UNIT II - TAX REMEDIES

Definition of terms:

Tax remedies:
 On part of the taxpayer – courses of legal actions which the taxpayer can avail of to seek relief from the
assessment made by revenue officers.
 On the part of the government – the courses of action allowed in the law to enforce tax collection.

Tax Assessment
 is an official action of an officer authorized by law in ascertaining the amount of tax due
under the law from a taxpayer.
 process of determining the correct amount of the tax due in accordance with the prevailing tax
laws.

Tax audit – process of examining, going over or scrutinizing the books and records of the taxpayer to
ascertain the correctness of the tax declared and paid by the taxpayer.

Assessment Period –
period in processing, appraising and determining he value of he subject of taxation, including the
computation of tax prescriptions, surcharges and interest to arrive at the specific sum of tax charged
on a person or property.

Letter of Authority (LOA) – is an official document that empowers a Revenue Officer to examine,
scrutinize a taxpayer’s books of account and other accounting records in order to determine the
taxpayer’s correct internal revenue tax liabilities. In the absence of such an authority, the assessment
or examination is null and void.

Pre-Assessment notice (PAN) – is written notice given to a taxpayer informing him of the findings of the
BIR officer(s) relating to a deficiency in his tax return, indicating therein the law and the facts on which
the assessment is made and requiring the taxpayer to respond within a given period, otherwise , the
Commissioner of his dully authorized representative shall issue an assessment based on his findings.

Formal Letter of Demand (FLD) and Final Assessment Notice (FAN)

 is a formal demand or notice sent to the taxpayer requiring payment within a specified time of the
tax due from him including interest and civil penalties.
 shall be issued by the CIR or his duly authorized representatives.

Request for reconsideration – a plea of re-evaluation of an assessment on the basis of existing records
without need of additional evidence or supporting documents. It may involve both a question of fact or law.

Request for reinvestigation - a plea of re-evaluation of an assessment on the basis of a newly discovered
or additional evidence or documents that a taxpayer intends to present in the reinvestigation. It may also
involve both a question of fact or law.

TAX ASSESSMENT

Taxpayer’s Assessment Government’s Assessment

(thru tax returns) (Before and after payments of tax)

Taxpayer’s assessment - taxpayer reports his own assessment of his tax liability in his tax return to the
Internal revenue office. (Tax return filed by the taxpayer)
Government Assessment

 assessment could be made

1. Before a tax return is filed
a. after prescription period expired
b. if the taxpayer intends to leave the country or close business (Jeopardy Assessment)

2. After a fraudulent tax return is uncovered.

 When is the government tax assessment made?

a) When ITR filed by taxpayer filed an accurate return –
 within 3- year prescription period
1. after the due date/last day of filing
2. from the day the return was filed, where a return is filed beyond the due date.

Note: A return filed before the due date shall be considered as filed on such due date.

 before the expiration of the 3-year prescription period, the BIR and the taxpayer may
agree on the period of assessment. (Sec. 22 (b) NIRC)

 Jeopardy Assessment, if the taxpayer:

a) retires from business
b) leaves the country.

b) When taxpayer filed a fraudulent return or return not filed –

 within 10 –year prescription period when the BIR discovers the falsity, fraud or omission of
the taxpayer’s tax return.

Assessment Process:
1. Tax audit or Investigation
 Examination of the books accounts of the taxpayer by the revenue officer who has the Letter of
Authority (LOA). In the absence of LOA, the assessment is a null and void.
 Persons authorized to issue LOA:
 If taxpayer is
a. under National Office - Commissioner of Internal Revenue
b. If taxpayer is under regional offices - Regional Director
 Tax Cases need not covered by LOA:
a. Cases involving civil or criminal tax fraud which fall under the National Investigation Division under
the Enforcement and Advocacy Services of the BIR;
b. Policy cases under audit by the special teams in the National Office.

