 Tax Remedies are the processes or

procedures available to and employed by the

State, to assess ad collect taxes, or by the
taxpayer to contest and refuse to pay the tax
due on a disputed assessment.
 Administrative Remedies:
◦ 1. To make deficiency assessments within 3years or 10
years, as the case may be; and
◦ 2. To enforce deficiency assessments and collect taxes
within 5 years through:
a. Distraint of personal property;
b. Levy of real property;
c. enforcement of tax liens;
d. pursuit of judicial proceeding to collect;
e. enforcement of forfeiture of property;
f. enforcement of statutory penal provisions;
g. compromise, abatement, or cancellation of taxes; and/or
h. suspension of business operations.
 Judicial Remedies:
1.File civil action; and/or
2. File criminal action.
 Administrative Remedies:
◦ 1. To protest against assessment;
◦ 2. To compromise;
◦ 3. To redeem property after sale at public auction;
and
◦ 4. To file a claim for tax refund or tax credit.

 Judicial Remedies:
1.File an ordinary civil action; and
2. For refunds and protest of deficiency tax
assessment, to file a petition before the Court of
Tax Appeals (CTA)
 To assess and collect all internal revenue taxes,
fees, and charges;
 To enforce al forfeiture, penalties, and fines
connected with the assessment and collection of
all internal revenue taxes, fees, and charges;
 To execute judgment in all cases decided in favor
of BIR by the CTA and the ordinary courts;
 To effect and administer the supervisory and
police power conferred to BIR by the 1997 Tax
Code, as amended, or other laws.
 To interpret the Tax Code and Other Tax Laws subject to
review by the Secretary of Finance;
 To decide disputed assessments, refunds, penalties, and
other matters;
 To obtain information and to summon, examine and take
testimony of persons;
 To make assessments;
 To prescribe real property values;
 To inquire into Bank deposits;
 To prescribe additional procedural or documentary
requirements;
 To not allow withdrawal of any return, statement or
declaration, although the same may be amended;
 To examine any book, paper, record, or other date which may be
relevant or material to such inquiry;
 To obtain information from: taxpayer himself, any office or officer of
the national and local governments, third party information;
 To summon the person liable for tax or required to file a return or
any person having possession, custody or care of the books of
accounts;
 To take such testimony of the person concerned under oath as may
be relevant and material;
 To cause revenue officers and employees to make a canvass from
time to time to any revenue district or region and inquire concerning
person who are liable to pay internal revenue taxes.
 To examine the returns and determine tax
dues;
 Assess the proper tax on the Best Evidence
Obtainable;
 Conduct inventory-taking, surveillance and to
prescribe presumptive gross sales and
receipts;
 Issue jeopardy assessments and terminate
taxable period.
 A notice to the effect that the amount therein
stated is due and a demand for payment
thereof. (Petronila Tupax v. Hon. Benedicto
Ulep, 316 SCRA 118,126)
 The determination of amounts due from a
person obligated to make payments. (SMI-ED
Philippines Technology, Inc. v. Commissioner
of Internal Revenue, 739 SCRA 691)
 1. Self-assessment– When the taxpayer computes his
own liability, files his return and pays the tax based on
his computation
 2. Deficiency assessment– this occurs upon discovery
of the BIR that the self-assessment was either deficient
or when no return was made by the taxpayer
 3. Jeopardy assessment – made by an authorized
Revenue Officer without the benefit of a complete or
partial audit, when the Revenue Officer believes that
the assessment and the collection of tax will be
jeopardized by the delay caused by the taxpayer’s
failure to comply with audit and investigation
requirements and substantiate any or all claims,
deductions, credit in his return.
 4. Disputed Assessment – assessment made by BIR is
contested by the taxpayer and asks BIR for a
reconsideration or reinvestigation of the findings or
the cancellations of the deficiency assessment.
GR: Internal Revenue Taxes are self-assessing and do not
require the issuance of an assessment notice in order to
establish the tax liability of a taxpayer (Tupaz v.Ulep, 316
SCRA 118). The NIRC follows the pay-as-you-file system
of taxation under which the taxpayer computes his own
tax liability, prepares the return, and pays the tax as he
files the return.
XPN:
 1. When the taxable period of a taxpayer is terminated
(Sec. 6 [D], NIRC)
 2. In case of deficiency tax liability arising from a tax audit
conducted by the BIR (Sec. 56 [B], NIRC)
 3. Tax lien (Sec. 219, NIRC)
 4. Dissolving corporation (Sec. 52 [c], NIRC)
 5. Improperly Accumulated Earnings Tax
 A deficiency assessment is a notice to the
taxpayer, which contains a computation of his or
her liabilities, and a demand to pay the same.
(computation is result of an audit)
 Tax assessment is the official action of an officer
authorized by law in ascertaining the amount of
tax due under the law from a taxpayer. This
action necessarily involves:
 1. The computation of the sum due;
 2. Giving notice to that effect to the taxpayer; and
 3. The making, simultaneously with or sometime after the
giving of notice, of a demand upon him for the payment of
the deficiency stated .
 1. In writing and signed by the BIR;
 2. Contains the law and the facts on which the
assessment is based (basis must be provided);
 3. Contains a demand for payment within the
prescribed period;
 4. Must be served on and received by the
taxpayer.

