TAX REMEDIES

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There are remedies that may be availed of by the government.
There are remedies that may be resorted to by the taxpayer.
These remedies are either administrative or judicial.
Q: What is the difference between these administrative and judicial remedies?
A: Administrative remedies are those that do not require judicial proceedings,
Whereas judicial remedies are those that require /necessitate /warrant judicial actions or
proceedings.
REMEDIES OF THE TAXPAYER

These are legal actions which a taxpayer can avail to seek relief from the undue burden or oppressive
effect of tax laws, or as means to check possible excesses by revenue officers in the performance of
their duties.

Remedies before payment

A. Administrative remedies
a. Protest of assessment;
i. Reconsideration
ii. Reinvestigation

b. Compromise; and
c. Abatement

B. Judicial Remedies

Remedies after payment

A. Administrative remedies
a. Tax refund
b. Tax credit

B. Judicial remedies

REMEDIES OF THE GOVERNMENT

Q: What is the purpose of the remedies insofar as the government is concerned?

A: These remedies available to the government are designed to ensure the collection of taxes. In
resorting to these remedies, the government must observe/comply with the legal parameters that are
set forth in the tax laws.
These remedies are either administrative or judicial.
A. Administrative Remedies
1. Compromise;
2. Enforcement of a tax lien;
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3. Forfeiture;
4. Distraint of personal property;
5. Levy of real property;
6. Civil penalties;

B. Judicial Remedies
1. Civil action;
2. Criminal action;

Q: What are the requisites of a valid assessment under the NIRC?

A: The requisites of a valid assessment under the NIRC are as follows:
1. It must be a written notice and demand;
2. It must state the due tax liability of a taxpayer;
3. The taxpayer’s tax liability must be final;
4. It must state the law and the facts upon which it is based.
5. It must be served on and duly received by the taxpayer;

ASSESSMENT
An assessment contains not only a computation of tax liabilities, but also a demand for payment within
a prescribed period. It also signals the time when penalties and interests begin to accrue against the
taxpayer. To enable the taxpayer to determine his remedies thereon, due process requires that it must
be served on and received by the taxpayer.
- DETERMINING THE CORRECTNESS of TAX DUE and
- Giving a WRITTEN NOTICE of the FINDING to the taxpayer.
- ISSUING A DEMAND FOR PAYMENT of a tax LIABILITY OF DEFICIENCY
TAX ASSESSMENT – formal letter made by the BIR demanding the taxpayer to settle his liability
within an indicated period
Who makes assessment? CIR or his duly authorized representative
ASSESSMENT PERIOD-
-refers to a span of time allowed by law to investigate a taxpayer’s discrepancy.
Q: Which comes first, assessment or collection?
A: Assessment precedes collection except when the unpaid tax is a tax due per return as in the case
of a self-assessed income tax under the pay-as-you-file system in which case collection may be
instituted without need of assessment.
Q: When assessment is made ?
A: An assessment is deemed made only when the Collector of Internal Revenue RELEASES, MAILS
OR SENDS such notice to the taxpayer (CIR, v. Pascor Realty and Development Corporation, et. al. G.R.
No. 128315, June 29, 1999).
JEOPARDY ASSESSMENT
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A delinquency tax assessment made without the benefit of a complete or partial investigation by an
authorized revenue officer who has a reason to believe that the assessment and collection of a
deficiency tax will be jeopardized by delay caused by the taxpayer’s failure to:

a. Comply with audit and investigation requirements to present his books of accounts and/or
pertinent records, or

b. Substantiate all or any of the deductions, exemptions or credits claimed in his return (Sec. 3
(1)(a), R.R. 30-2002).

Date of filing the return Prescriptive period of Prescriptive period of

Assessment Collection
Before due date 3 years from due date 3 years from receipt of FAN
by taxpayer IF with PRIOR
ASSESSMENT

3 yrs from filing of

return/last day of filing of
return = NO PRIOR
ASSESSMENT

NOTE: If taxpayer files

fraudulent return or did not
file any return, the BIR may
collect without assessment
within 5 years of filing of
fraudulent return or
discovery of non-filing
On due date 3 years from due date
Beyond due date 3 years from actual filing
False Fraudulent filing 10 years from discovery of bad
faith/fraud
Non-filing 10 years from discovery of non-filing
Waiver by taxpayer: Depends on the agreement of the parties provided that the
agreement to extend is executed prior to the expiration of the original period of
assessment

Prescriptive period for FFF return – Sec 222 of NIRC as amended

Prescriptive period for ordinary cases- Sec 203 of the NIRC
Determining whether prescription to assess had set in
The important date to remember is the date when the demand letter or notice is released or
mailed or sent by the CIR to the taxpayer.

