO finds:
a. No deficiency-audit ends
b. If there is any deficiency- he shall inform the taxpayer and write in his
report if the taxpayer is amenable to his finding.
 If amenable to his findings- taxpayer will pay the tax
 Not amenable- the RO shall state in his audit report that the
taxpayer does not agree with his findings. Such report is
submitted to Revenue District Officer or Special Investigation
division or to the Chief Division for review and evaluation
Note: Letter of authority refers to the letter informing the taxpayer that a certain
Revenue Officer RO is authorized to examine the books of accounts and other
accounting record of said taxpayer for the purpose of verifying his tax liabilities during a
taxable year.
2. PRELIMINARY ASSESSMENT NOTICE (PAN)
 After the review and evaluation by the Commissioner or his duly
authorized representative, as the case may be, it is determined that :
a. No sufficient basis for assessment- case shall be dismissed;
b. There exist sufficient basis to assess the taxpayer for any deficiency
taxes - the said office shall issue to the taxpayer a PAN for the
proposed assessment. (Unless PAN is not required)
 It shall show in detail the facts and the law, rules and regulations, or
jurisprudence on which the proposed assessment is based. (part of due
process requirement)
Note: Prior to the issuance of the PAN, the taxpayer may be allowed to make voluntary
payments of probable deficiency taxes and penalties.
3. REPLY TO PAN
 The taxpayer is given 15 days from receipt of PAN to file a written reply
contesting the proposed assessment
 Failure to reply: TP is considered in default, and a Formal Letter
of Demand (FLD) and Final Assessment Notice (FAN) is issued
calling for payment of the taxpayers deficiency tax liability, inclusive
of the applicable penalties.
 If he responds but disagrees to the findings: a FLD/ FAN shall
be issued within 15 days.
Note: Failure to reply to PAN will not bar the taxpayer from protesting the FAN because
PAN is not the final assessment which can be protested as contemplated under NIRC.
4. FORMAL LETTER OF DEMAND AND FINAL ASSESSMENT NOTICE

ISSUANCE
 The CIR or his duly authorized representative may issue FLD/FAN:
a. If there is no need to issue a PAN, because circumstances show that it
falls within the exception for issuance of PAN,
b. If the Taxpayer is in default for failure to respond to a PAN within the
period of 15 days from receipt of PAN.
c. If the CIR or his duly authorized representative does not agree with the
justifications stated by the TP in his reply to the PAN.
 If the Taxpayer, within 15 days from receipt of PAN, responds that he
disagrees with the findings of deficiency taxes, an FLD / FAN shall be
issued within 15 days from filing of taxpayers response calling for payment
of taxpayers deficiency tax liability, inclusive of applicable penalties.
5. FILING OF ADMINISTRATIVE PROTEST AGAINST THE FAN
In case of disputed assessment, the TP as against the FAN may PROTEST the
assessment with the Commissioner within 30 days from receipt of FAN. Otherwise, the
assessment becomes final and executor and not appealable to the CTA.
 Taxpayer may:
1. Request for reconsideration
 re-evaluation of assessment based on existing records without need of
additional evidence.
Note: it does not toll the 30 day period to appeal to CTA
2. Request for reinvestigation
 Re-evaluation of assessment based on newly discovered evidence or
additional evidence the he intends to present.
Note: it tolls the 30 day period. (interrupted)
 Taxpayer is given 60 days to submit all relevant supporting documents,
otherwise, the assessment shall attain FINALITY.
3. No protest filed against FLD /FAN within 30 days from date of receipt
of FAN/FLD
 Assessment shall attain FINALITY. No request for reinvestigation or
reconsideration shall be granted on tax assessment that have already
become final and executor and demandable.
Note: Issuance of FLD/ FAN beyond the 15 day period is still valid, provided it is issued
within the period of limitation to assess internal revenue taxes. However, revenue
officers who caused the delay shall be subject to administrative sanctions as provided
by law and pertinent revenue issuances.
Note: An FLD/FAN issued reiterating the immediate payment of deficiency taxes and
penalties previously made in the PAN is a denial of the response to PAN
6. OTHER REMEDIES
A. ENTERING INTO A COMPROMISE