The taxpayers shall be informed in writing of the

law and the facts on which the assessment is
made; otherwise, the assessment shall be void.
Moreover, the regulations provide that the
Formal Letter of Demand and Final
Assessment Notice (FLD/FAN) shall be issued
by the Commissioner or his duly authorized
representative. The FLD/FAN 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
assessment shall be void (RR 18-13).
 1. Prima facie presumed correct and made in good faith .
The burden of proof is on the taxpayer contesting the validity or
correctness of an assessment to prove not only that the CIR is wrong
but the taxpayer is right.
 2. Should be based on Actual facts
◦ However, in the absence of the accounting records of a taxpayer,
his tax liability may be determined by estimation. The CIR is not
required to compute such tax liabilities with mathematical
exactness.
 3. Discretionary on the part of the Commissioner
 Mandamus cannot lie to compel the CIR to impose deficiency tax
assessment
 4. Must be Directed to the right party
 5. The authority vested in the Commissioner to assess taxes may be
Delegated
 Before the delegated revenue officer can conduct examination or
assessment, there must be a clear grant of authority. This
authority is embodied in a Letter of Authority (LOA)
Pursuant to CIR’s power to make assessment, the CIR shall assess
the proper tax on the best evidence obtainable:
1. When a report required by law as a basis for assessment
of any internal revenue tax shall not be forthcoming within the
time fixed by law or regulation, or
2. Any such report is false, incomplete or erroneous

 The "best evidence" includes the corporate and accounting

records of the taxpayer who is the subject of the assessment
process, the accounting records of other taxpayers engaged in
the same line of business, including their gross profit and net
profit sales.

 The best evidence obtainable may consist of hearsay evidence,

such as the testimony of third parties or accounts or other
records of other taxpayers similarly circumstanced as the
taxpayer subject of the investigation.
The CIR shall make or amend the return from
his own knowledge and from such
information as he can obtain through
testimony or otherwise:
1. In case a person fails to file a required
return or other document at the time
prescribed by law; or
2. Willfully or otherwise files a false or
fraudulent return or other document
The CIR shall compute income for taxation in
accordance with the method as in his opinion
clearly reflects income:
1. If no method of accounting was
employed by the taxpayer, or
2. The accounting method employed does
not clearly reflect the income.
 1. Net worth method
 2. Cash expenditure method
 3. Percentage method
 4. Bank deposit method
 5. Unit and value method
 6.Third party information or access to records
method
 7. Surveillance and assessment method
 8. Such methods as in the opinion of the BIR
Commissioner clearly reflect the income
A method of reconstructing income which is
based on the theory that if the taxpayer’s net
worth has increased in a given year in an
amount larger than his reported income, he
has understated his income for the year.
 1. When the tax law itself is silent on prescription, the tax is
imprescriptible;
 2. When no return is required, tax is imprescriptible and tax may
be assessed at any time as the prescriptive periods provided in
Sec. 203 and 222, NIRC are not applicable. Remedy of the
taxpayer is to file a return for the prescriptive period to
commence.
 3. Prescription is a matter of defense, and it must be proved or
established by the taxpayer relying upon it.
 4. Defense of prescription is waivable, such defense is not
jurisdictional and must be raised seasonably, otherwise it is
deemed waived.
 5. Being a remedial measure, it should be interpreted liberally in
order to protect the taxpayer.
 6. If the last day of the period falls on a Saturday, a Sunday or a
legal holiday in the place where the Court sits, the time shall not
run until the next working day.
The right to assess must be done within 3 years from
the date of:
1. Actual filing of the return, or
2. From the last date prescribed by law for the filing
of such return, whichever is later.

XPN:
 1. False or fraudulent return with intent to evade tax:
within 10 years from discovery of falsity or fraud
 2. Failure to file any return at all: within 10 years
from discovery of omission to file a return
 3. Waiver of statute of limitations in writing, which
must be made before the expiration of the period of
assessment of taxes: period agreed upon.
 Tax return refers to the form prescribed by the
BIR showing basic information about the taxpayer
and the computation of his tax liability, which is
required to be filed within the periods prescribed
by law and used as the basis for payment of tax
assess by the taxpayer. Two types of returns are
(a) original and (b) amended return.

 In order that the filing of return may serve as the

starting point of the period of the making of
assessment, the return must be substantially
complete as to include the needed details on
which the full assessment may be made.
 If the taxpayer files an amended return which is
substantially different from the original return, the
period of prescription of the right to issue the
deficiency assessment should be counted from the
filing of the amended return and not the original
return. To hold otherwise would pave the way for
taxpayers to evade payment of taxes by simply
reporting in their original return heavy losses and
amending the same after the CIR has lost his
authority to assess the proper tax.

Amendment considered Substantial

 1. There is under declaration (exceeding 30% of that
declared) of taxable sales, receipts or income; or
 2. There is overstatement (exceeding 30% of
deductions)
 If the taxpayer files the wrong return, it is as though
the taxpayer filed no return at all. This is true even if
all the necessary information was reflected in the
erroneous return. In situations like this, the 10-year
prescriptive period will apply.

 Section 222 (b) of the NIRC provides that the CIR or

her duly authorized representative and the taxpayer
or its authorized representative may agree in writing
as to a specific future date within which to assess the
taxpayer for internal revenue taxes for a given
taxable period, before the expiration of the period to
assess taxes.