2. Issuance of Notice of Discrepancy (NoD)

3. Issuance of Preliminary Assessment Notice (PAN)
 Issuance of PAN to the taxpayer informing him of the findings of revenue officer.
 The PAN shall be in writing and show in detail the facts and the law, rules and regulations on which the
proposed assessment is based, otherwise the assessment is void.
 The taxpayer has 15 days to reply contesting the findings in the PAN. Failure to reply, the BIR will
issued FAN and FLD.

4. Issuance of Final Assessment Notice and Final Letter of Demand

 Issued when:
a. The taxpayer failed to respond; or
b. The reply to the PAN was found to be without merit
Illustration ( source: Income Taxation by Ampongan)

The Income tax return by Mr. Ace for taxable year for 2019 was filed on April 10, 2020. The tax per return as
paid by Mr. Ace is P 25,000, but per audit of the BIR, it was discovered that the correct tax payable by Mr. Ace is
P 32,000. The assessment for deficiency tax was made on May 25, 2022.

Q1: Was the assessment made on time? Yes

Q2 Suppose the assessment was made on May 25, 2023, is the assessment valid? No

Q3: Suppose Mr. Ace filed a fraudulent return and discovered by the BIR on April 10, 2023. Assessment is made
on May 25, 2023, will the assessment be valid? Yes – fraudulent return - assessment is within 10 years from
the date of discovery of filing the fraudulent return – valid assessment from April 10, 2023 to April 10, 2033.

BIR’s Denial of Protest

1. Direct denial of protest
2. Indirect denial of protest – if the CIR or his duly authorized representative fails to act on the taxpayer’s
protest within 180 days from the date of submission, the protest may be considered denied.

REMEDIES OF THE TAXPAYER

Remedies before payment

1. administrative protest
2. request for reconsideration
3. request for reinvestigation
4. judicial protest

Remedies after payment

1. claim for refund
2. claim for tax credit

1. Notice for Informal conference -

♦ sent by the Revenue Officer to the taxpayer with noted discrepancy
♦ the taxpayer is given 15 days to respond from date of receipt of the notice.
♦ failure to respond will warrant endorsement to Assessment Division of the Revenue Office for
appropriate review.

2. Preliminary Assessment Notice (PAN) –

♦ shall be served to the taxpayer or through registered mail – if the result of the review conducted by
the Administrative Division has established sufficient basis to assess the taxpayer for any
deficiency.
♦ the taxpayer is given 15 days from receipt thereof to contest the amount being assessed.
♦ failure to respond will warrant the issuance of Formal Letter of Demand of Payment together with
the assessment showing the computation inclusive of the applicable penalties.

3. Final Assessment Notice/Formal letter of demand

 to be responded by the taxpayer within 30 days.

a) Protest the Assessment

 The taxpayer shall file a request for reconsideration or reinvestigation with the BIR within 30 days from
receipt of the assessment notice.
1. Request for reconsideration - a plea for re-evaluation of an assessment on the basis of existing
records without need for additional evidence. It may involved both question of fact or of law or both.

2. Request for re-investigation - a plea for re-evaluation of an assessment on the basis of newly
discovered or additional evidence that the taxpayer intends to present in the reinvestigation. It may
also involved both question of fact or of law or both. Submit all relevant supporting documents to
the BIR within 60 days from filling of protest, otherwise the assessment shall become final.
  Failure to file a request for reconsideration or reinvestigation within 30 days from the date of receipt, the
assessment shall become final.

The CIR or his duly authorized representative must act within 180 days -
1. From the submission of relevant supporting documents in case of request for reinvestigation or
2. From the filing of protests in case of request for reconsideration.

b) Appeal to the Court of Tax Appeal

1. if the protests is denied in whole or in part by the Commissioner, the taxpayer may appeal to the
Court of Tax Appeal within 30 days from the receipt of letter of denial or unfavourable
decision.
2. File an appeal to the CTA within 30 days from the lapse of 180 days period, If CIR or his duly
authorized representative fails to act on the protest
3. Failure to appeal to the CTA shall make the BIR’s decision final, executor and demandable

Illustration: (Source: Income Taxation by Ampongan)

Mr. Reyes received an assessment on January 16, 2022. He filed a request for reconsideration with the BIR
on
February 13, 2022. The request was denied and Mr. Reyes received the decision August 12, 2022.