Provided the release was effected before the prescription sets in, the assessment is deemed made on
time, even if the taxpayer actually receives if after the prescriptive period.
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However, the fact that the assessment notice was mailed before the prescription period sets in must
be proved with substantial evidence by the CIR. The presumption that a letter duly directed and
mailed was received in the regular course of mail cannot be applied if there is no substantial evidence
to prove that the notice was indeed sent (Ingles, 2015).
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Protest under the NIRC

Q: What must be protested?

A: The final assessment notice or final letter of demand

Q: What do you file?

A: Request for reinvestigation or reconsideration

Q: Where do you file your protest under Income Tax?

A: BIR.

Q: When do you file?

A: Within 30 days from receipt of the final assessment notice or final letter of demand.

Protest under the Local Government Code (Section 195)

Q: Where do you file?

A: Local treasurer

Q: When do you file?

A: Within 60 days from receipt of the local tax assessment.

Protest under Real Property Tax (Section 252)

Q: What do you file?

A: Payment under protest is required.

Q: Where do you file?

A: Local treasurer.

Q: When do you file?

A: Within 30 days from the date of payment of taxes.

Preliminary Assessment

Q: Is preliminary assessment notice required?

A: Yes. The sending of a Preliminary Assessment Notice (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 by the tax authorities.

Q: What is the prescriptive period to respond?

A: 15 days from receipt of PAN.

Q: When there is no response given within 15 days, what will happen?

A: The BIR will issue the Final Assessment Notice (FAN) or Final Letter of Demand (FLD).

Reinvestigation v. REQUEST FOR REQUEST FOR

Reconsideration REINVESTIGATION RECONSIDERATION
Basis Newly discovered evidence Existing records

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Suspension of prescriptive Allowed Not allowed
period (Section 228)

General rule: PAN must first be sent before FAN.

Exceptions:

1. 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

2. When a discrepancy has been determined between the tax withheld and the amount actually
remitted by the withholding agent; or

3. When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a
taxable period was determined to have carried over and automatically applied the same amount
claimed against the estimated tax liabilities for the taxable quarter or quarters of the succeeding
taxable year; or

4. When the excise tax due on excisable articles has not been paid; or

5. 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.

Q: What is the purpose of PAN?

A: To rectify the amount. The taxpayer is given chance to explain why PAN is erroneous.

Q: Why are there 5 exceptions?

A: The ratio decidendi is that in the 5 exceptions, the BIR can easily rectify the assessment.

Q: Who can issue PAN?

A: BIR and its duly authorized representative

Q: Who are the duly authorized representatives?

A: Regional Revenue Directors.

Q: What is the purpose of the 60-day period after filing the administrative protest?
A: It is required in request for reinvestigation where relevant supporting documents shall be submitted.

Q: Does this apply to reconsideration?

A: NO.

Q: What is the 180-day period?

A: It is the period of inaction on the part of BIR. The taxpayer will have the option to either;
1. File a petition for review under Rule 42 within 30 days after the lapse of 180-day period; or
2. Await the final decision of the Commissioner of Internal Revenue.

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Q: What happens if there is a decision by the Commissioner?
A: If there is a decision, the taxpayer may opt to;
1. Appeal to the CTA within 30 days from receipt of the decision;or
2. File a request for reinvestigation within 30 days from receipt.

TAX REFUND

Tax refund v. Tax credit

Tax credit is not synonymous with tax refund.
Tax refund is defined as the money that a taxpayer overpaid and is thus returned by the taxing authority.
Tax credit, on the other hand, is an amount subtracted directly from one’s total tax liability.

1. Tax Refund – When a refund check or warrant remains unclaimed or uncashed within 5 years from
date of mailing or delivery.
2. Tax Credit – a Tax Credit Certificate which remains unutilized after 5 years from date of issue, shall be
invalid. Unless revalidated (Sec. 230, NIRC).

Tax Refund or Tax Credit may be forfeited to the Government

Two-year prescriptive period

No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the CIR
a claim for credit or refund within 2 years after the payment of the tax or penalty (Sec 204(C), NIRC).

No suit or proceeding shall be filed after the expiration of 2 years from the date of payment of the tax or
penalty regardless of any supervening cause that may arise after payment (Sec 229, NIRC).

It is necessary that the tax be paid in full, and that the claim for refund in the BIR as well as the
proceedings in the CTA be commenced within 2 years counted from the payment of the tax.

Thus, as a rule, the two-year prescriptive period runs from the payment of tax. However, the following
instances provide for different commencement of the two-year period.