 An assessment issued as a result of the waiver of the

prescriptive period is known as an “extended
assessment”, which has a prescriptive period for
collection of five (5) years from the time of issuance
of the assessment.
 1. The waiver may be, but not necessarily, in the form prescribed by RMO No. 20-90 or
RDAO No. 05-01.
 2. Except for waiver of collection of taxes which shall indicate the particular taxes
assessed, the waiver need not specify the particular taxes to be assessed nor the
amount thereof, and it may simply state "all internal revenue taxes" considering that
during the assessment stage.
 3. the taxpayer is charged with the burden of ensuring that the waivers of statute of
limitation are validly executed by its authorized representative. The authority of the
taxpayer's representative who participated in the conduct of audit or investigation shall
not be thereafter contested to invalidate the waiver.
 4. The waiver may or may not be notarized. It is sufficient that the waiver is in writing
as specifically provided by the NIRC.
 5. Considering that the waiver is a voluntary act of the taxpayer, the waiver shall take
legal effect and be binding on the taxpayer upon its execution.
 6. lt shall be the duty of the taxpayer to submit its duly executed waiver to the CIR or
officials previously designated in existing issuances or the concerned revenue district
officer or group supervisor as designated in the Letter Of Authority/Memorandum of
Assignment who shall then indicate acceptance by signing the same. Such waiver shall
be executed and duly accepted prior to the expiration of the period to assess or to
collect.
 7. There shall only be two (2) material dates that need to be present on the waiver:
a. The date of execution of the waiver by the taxpayer or its authorized
representative; and; b. The expiry date of the period the taxpayer waives the statute of
limitations
 8. Before the expiration of the period set on the previously executed waiver, the period
earlier set may be extended by subsequent written waiver
Effect of Failure to conform to the
requirements of waiver of the statute of
limitations.
It is invalid and ineffective to extend the
prescriptive period to assess taxes.
 There is a prima facie evidence of false or
fraudulent return when the taxpayer substantially
under declared his taxable sales, receipts or
income, or substantially overstated his
deductions. The taxpayer’s failure to report
sales, receipts or income in an amount exceeding
30% of that declared per return, and a claim of
deduction in an amount exceeding 30% of actual
deduction shall render the taxpayer liable for
substantial under declaration and over
declaration, respectively, and will justify the
imposition of the 50% surcharge on the
deficiency tax due from the taxpayer .
 1. When taxpayer cannot be Located in the address given by him in
the return.
XPN: He informs the CIR of any change in his address thru a
written notice to the BIR;
 2. When the taxpayer is Out of the Philippines;
 3. When the Warrant of distraint and levy is duly served upon the
taxpayer, his authorized representative or a member of his
household with sufficient discretion and no property is located;
 Only period to collect is suspended.
 4. Where the CIR is prohibited from making the assessment or
beginning distraint or levy or a proceeding in court for 60 days
thereafter, such as where there is a Pending petition for review in
the CTA from the decision on the protested assessment.
 5. Where CIR and the taxpayer Agreed in writing for the extension of
the assessment, the tax may be assessed within the period so
agreed upon
 6. When the taxpayer Requests for reinvestigation which is granted
by the Commissioner .
 7. When there is an Answer filed by the BIR to the petition for review
in the CTA .
 A civil penalty, also know as surcharge, is
imposed by law as an addition to the basic
tax required to be paid (Sec. 248, NIRC).A
surcharge is a civil administrative sanction
provided as a safeguard for the protection of
the State revenue and to reimburse the
government for the expenses of investigation
and the loss resulting from the taxpayer’s
fraud. A surcharge added to the main tax is
subject to interest.
 a. Failure to File any return and pay the tax due thereon as required
under the provisions of the NIRC or rules and regulations on the date
prescribed,
 b. Failure to pay the deficiency tax within the Time prescribed for its
payment in the notice of assessment.
In cases of late payment of a deficiency tax assessed, taxpayer shall be liable
for the delinquency interest incident to late payment (RR 18-2013).
 c. Unless otherwise authorized by the CIR, filing a return with an internal
revenue officer Other than those with whom the return is required to be
filed
 d. Failure to Pay the full or part of the amount of tax shown on any
return required to be filed under the provisions of the NIRC or rules and
regulations, 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

NOTE: There is no 25% surcharge when tax return is filed on time and paid
the full amount stated in the return, but subsequently discovered that
the return filed and the amount paid was erroneous.
 a. Willful neglect to file the return within the period
prescribed
- If the taxpayer voluntarily files the return without
notice from BIR, only 25% surcharge shall be imposed for
late filing and late payment of tax. But if the taxpayer files
the return after prior notice in writing from BIR, then the
50% surcharge will be imposed. Thus:
a. No demand from the BIR and the taxpayer pays,
albeit late, 25%
b. With demand by the BIR, 50%
 b. False or fraudulent return is willfully made
The fraud contemplated by law is actual fraud, not
constructive fraud. It must be intentional fraud, consisting
of deception willfully and deliberately done or resorted to.
Negligence, whether slight or gross, is not equivalent to
fraud with intent to evade the tax contemplated by law
 1. General interest – There shall be assessed and collected on any unpaid amount of
tax, interest at the rate of 20% per annum, or such higher rate as may be prescribed by
rules and regulations, from the date prescribed for payment until the amount is fully
paid
 2. Deficiency interest – Any deficiency in the tax due shall be subject to interest at the
rate of 20% per annum, which interest shall be assessed and collected from the date
prescribed for its payment until the full payment thereof
 3. Delinquency interest – There shall be assessed and collected on the unpaid amount,
interest at the rate of 20% per annum until the amount is fully paid, which interest
shall form part of the tax, in case of failure to pay:
 - Amount of tax due on any return required to be filed, or
 - Amount of tax due for which no return is required, or
 - Deficiency tax, or any surcharge on interest thereon on the due date
appearing in the notice and demand of the CIR
 4. Interest on extended payment – There shall be assessed and collected interest at the
rate of 20% per annum on the tax or deficiency tax or any part thereof unpaid from the
date of notice and demand until it is paid:
 - If any person required to pay the tax is qualified and elects to pay the tax
on installment, but fails to pay the tax or any installment hereof, or any part
of such amount or installment on or before the date prescribed for its
payment, or
 - Where the CIR has authorized an extension of time within which to pay a
tax or a deficiency tax or any part thereof
 It is a certain amount of money which the
taxpayer pays to compromise a tax violation.
Compromise penalties are paid in lieu of
criminal prosecution, and cannot be imposed
in the absence of a showing that the taxpayer
consented thereto. If an offer of compromise
is rejected by the taxpayer, the compromise
penalty cannot be enforced through an action
in court or by distraint and levy.
Deficiency Assessment Process
A. Tax Audit (including the Letter of
Authority)
B. Issuance of Preliminary Assessment Notice
(PAN)
C. Reply
D. Issuance Formal Letter of Demand and
Final Assessment Notice (FLD/FAN).
E. Disputed assessment
 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 Letter of Authority should cover a taxable period