Q1: Was the request for reconsideration filed on time? When is the last day for filing the protest with the BIR?
= Yes, last day February 15, 2022.

Q2: When is the last for Mr. Reyes to submit supporting documents assuming it is a request for reinvestigation?
= April 14, 2022 , 60 days from February 13, 2022.

Q3: When is the last day to appeal to the CTA, if request for reconsideration/reinvestigation was denied by BIR
on August 12, 2022?
= 30 days from the receipt of denial .. last day is September 11, 2022.

Q4: Suppose Mr. Reyes submitted the supporting documents on March 31, 2022 and the BIR failed to act on
the protest, when is the last day to appeal to the CTA?
= 30 days after the 180 day period ( will lapse on Septem 27, 2022) last day to appeal to CTA is on
October 27, 2022

Remedy Against an Erroneously or Illegally paid Tax

a. File a formal Claim for refund -

1. The taxpayer must file a written claim for refund with the Commissioner within 2 years after the
final payment of tax or penalty .
2. Within 30 days from the receipt of the decision and within two (2) yeas from the date of final payment,
if adverse to the taxpayer, he can file an appeal to the CTA;
3. A partial payment of the tax cannot be the subject to a claim for refund.
4. There is no extension of said 2 year period of recovery regardless of any new effective cause that may
arise after payment.
5. When the two year period is about to prescribe and the claim for refund has not been acted by the CIR,
the taxpayer should file a petition for review with the CTA within the said two-year period.

b. Submit all relevant supporting documents to the BIR .

 Submit relevant documents within 60 days from filling of claim for refund.
c) Appeal to the Court of Tax Appeal
 File an appeal with CTA, raising questions of facts and/or law within 30 days ( but within the 2-year
period required for filing a formal claim for refund)
1. from the receipt of the adverse (unfavourable) decision, or
2. from the lapse of the 180 day period.
Note:
1. If the tax is paid in instalments, the 2-year period shall be counted from the date of final
payment.
2. The filing for claim for mrefund with the BIR and the institution of judicial action with CTA to
recover the tax can be dome either simultaneously or one after the other within the 2-year
period to protect the interest of the taxpayer.
3. Failure to appeal to the CTA shall make the BIR’s decision final, executor and demandable.

Refund or credit Even without written claim and forfeiture of refund

a. Refund or credit Even without written claim
The Commissioner may, even without written claim therefore refund or credit any tax, where the face
of the return upon which payment was made, such payment appears clearly to have been paid.

b. Forfeiture of refund
A refund check or warrant which shall remain unclaimed or uncashed within 5 years from the date the
said warrant or check was mailed or delivered, shall be forfeited in favor of the government and the amount
shall revert to the general fund

c. Forfeiture of Tax Credit:

A tax credit certificate issued, which shall remain unutilized after 5 years from the date of issue,
shall, unless revalidated , be considered invalid, and shall not be allowed as payment for internal
revenue tax liabilities of the taxpayer, and the amount covered by the certificate will revert to the
general fund.

Instances that Suspend the Running of the Two-year Peremptory period.

a. If the Commissioner made the taxpayer asking for refund believe that he would be credited for the
overpayment.

b. If there is an agreement between the taxpayer and the amount of the Commissioner that they would
wait for the decision of the SC to guide them in the settlement of question or questions involved in the
fraud.

Court of Tax Appeals (CTA)

a) Creation of CTA
R.A. 1125 – the Law creating CTA - as amended by R.A. 9282 which took effect April 22, 2004,
which expands the jurisdiction of the CTA. The CTA shall be the same level as the Court of
Appeals, possessing all inherent powers of Court of Justice (Sec. 1 R.A. No. 1125, as amemded by
R.A. 9282
b) Composition of CTA
The CTA shall consist of a Presiding Justice and eight (8) Associate Justices (Sec. R.A.1125, as
amended by R.A. 9503,
June 12, 2008.

c) Sitting enbanc or division

The CTA en banc or in three Division, each Division consisting of three Justices (Sec. 2 -R.A.1125
an amended by R.A. 9503)

d) What will constitute a Quorum?