-Before payment, the taxpayer may offer an amount which is lesser than the
amount o tax liability assessed to him. It is available at any stage of litigation
even on appeal provided , prior leave of court must be obtained.
- it is not available after a final judgment because by virtue of final judgment,
the government already acquired a vested right.
B. JUDICIAL REMEDIES
7. APPEAL TO THE COURT OF TAX APPEALS (CTA)
A. The CIR is given 180 days from the filing of REQUEST FOR
RECONSIDERATION or THE RECEIPT OF RELEVANT SUPPORTING
EVIDENCE TO DECIDE.
 Protest denied:
:TP may appeal the decision of CIR to the CTA division within 30 days via
a petition for review, otherwise the same shall attain finality.
 Does not act upon the protest
:TP can await the decision of the CIR and appeal to the CTA within 30
days from receipt of decision via a Petition for Review
:TP may treat the same as denial and appeal to the CTA division within 30
days via a petition for review.
B. The CTA is given 12 months from the time the case is submitted for decision
within which to decide.
 Grants the petition and reverses the decision of CIR
- The CIR may file a MR or MNT within 15 days with the same division,
otherwise, the case against the TP will be dismissed.
- Denial of the MR or MNT may be appealed to the CTA EN BANC
within 15 days from the receipt of denial
 Denies the Petition and Affirms the decision of the CIR
- TP may file a MR or MNT within 15 days with the same division ,
otherwise, the decision attains finality
- Denial of MR/MNT may be appealed to the CTA en Banc within 15
days from receipt of the denial.
C. CTA en Banc is given a period of 12 months within which to decide a case
 Decision of CTA en banc may be a subject of MR

 The party adversely affected by the decision may file a PETITION FOR
REVIEW ON CERTIORARI under rule 45 with the SC.
D. The SC has a period of 24 months from the time the case is submitted for
decision within which to decide
 The decision of SC granting or denying the Petition may be the subject

of a MR, after which the decision shall become FINAL!!
OTHER REMEDIES AFTER PAYMENT
1. FILING OF TAX CREDIT

- Use Tax credit within 5 years or else, UNUSABLE.
- After Payment, a tax credit certificate could be issued to the taxpayer,
which may be applied against any internal revenue tax for which the
taxpayer is liable.
- The TP asks that the money paid be applied to his existing tax liability
except withholding taxes.
- Note: not applicable to withholding taxes, for which TP is directly

liable.
2. TAX REFUND
- Actual reimbursement of tax
- TP asked for the restitution of the money paid as tax
Grounds for refund:

1. Taxes illegally collected
2. Taxes excessively collected
3. Tax paid by the taxpayer by mistake
Steps of filing of claim for refund/credit
a. A written claim for refund/credit by the Taxpayer shall be filed with the CIR
within 2 years after the payment of tax or Penalty. Written claim is a mandatory
requisite!
-the 2year period is not only a limitation for filing a claim for reund at the
administrative level but also a limitation for appealing the case to the CTA.
Note: even without a written claim, the BIR Commissioner may refund or cresit
any tax I, o the face of the return upon which payment was made, it appears
clearly to have been erroneously paid.
b. If the 2 year period is about to run out , and the CIR hast decided, you can
already go to the CTA. The 30 day period to appeal to the CTA must be within
the 2 year prescriptive period.
- TP must show proof of payment of tax. The actual receipt from
government of the tax sought to be recovered and this requires factual
proof.
Date of
Claim tax
payment
refund or
Petition for
credit with
review (30 days
CIR CTA DIVISION
within 2yrs)
Petition
for
certiorari
within 15
days
SUPREME
COURT

GROUP 1 Tax Remedies

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GROUP 1 REPORT

REMEDIES OF THE TAXPAYER PROTESTING UNDER NATIONAL INTERNAL

..to question the enforcement of tax collection. Exhaustion of Administrative remedies

PROCEDURAL REMEDIES AVAILABLE TO THE TAXPAYER

 This includes the examination of books o accounts and other accounting

4. FORMAL LETTER OF DEMAND AND FINAL ASSESSMENT NOTICE

5. FILING OF ADMINISTRATIVE PROTEST AGAINST THE FAN

A. ENTERING INTO A COMPROMISE

7. APPEAL TO THE COURT OF TAX APPEALS (CTA)

C. CTA en Banc is given a period of 12 months within which to decide a case

 Decision of CTA en banc may be a subject of MR

 The decision of SC granting or denying the Petition may be the subject

OTHER REMEDIES AFTER PAYMENT

1. FILING OF TAX CREDIT

- Note: not applicable to withholding taxes, for which TP is directly

Grounds for refund:

Steps of filing of claim for refund/credit

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