not exceeding one taxable year. The practice of
issuing LAs covering audit of “unverified prior years”
is therefore prohibited.

 It 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 LA, unless the LA is
revalidated.
1. Cases involving civil or criminal tax fraud
which fall under the jurisdiction of the tax
fraud division of the Enforcement Services;
and
2. Policy cases under audit by the Special
Teams in the National Office (RMO 36-99).
Tax audit
 This includes the examination of books of
accounts and other accounting records of the
taxpayers by revenue officers (RO) to determine
the correct tax liability.

A RO is allowed only 120 days to conduct the audit

and submit the required report of investigation
from the date of receipt of a LA by the taxpayer.
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 of
Office, and surrender the LA for revalidation.
GR: Only once per taxable year
XPN:
 1. When the CIR determines that Fraud, irregularities,
or mistakes were committed by the taxpayer.
 2. When the taxpayer himself requests for the Re-
investigation or re-examination of his books of
accounts and it was granted by the commissioner
 3. When there is a need to verify the taxpayer’s
Compliance with withholding and other internal
revenue taxes as prescribed in a Revenue
Memorandum Order issued by the Commissioner
 4. When the taxpayer’s Capital gains tax liabilities
must be verified
 5. When the Commissioner chooses to exercise his
power to obtain information relative to the
examination of other taxpayers
 The error made by a tax official in the
assessment of his tax liabilities does not have
the effect of relieving the taxpayer from the
obligation to pay the full amount of his tax
liability, for taxes are fixed by law and the
government is never estopped to collect the
legitimate taxes because of errors committed
by its agents.
 If after review and evaluation by the
Commissioner or his duly authorized
representative, as the case may be, it is
determined that there exists sufficient basis to
assess the taxpayer for any deficiency tax or
taxes, the said Office shall issue to the taxpayer
a PAN for the proposed assessment. It shall show
in detail the facts and the law, rules and
regulations, or jurisprudence on which the
proposed assessment is based .

Prior to the issuance of the PAN, the taxpayer may

be allowed to make voluntary payments of
probable deficiency taxes and penalties
 Requirements of a valid PAN
◦ 1. In writing; and
◦ 2. Should inform the taxpayer of the law and the facts on which the
assessment is made

GR: There must be a PAN issued by the BIR before issuing a Formal
Letter of Demand (FLD)/ Final Assessment Notice (FAN).
XPN: PAN is not required in the following instances:
 1. When the finding for any deficiency tax is the result of
Mathematical error in the computation of the tax appearing on the
face of the tax return filed by the taxpayer;
 2. When the Excise tax due on excisable articles has not been paid;
 3. When a Discrepancy has been determined between the tax
withheld and the amount actually remitted by the withholding agent;
 4. When an 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;
 5. 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.
 The taxpayer has 15 days from receipt of PAN
to file a written reply contesting the proposed
assessment.
 Failure to respond to PAN , the taxpayer shall
be considered in default, in which case, a
FLD/FAN shall be issued calling for payment
of the taxpayer's deficiency tax liability,
inclusive of the applicable penalties.
The CIR or his duly authorized representative may issue
FLD/FAN:
1. If there is no need to issue a PAN, because the
circumstances show that it fall within the exceptions
for the issuance of PAN;
2. If the taxpayer is in default for failure to
respond to a PAN within a period of 15 days from the
receipt of PAN; or
3. If the CIR or his duly authorized representative
does not agree with the justifications stated by the
taxpayer in his reply to the PAN

Note:The FAN and FLD should always go together

 If the taxpayer, within 15 days from date of
receipt of the PAN, responds that he/it
disagrees with the findings of deficiency tax
or taxes, an FLD/FAN shall be issued within
15 days from filing/submission of the
taxpayer’s response, calling for payment of
the taxpayer's deficiency tax liability,
inclusive of the applicable penalties.

 An FLD/FAN issued beyond 15 days from

filing/submission of the taxpayer’s response
to the PAN shall be valid, provided that, it is
issued within the period of limitation to
assess internal revenue taxes.
 Who issues the FAN - issued by the
Commissioner or his duly authorized
representative.
 In what form shall the FAN be and what
should it contain?
1. In writing; and
2. Shall state the facts, the law, rules and
regulations, or jurisprudence on which the
assessment is based, otherwise, the FAN
shall be void
 Remedies of the taxpayer after the issuance
of a FAN;
The taxpayer may protest the
assessment within 30 days from receipt.
Otherwise, the assessment becomes final,
executory, demandable and not appealable
to the CTA.