Five justices shall constitute a quorum for session en banc and 2 justices for session of division
(Sec. 2, R.A. 1125 as amended by R.A. 9503.)
 e) Rendition of a decision or resolution
The affirmative votes of 5 members of the Court en banc shall be necessary to reverse a decision
of a Division but a simple majority of the Justices present necessary to promulgate resolution or
decision in all cases or two (2) members of a Division, as the case may be, shall be necessary for
the rendition of a decision or resolution in the division level. (Sec. 2, R.A. 1125 as amended by R.A.
9503.)

f) Jurisdiction of the CTA (Sec. 7 of R.A.112 as amended :

The CTA shall exercise;
1. Exclusive appellate jurisdiction to review by appeal
2. Jurisdiction over cases involving criminal offenses.
3. Jurisdiction over tax collection cases

g) Exclusive appellate jurisdiction

The CTA shall exercise exclusive appellate jurisdiction to review by appeal:
1. Decision of the CIR in cases involving disputed assessments, refunds of internal revenues, fees
and other charges, penalties in relation thereto, or other matters arising under NIRC or other laws
administered by the BIR;
2. Inaction by the CIR in cases involving disputed assessments, refunds of internal revenues, fees and
other charges, penalties in relation thereto, or other matters arising under NIRC or other laws
administered by the BIR, where the NIRC provides a specific period action
3. Jurisdiction over cases involving criminal offenses.
4. Jurisdiction over tax collection cases

REMEDIES OF THE GOVERNMENT:

Collection
1. The BIR may avail of the remedy of collection when the assessment becomes final, executory and
demandable.
2. Any internal revenue tax which has been subject to assessment may be collected by distraint or levy or
by a proceeding in court within 5 years :
1. If assessment within 3 years or ten year period – the counting of the 5 year period shall start from the
issuance of FAN;
2. If assessed based on the period agreed upon between the taxpayer and the Commissioner - the
collection shall be made within the period agreed upon in writing before the expiration of the 5 year
period.
3. The period agreed upon may be extended by a subsequent written agreement made before the expiration
of the period previously agreed upon.

Methods of Collection

1. Distraint of Personal Property –

 it is the seizure by the government of taxpayer’s personal property , tangible or intangible to enforce the
payment of taxes.

a. Actual distraint -
 personal property are seized and physically taken into possession by the BIR and offered for sale at
public auction. The property is sold to the highest bidder and the proceeds of the sale are applied to
the payment of the tax due. The excess of the purchase price over the claim of the government
shall be returned to the taxpayer. There is no right of redemption
 when the amount of the bid for the property is not equal to the claim of the government, or is very
much less than the actual market value of the property, the same may be purchased by the
government for the amount of the claim.
 b. Garnishment – property owned by the taxpayer but in the possession of a third party, e.g. bank
accounts.

c. Constructive distraint -
 the taxpayer or person in possession or control of the taxpayer’s property, is required to sign a
receipt covering the property distrained obligating himself to preserve and not to dispose of the
same without the authority of the BIR.

 May be availed of in the following cases:

1. The taxpayer is retiring from any business subject to tax.
2. He intends to leave the Philippines
3. He removes the property therefrom
4. He performs any act tending to obstruct the proceeding for collecting the tax due or which may
be due to him.

4. Persons authorized to commence distraint proceedings

a. If the amount is more than P 1,000,000 - Commissioner of Internal Revenue
b. If the amount is P 1,000,000 or less - Revenue District Officer

5. Power to lift order of distraint – The Commissioner or his duly authorized representative shall have the
power to lift order or distraint.

6. Right of Pre-emption /Release of distraint property upon payment prior to sale -

if any time prior to the consummation of the sale all proper charges are paid to the officer conducting
the sale, the goods or effects distrained shall be restored to the owner.