Tax is paid in installments (For individuals): From the date of the final payment
Payments effected through the withholding tax system: From the date it falls due at the end of the
taxable year
Overpaid quarterly corporate income tax: From the date the final adjustment return is filed after the
end of the taxable year. The period is counted from the actual filing, not the last day allowed by law to file.

Q: Is tax refund available under the Local Government Code?

A: YES under Section 196 of the Local Government Code.
Q: Where do you file the tax refund?
A: The Local Treasurer.
Q: What is the Prescriptive Period?
A: 2 years from the date of payment or from the time he is entitled thereto.

Example;
For instance, local tax was paid in 2016. In 2017, there was finding to effect that this taxpayer was
exempt. What’s the reckoning date of the 2-year period? 2016 or 2017?

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2017 is from the time he is entitled thereto. But if it were a revenue tax, you should count that from the
date of payment.

Q: Is tax refund available to Real property Taxation?

A: YES. Section 253 allows refund.

Q: What is the Prescriptive period to claim syuch refund?

A: 2 years from the date of payment or from the time he is entitled thereto. Therefore, the doctrine of
supervening cause applies.

Q: Is refund available under the Tariff and customs Code?

A: YES.

Q: What is the prescription period?

A: Prescription period under Section 193 is Within 12 months from the date of payment of duties and
taxes. This is a new prescriptive period.

Q: What are the requisites for a tax refund under the NIRC?
A: The requisites are as follows;
1. There must be a written claim for refund filed by the taxpayer with the commissioner;
2. The claim for refund must be a categorical demand for reimbursement;
3. The claim for refund must be filed within two years from date of payment of the tax or penalty
regardless of any supervening cause;

Q: may a withholding agent file a written claim for refund?

A: YES. The withholding agent is not only the agent of the government. It is also an agent of the taxpayer.
As an agent of the taxpayer, the withholding agent has two fold duties to pay the tax and to file the return.
So with that obligation to pay the tax, the withholding agent is technically considered as taxpayer.
Withholding agent has the legal obligation to file the return of the taxpayer to pay the tax of the taxpayer
as such withholding agent technically considered as taxpayer. That is the jurisprudence there.

Q: In case of a leap year, which will prevail; the Civil Code or the Administrative Code?
A: The Administrative Code(12 months regardless of number of days). Lex posterior derogat prior. It
means that recent law prevails over prior law. The prior law must yield to recent law otherwise. The
recent law is the 1987 Administrative Code. That is you’re your reason why.

PROBLEM 1:

Q: GJM filed its Annual Income Tax Return for the taxable year 1999 on April 12, 2000. BIR sent
FAN through registered mail on April 14, 2003, well within the 3-year prescriptive period. GJM
however denies having received any FAN. BIR failed to prove that GJM received the FAN. Should
the assessment be given due course?

Tax Return Filed for taxable year 1999- April 12, 2000
BIR sent FAN – April 14, 2003

Company denies having received any FAN

BIR failed to prove that GJM received the FAN.

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Should the assessment be given due course?

A: NO. When an assessment is made within the prescriptive period, as in the case at bar, receipt by the
taxpayer may or may not be within said period. But the rule does not dispense with the requirement that
the taxpayer should actually receive the assessment notice, even beyond the prescriptive period. If the
taxpayer denies having received the assessment from the BIR, it then becomes incumbent upon the latter
to prove by competent evidence that such notice was indeed received by the addressee.
Here, the onus probandi has shifted to the BIR to show by contrary evidence that GJM indeed received the
assessment in the due course of mail. While it is true that an assessment is made when the notice is sent
within the prescriptive period, the release, mailing, or sending of the same must still be clearly and
satisfactorily proved (CIR v. GJM, G.R. No. 202695, February 29, 2016).

PROBLEM 2:
On March 10, 2010, Continental, Inc. received a preliminary assessment notice (PAN) dated March 1,
2010 issued by the Commissioner of Internal Revenue (CIR) for deficiency income tax for its taxable year
2008. It failed to protest the PAN. The CIR thereupon issued a final assessment notice (FAN) with letter of
demand on April 30, 2010. The FAN was received by the corporation on May 10, 2010, following which or
on May 25, 2010, it filed its protest against it. The CIR denied the protest on the ground that the
assessment had already become final and executory, the corporation having failed to protest the PAN. Is
the CIR correct? Explain. (5%)
May 10, 2010 – received PAN (dated March 1, 2010) for taxable year 2008
Failed to protest PAN.
CIR issued FAN with Final Letter of Demand on April 30, 2010
FAN received by Corp May 10, 2010
May 25, 2010 – filed Protest
CIR denied protest – ground- Assessment had already become Final and Executory having failed to
protest the PAN.
Is the CIR Correct?
No. The issuance of preliminary assessment notice (PAN) does not give rise to the right of the
taxpayer to protest. What can be protested by the taxpayer is the final assessment notice (FAN) or
that assessment issued following the PAN. Since the FAN was timely protested (within 30 days
from receipt thereof, the assessment did not become final and executory