The protest comes in the form of either a

written request for reconsideration or
reinvestigation.
 The government is given two ways to collect:
◦ 1. Summary or administrative remedies, and
◦ 2. Judicial remedies

The legislature may adopt any reasonable

method for the effective enforcement of the
collection of taxes, subject to:
1. The right of the person to notice; and
2. The opportunity to be heard.
GR: Collection is only allowed when there is already a
final assessment made for the determination of the
tax due.
XPN: Judicial action to collect the tax liability is
permitted even without an assessment when the
taxpayer:
1. Files a false or fraudulent return with intent to
evade the tax, or
2. Fails to file a return.

 In the above cases, collection must be done within 10

years after the discovery of falsity, fraud, or omission.
 However, once an assessment is made against the
taxpayer, the government cannot avail of the 10-year
period in Section 222(A). If the assessment is made,
then the period to collect is five years from the
assessment and not 10 years.
 1. The taxpayer failed to file a protest 30
days from receipt of the assessment
 2. After the 180-day period and the CIR has
not yet acted on the protest, the taxpayer
fails to appeal it.
 3. After 30 days from the receipt of the
decision of the CIR the taxpayer fails to
appeal.
XPNs:
1. False or fraudulent return with intent to
evade the tax: within 10 years from discovery
without need of assessment.
2. Failure or omission to file return: within 10
years from discovery without need of
assessment
3. Waiver in writing executed before the the
five-year period expires: period agreed upon
 PROTESTING AN ASSESSMENT
 The taxpayer or its authorized representative or tax
agent may protest administratively against the
aforesaid FLD/FAN within thirty (30) days from date of
receipt thereof.
 1. In writing;
 2. Addressed to the CIR or his duly Authorized representative;
 3. Accompanied by a waiver of the Statute of Limitations in favor of the
Government. Without the waiver the prescriptive period will not be tolled.
 4. State the facts, applicable law, rules and regulations or jurisprudence on which
the protest is based otherwise the protest would be void; and
 5. Must contain the following:
a. Name of the taxpayer and address for the immediate past 3 taxable years;
b. Nature of the request, specifying the newly discovered evidence to be
presented;
c. Taxable periods covered by the assessment;
d. Amount and kind of tax involved and the assessment notice number;
e. Date of receipt of the assessment notice or letter of demand;
f. Itemized statement of the finding to which the taxpayer agrees (if any) as
basis for the computation of the tax due, which must be paid upon filing of the
protest;
g. Itemized schedule of the adjustments to which the taxpayer does not
agree;
h. Statements of facts or law in support of the protest; and
i. Documentary evidence as it may deem necessary and relevant to support
its protest to be submitted 60 days from the filing thereof.
 Prescriptive period provided by law to make
collection by distraint or levy or by a
proceeding in court is interrupted once a
taxpayer protests the assessment and
requests for its cancellation.
1. Request for reconsideration — refers to a
plea of re-evaluation of an assessment on the
basis of existing records without need of
additional evidence. It may involve both a
question of fact or of law or both.
2. Request for reinvestigation — refers to a
plea of re-evaluation of an assessment on the
basis of newly discovered or additional
evidence that a taxpayer intends to present in
the reinvestigation. It may also involve a
question of fact or of law or both.
 For requests for reinvestigation, the taxpayer
shall submit all relevant supporting documents in
support of his protest within sixty (60) days from
date of filing of his letter of protest. Otherwise,
the assessment shall become final.
 “Relevant supporting documents” - refer to those
documents necessary to support the legal and
factual bases in disputing a tax assessment as
determined by the taxpayer.

 If the taxpayer fails to file a valid protest against

the FLD/FAN within thirty (30) days from date of
receipt thereof, the assessment shall become
final, executory and demandable. No request for
reconsideration or reinvestigation shall be
granted on tax assessments that have already
become final, executory and demandable.
a. By the duly authorized representative
1. Request for investigation – within 180 days from
submission of relevant documents
2. Request for reconsideration - within 180 days from
filing of protest.

b. By CIR
1. In case of protest – within 180 days from filing of
protest
2. In case of administrative appeal - within 180 days
from the filing of administrative appeal

Administrative appeal – request for reconsideration filed

wIth the CIR to elevate the denial made by his duly
authorized representative.
 By the CIR’s duly authorized representative
1. If the protest is denied, in whole or in part, the taxpayer
may either:
a. appeal to the CTA within 30 days from date of
receipt of the said decision; or
b. elevate his protest through request for
reconsideration to the CIR within 30 days from date of receipt of
the said decision.
Note: No request for reinvestigation shall be allowed in
administrative appeal and only issues raised in the decision of
the CIR’s duly authorized representative shall be entertained by
the CIR.
2. If the protest is not acted upon, the taxpayer may either:
a. appeal to the CTA within 30 days after the
expiration of the 180-day period; or
b. await the final decision of the CIR’s duly
authorized representative on the disputed assessment.
 By the CIR
a. If the protest or administrative appeal, as the case
may be, is denied, in whole or in part, 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.
A motion for reconsideration of the CIR’s denial
of the protest or administrative appeal, as the case
may be, shall not toll the 30-day period to appeal to
the CTA.
b. If the protest or administrative appeal is not acted
upon, the taxpayer may either:
◦ 1. appeal to the CTA within 30 days from after the
expiration of the 180-day period; or
◦ 2. await the final decision of the CIR on the disputed
assessment and appeal such final decision to the CTA
within 30 days after the receipt of a copy of such decision.
 1. file a petition for review with the CTA within
30 days after the expiration of the 180-day
period; or
 2. await the final decision of the Commissioner
or his duly authorized representative on the
disputed assessment and appeal such final
decision to the CTA within 30 days after the
receipt of a copy of such decision.

These options are mutually exclusive and the

resort to one bars the application of the other.
 If the decision is adverse to the taxpayer, he
may file a motion for reconsideration or new
trial before the same Division of the CTA
within 15 days from notice thereof.
 In case the resolution of a Division of the CTA
on a motion for reconsideration or new trial is
adverse to the taxpayer, he may file a petition
for review with the CTA en banc.
 The ruling or decision of the CTA en banc
may be appealed with the Supreme Court
through a verified petition for review on
certiorari pursuant to Rule 45 of the 1997
Rules of Civil Procedure.
 Compromise Abatement
Nature Involves a reduction of Involves a cancellation
the taxpayer’s liability of the entire tax
through a mutual liability of a taxpayer.
agreement

Grounds 1. Reasonable doubt 1. The tax or any

as to the validity of portion appears to
assessment; be unjustly or
2. Financial incapacity excessively or
of the taxpayer assessed;
2. The administration
and collection costs
involved do not
justify the
collection of the
amount due.
 Compromise as amount of paid by the
taxpayer to settle his tax liability is different
from compromise penalty which is the
amount paid by the taxpayer to compromise
tax violation and paid in lieu of criminal
prosecution
1. Tax liability of the taxpayer;
2. An offer of the taxpayer of an amount to be
paid by him; and
3. The acceptance (the CIR or the taxpayer) of
the offer in the settlement of the claim
The CIR may compromise the payment of any
internal revenue tax, when:
a. A reasonable doubt as to the validity of
the claim against the taxpayer exists
provided that the minimum compromise
entered into is equivalent to 40% of the basic
tax (Doubtful Validity);
b. The financial position of the taxpayer
demonstrates a clear inability to pay the
assessed tax provided that the minimum
compromise entered into is equivalent to 10%
of the basic assessed tax (Financial
Incapacity)
 1. The delinquent account or disputed assessment is one
resulting from a Jeopardy assessment.
 2. The assessment seems to be Arbitrary in nature, appearing
to be based on presumptions and there is reason to believe
that it is lacking in legal and/or factual basis.
 3. The taxpayer Failed 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.
 4. The taxpayer Failed to file a request for
reinvestigation/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.
The offer for compromise based on financial
incapacity may be accepted upon showing that:
1. The taxpayer is a Compensation income earner
with no other source of income and the family’s
gross monthly compensation income does not
exceed the levels of compensation income
provided for Sec. 4.1.1. of RR No. 30-2002 and it
appears that the taxpayer possesses no other
leviable/distrainable assets, other than his family
home.
2. The taxpayer has been declared by any competent
tribunal/authority/body/ government agency as
Bankrupt or insolvent.
3. The corporation ceased operation or is already
Dissolved
1. Clear inability to pay the tax; and
2. The taxpayer must waive in writing his
privilege of the secrecy of bank deposit under
RA 1405 or other general or special laws,
which shall constitute as the CIR’s authority
to inquire into said bank deposits
The CIR is allowed to enter into a compromise
only if the basic tax involved does not exceed
P1M and the settlement offered is not less
than the prescribed percentages

Subject to approval of Evaluation Board:

a. When basic tax involved exceeds
P1,000,000;
b. Where the settlement offered is less than the
prescribed minimum rates (Sec. 204, NIRC);
c. When the CIR is not authorized to
compromise.
1. Delinquent accounts
2. Cases under Administrative protest after issuance of the Final
Assessment Notice to the taxpayer which are still pending in
the RO, RDO, Legal Service, Large Taxpayer Service, Collection
Service, Enforcement Service, and other offices in the National
Office
3. Cases covered by pre-assessment notices but taxpayer is
Not agreeable to the findings of the audit office as confirmed
by the review office
4. Civil tax cases disputed before the courts
5. Collection cases filed in courts
6. Criminal violations except:
a. Those already filed in courts; and
b. Those involving criminal tax fraud
1. Criminal tax Fraud cases, confirmed as such by the CIR or his duly
authorized representative.
2. Cases where Final reports of reinvestigation or reconsideration have
been 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.
3. 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.
4. Estate tax cases where compromise is requested on the ground of
financial incapacity of the taxpayer.
5. Withholding tax cases, unless the applicant – taxpayer invokes
provisions of law that cast doubt on the taxpayer’s obligation to
withhold.
6. Criminal violations already filed in courts.
7. Delinquent accounts with duly approved schedule of installment
payments
Grounds for abatement(Sec. 204[B], NIRC):
1. The tax or any portion thereof appears to be unjustly or excessively
assessed:
a. The filing of the return/payment is made at the Wrong venue.
b. The taxpayer fails to file the return and pay the tax on time due to:
Substantial losses from prolonged labor dispute; Force majeure; Legitimate
business reverses.
NOTE: The abatement shall only cover the surcharge and the
compromise penalty and not the interest imposed under Sec. 249, NIRC
c. There is Late payment of the tax under meritorious circumstances
(i.e. Failure to beat bank cut-off time, surcharge erroneously imposed.)
d. The assessment is brought about or resulted from taxpayer’s non-
compliance with the law due to a difficult Interpretation of said law.
e. The taxpayer fails to file the return and pay the correct tax on time
due to Circumstances beyond his control.
NOTE: The abatement shall only cover the surcharge and the
compromise penalty and not the interest.
f. The taxpayer’s mistake in payment of his tax is due to Erroneous
written official advice of a revenue officer
2. The administration and collection costs involved do not justify the
collection of the amount due:
a. Abatement of penalties on assessment confirmed by the lower
court but Appealed by the taxpayer to a higher court.
b. Abatement of penalties on Withholding tax assessment under
meritorious circumstances.
c. Abatement of penalties on assessment reduced after
Reinvestigation but taxpayer is still contesting reduced assessment.
d. Abatement of penalties on Delayed installment payment under
meritorious circumstances.
e. Such Other circumstances which the CIR may deem analogous to
the enumeration above (Sec. 3, R.R. 13-2001).
Remedies of taxpayer after payment
 1. Tax refund – Actual reimbursement of tax
 2. Tax credit – Government issues Tax Credit
Certificate (TCC) which may be applied
against any internal revenue tax, excluding
withholding taxes, for which the taxpayer is
directly liable
 1. Tax is erroneously or illegally assessed or
collected;
 2. Penalty is imposed without authority; and
 3. Sum collected is excessive or in any
manner wrongfully collected.
1. There is tax collected erroneously or illegally, or a penalty collected
without authority, or a sum excessively or wrongfully collected
2. There must be a written claim for refund filed by the taxpayer with
the CIR
XPNs: a. When on the face of the return upon which payment was
made, such payment appears clearly to have erroneously paid - the
CIR may refund or credit the tax even without a written claim
b. A return filed showing an overpayment shall be considered as a
written claim for credit or refund
3. Must be a categorical claim for refund or credit
4. Must be filed within 2 years from date of payment of the tax or
penalty regardless of any supervening cause that may arise after
payment. No suit or proceeding shall be instituted after the
expiration of the such period; and
5. The taxpayer must present proof of payment of the tax.
GR: There can be no interest on refund of tax
in the absence of statutory provision clearly
and expressly directing or authorizing such
payment.
XPNs:
1. If interest is authorized by law;
2. Arbitrariness in the collection of tax;
3. Under Sec. 79(C)) [2] with respect to income
taxes withheld on the wages of the
employees.
 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.
XPN:
1. Tax is paid in installments (For individuals):
From the date of the final payment
2. Payments effected through the withholding
tax system: From the date it falls due at the
end of the taxable year
3. 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.
 The taxpayer may appeal to CTA in case of
denial by CIR of the claim for refund. It must
be filed within 30 days from receipt of the
decision of the CIR but not to exceed the 2-
year period from date of payment of the tax
or penalty regardless of any supervening
cause that may arise after payment.
1. Under Sec. 112, the 2-year prescriptive period applies only to the
administrative claim before the CIR and not to judicial claim before the CTA
because the taxpayer always has 30 days from the decision of the CIR or
from the lapse of the 120-day period even after the lapse of 2 years from
the taxable quarter where the sales were made
Thus, it is only the administrative claim that must be filed within the two-
year prescriptive period; the judicial claim need not fall within the two-year
prescriptive period.
2. Under Section 229, the decision of the CIR is appealable to the CTA sitting in
division within 30 days after the receipt but must be within the 2-year
period from payment or filing of the final adjusted return. Thus, if the
Commissioner denies the claim for refund within the 2-year period, the
remedy is to file an appeal with the CTA 30 days from the receipt of such
denial. But, such 30-day period must also be within the 2-year period. For
example, if there are only 10 days left within such 2-year period, then, the
taxpayer has only 10 days within which to appeal his claim. However, if there
is an inaction on the part of the Commissioner and the 2-year period is
about to lapse, the remedy is to file an appeal also with the CTA.
Once the option to carry-over and apply the
excess quarterly income tax against income
tax due for the taxable quarters of the
succeeding taxable years has been made,
such option shall be considered irrevocable
for that taxable period and no application for
cash refund or issuance of a tax credit
certificate shall be allowed therefor
The requirements for entitlement of a corporate taxpayer for a
refund or the issuance of TCC involving excess withholding
taxes are as follows:
 1. That the claim for refund was filed within the two-year
reglementary period pursuant to Section 229 of the NIRC;
 2. When it is shown on the ITR that the income payment
received is being declared part of the taxpayer's gross
income; and
 3. When the fact of withholding is established by a copy of
the withholding tax statement, duly issued by the payor to
the payee, showing the amount paid and income tax withheld
from that amount.
1. Administrative remedies
a. Tax lien
b. Distraint of personal property; levy and sale of real
property
c. Forfeiture of real property to the government for want
of bidder
d. Suspension of business operation
e. Non-availability of injunction to restrain collection of
tax
2. Judicial remedies
a. Ordinary civil action;
b. Criminal action
 It is a legal claim or charge on property,
personal or real, established by law as a sort
of security for the payment of tax obligations