Local Taxation: Business Tax: Taxable Period, Payment in Instalment

MNO Corporation was organized on July 1, 2006, to engage in trading of school supplies, with principal
place of business in Cubao, Quezon City. Its books of accounts and income statement showing gross sales
as follows: July 1, 2006 to December 31, 2006 P5,000,000. January 1, 2007 to June 30, 2007 P10,000,000.
July 1, 2007 to December 31, 2007 15,000,000.

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Since MNO Corporation adopted fiscal year ending June 30 as its taxable year for income tax purposes, it
paid its 2% business tax for fiscal year ending June 30, 2007 based on gross sales of P15 million.
However, the Quezon City Treasurer assessed the corporation for deficiency business tax for 2007 based
on gross sales of P25 million alleging that local business taxes shall be computed based on calendar year.
Q1: Is the position of the city treasurer tenable? Explain.
A1: Yes. Under Sec. 165 of the Local Government Code, the taxable period for the payment of
business taxes is the calendar year.
Q2: May the deficiency business tax be paid in installments without surcharge and interest? Explain.
A2: Yes, provided there is a valid tax ordinance enacted for that purpose that does not impose
such surcharge and/or interest on any taxes not paid (Sec. 192, Local Government Code).

Taxpayer: Local Tax; Period to File Protest and Appeal

On May 15, 2009, La Manga Trading Corporation received a deficiency business tax assessment of
P1,500,000.00 from the Pasay City Treasurer. On June 30, 2009, the corporation contested the
assessment by filing a written protest with the City Treasurer. On October 10, 2009, the corporation
received a collection letter from the City Treasurer, drawing it to file on October 25, 2009 an appeal
against the assessment before the Pasay Regional Trial Court (RTC). (IXa) Was the protest of the
corporation filed on time? Explain.

SUGGESTED ANSWER: The protest was filed on time.

The taxpayer has the right to protest an assessment within 60 days from receipt thereof (Sec 195,
LGC).

(IXb) Was the appeal with the Pasay RTC filed on time? Explain.

SUGGESTED ANSWER:
The appeal was not filed on time. When an assessment is protested, the treasurer has 60 days
within which to decide. The taxpayer has 30 days from receipt of the denial of the protest or from
the lapse of the 60-day period to decide whichever comes first, otherwise the assessment becomes
conclusive and unappeallable.
Since no decision becomes conclusive and unappeallable. Since no decision on the protest was
made, the taxpayer should have appealed to the RTC within 30 days from the lapse of the period
to decide the protest (Sec 195, LGC).
PROBLEM
The taxpayer received an assessment notice on April 15, 2019 and filed its request for reinvestigation
against the assessment on April 30, 2019. Additional documentary evidence in support of its protest was
submitted by it on June 29, 2011. If no denial of the protest was received by the taxpayer, when is the last
day for the filing of its appeal to the CTA?
PAN- April 15, 2011
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Request for Reinv- April 30, 2019 (60 days
Additional Evidence- June 29, 2019
(A) November 30, 2011; (B) December 30, 2011; (C) January , 2020; (D) February 28, 2012.
Using the same facts in the immediately preceding number, but assuming that the final decision on the
disputed assessment was received by the taxpayer on July 30, 2011, when is the last day for filing of the
appeal to the CTA.
(A) August 30, 2011; (B) September 30, 2011; (C) December 30, 2011; (D) January 30, 2012.
PROBLEM
Q: On Mar. 12, 2001, REN paid his taxes. Ten months later, he realized that he had overpaid and
immediately filed a claim for refund with the CIR. On Feb. 27, 2003, he received the decision of the
CIR denying REN's claim for refund. On Mar. 24, 2003, REN filed an appeal with the CTA. Was his
appeal filed on time or not?

A: NO, his appeal was not filed on time. The 2-year period for filing a claim for refund is not only a
limitation for pursuing the claim at the administrative level but also for appealing the case to the CTA.
The law provides that "no suit or proceeding shall be filed after the expiration of 2 years from the date of
the payment of the tax or penalty regardless of any supervening cause that may arise after payment.
Since the appeal was only made on Mar. 24, 2003, more than two years had already elapsed from the time
the taxes were paid on Mar. 12, 2003. Accordingly, REN had lost his judicial remedy because of
prescription.

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