When tax lien is applied

 1. With respect to personal property – Tax lien attaches when
the taxpayer neglects or refuses to pay tax after demand.
Thus, the tax lien attaches not from the service of the warrant
of distraint of personal property but from the time the tax
became due and payable.
 2. With respect to real property – from time of registration
with the Register of Deeds.
1. By payment or remission of the tax
2. By prescription of the right of government to
assess or collect
3. By failure to file notice of such tax lien in the
office of Register of Deeds
4. By destruction of property subject to tax lien
5. By replacing it with a bond
 Distraint is a summary remedy in which the
collection of tax is enforced on the taxpayer’s
personal property. When enforced to
taxpayer’s personal property not in his
possession, it is called garnishment.
 Levy is enforced on real property.
 Garnishment is enforced on personal property
owned by the taxpayer but in the possession
of the third party. Ex. Cash in bank
1. Taxpayer is delinquent in payment of tax;
2. There must be subsequent demand to pay;
3. Taxpayer failed to pay delinquent tax on
time; and
4. Period within which to assess and collect the
tax due has not yet prescribed
1. Actual distraint – resorted to when at the time
required for payment, a person fails to pay his
delinquent tax obligation (Sec. 207 [A], NIRC).
Distraint consists in the actual seizure and taking
possession of personal property of the taxpayer.
2. Constructive distraint – a preventive remedy which
aims at forestalling a possible dissipation of the
taxpayer’s assets when delinquency sets in. No
actual tax deliquency of the taxpayer is necessary
before the same is resorted to by government.
 1. Commencement of distraint proceedings by the CIR or his
duly authorized representatives or by the revenue district
officer as the case may be
 2. Service of warrant of distraint upon taxpayer or upon any
person in possession of the property
 3. Posting of notice in not less than 2 public places in the
municipality or city and notice to taxpayer specifying the time
and place of sale and the articles distrained
 4. Release of distrained property upon payment prior to sale
 5. Sale at public auction to be held not less than 20 days after
notice to the owner or possessor of the property and
publication or posting of such notice
 6. Purchase by government at sale upon distraint
It is effected by requiring the taxpayer or any
person having possession of the property:
 1. To sign a receipt covering the property
distrained;
 2. To obligate himself to preserve it intact
and unaltered; and
 3. Not to dispose of it without the express
authority of the CIR
1. Retirement from any business subject to the
tax;
2. Intending to leave the philippines or to
remove his property therefrom; or to hide or
conceal his property;
3. Intending to perform any act tending to
obstruct the proceedings for collecting the
tax due or which may be due from him.
It may be made before, simultaneously or after the
distraint of personal property of the same
taxpayer.

It may be effected by serving upon the taxpayer a

written notice of levy in the form of a duly
authenticated certificate prepared by Revenue
District Officer containing:
1. Description of the property upon which levy is
made;
2. Name of the taxpayer;
3. Amount of tax and penalty due.
 1. Preparation of a duly authenticated certificate which shall operate
with force of a legal execution throughout the Philippines;
 2. Service of the written notice to the:
a. Delinquent taxpayer, or
b. If he is absent from the Philippines, to his agent or the
manager of the business in respect to which the liability arose, or
c. If there be none, the occupant of the property,
d. The Registry of Deeds of the place where the property is
located shall also be notified;
 3. Advertisement of the time and place of sale within 20 days after
the levy by posting of notice and by publication for three
consecutive weeks;
 4. Sale at a public auction;
 5. Redemption of property sold; - Within 1 year from the date of
sale, the taxpayer or anyone for him
 6. Further distraint and levy.
BIR is allowed to forfeit the property subject to levy
only if:
1. There is no bidder; or
2. The bid amount is insufficient to pay the taxes,
penalties and costs

Forfeiture - It is the divestiture of property without

compensation, in consequence of a default or
offense. It transfers the title to the specific thing
from the owner to the government. Also, there
would no longer be any further levy for such would
be for the total satisfaction of the tax due.
 Redemption of forfeited property: Within 1
year from the date of forfeiture, the taxpayer,
or any one for him may redeem said property
by paying to the CIR or Revenue Collection
Officer the full amount of the taxes and
penalties, together with interest thereon and
the costs of sale, but if the property be not
thus redeemed, the forfeiture shall become
absolute.
The CIR may:
1. Sell and dispose of the same of public
auction upon the giving of not less than
twenty (20) days notice, or
2. Dispose of the same at private sale with
prior approval of the Secretary of Finance.

In either case, the proceeds of the sale shall be

deposited with the National Treasury, and an
accounting of the same shall rendered to the
Chairman of the Commission on Audit
 FORFEITURE - Ownership is transferred to the
Government ; SEIZURE -Taxpayer retains
ownership of property seized

 FORFEITURE - Excess of the proceeds of the

sale is not returned to the taxpayer ; SEIZURE
- Excess of the proceeds of the sale is
returned to the taxpayer
The CIR or his authorized representative is empowered to
suspend the business operations and temporarily close the
business establishment of any person for any of the following
violations:
1. In the case of VAT-registered person:
a. Failure to issue receipts or invoices;
b. Failure to file a VAT return as required under Sec. 114; or
c. Understatement of taxable sales or receipts by 30% or more
of his correct taxable sales or receipts for the taxable quarter.
2. Failure of any person to Register as required under Sec. 236:
The temporary closure of the establishment shall be for the
duration of not less than 5 days and shall be lifted only upon
compliance with whatever requirements prescribed by the CIR
in the closure order
GR: No court shall have the authority to grant an injunction to restrain
the collection of any national internal revenue, tax, fee or charge.
XPNs:
 1. Filing of Injunction with the CTA as an incident to its appellate
jurisdiction:
a. Showing that collection of the tax may jeopardize the interest
of the government and/or the taxpayer;
b. Deposit of the amount claimed or file a surety bond
c. Showing by taxpayer that appeal is not frivolous nor dilatory
 2. The SC, on exceptional cases of suits questioning the
constitutionality of a tax law
 3. In case of local taxes, RTCs may issue an injunction upon a suit
questioning their validity
NOTE: In the case of the collection of local taxes,
there is no express prohibition in the Local
Government Code prohibiting courts from issuing
an injunction to restrain local governments from
collecting taxes. Such statutory lapse or intent,
however it may be viewed, may have allowed
preliminary injunction where local taxes are
involved.

The Lifeblood doctrine requires that the collection of

taxes cannot be enjoined, without taxation, a
government can neither exist nor endure.