7. Distinction between Actual and Constructive Distraint –

Actual Distraint Constructive Distraint
a) personal property is physically taken a) personal property is not physically taken
b) the taxpayer is already delinquent in the b) there is no finding yet of discrepancy, only
payment of his taxes. that the taxpayer is leaving the country or
disposing of his property in favor of the
creditor or is in the process of liquidation.
c) personal property taken is sold in order to c) personal property is merely held as security
satisfy the tax delinquency. to answer for any future tax delinquency.

2, Levy on Real Property – the seizure by the government of real properties and interest in or rights to such
properties in order to enforce payment of taxes.
8. When to levy?
After the expiration of the time required to pay the delinquent tax or delinquent revenue, real property
may be levied upon before, simultaneously or after the distraint of personal property belonging to the
delinquent.

9. How shall levy be effected?

Levy shall be effected by writing upon a duly authenticated certificate showing the name of the taxpayer
and the amount of the tax and penalty due from his a description of the property upon which levy is made.

10. To whom shall the levy be served?

Written notice of the levy shall be mailed to or served upon the:
a. Register of deeds of the province or city where the property is located and
b. Upon the delinquent taxpayer,
c. or if he is absent from the Philippines, to his agent or the manager of the business in respect to
which the liability arose,
d. or if there be none, to the occupant of the property in question.

11. Redemption of the Property Sold - (levy of property)

a) the property sold may be redeemed by the delinquent taxpayer within one year from the date of sale
b) the owner shall not be deprived of the possession of the property sold and shall be entitled to the
 rents and other income thereof until the expiration of the time allowed for redemption.
c.) if the taxpayer fails to redeem the property, a final deed of sale is executed infavor of the buyer.

12. Further Distraint or Levy

the remedy by distraint of personal property and levy on realty may be repeated if necessary until the
full amount due, including all expenses, is collected.

13. Distinction among Warrant of Distraint, Warrant of Levy and Warrant of Garnishment:
Distraint Levy Garnishment
a) as to subject personal property owned personal property owned personal property owned
Matter by and in possession of by and in possession of by the taxpayer but in
the taxpayer. The taxpayer the possession of a third
party.

b) As to disposition purchased by the gov’t. forfeited for the gov’t. purchased by the gov’t.
for want of bidders then resold to meet then sold to meet the then resold to meet
or bids inadequate deficiency. deficiency. deficiency.
to satisfy tax
deficiency.

c) as to no advertisement is advertisement once a no advertisement is

Advertisement required week for three weeks. Required.

14. The remedies of distraint and levy shall not be availed of where the amount of tax involved is not more that
P 100.

3. Judicial Proceedings
a. Filing civil case for collection - a case filed before a regular courts requiring the taxpayer to pay taxes
b. File for criminal case (Tax evasion) - a case filed before a regular courts requiring the taxpayer to pay
taxes and enforcing penalty against the taxpayer for violation of the tax code.

COMPROMISE
 Compromise is a contract whereby the parties by reciprocal concessions avoid litigation or put an end
to one already commenced.

 May compromise the payment of any internal revenue tax on the following grounds:
1. reasonable doubt as to validity of the claim against the taxpayer exists, or
2. the financial position of the taxpayer demonstrates clear inability to pay the assessed tax.

 The compromise settlement of any tax liability shall be subject to the following minimum amounts:
a. For cases of financial incapacity – a minimum compromise rate equivalent of 10%of the basic
assessment tax;
b. For other cases – a minimum compromise rate equivalent to 40% of the basic assessed tax;

 *All criminal violations may be compromised, except:

1. those already filed in court;
2. those involving fraud.

 This power cannot be delegated by the Commissioner, except the following cases:
1. assessment issued by the Regional Office involving basic deficiency taxes of P 500,000 or less,
2. minor criminal violations

 Instances when approval of the evaluation board is required:

1. When the basic assessed tax involved exceeds P 1 million or
2. where the settlement offered is less than the prescribed minimum rates,
  Composition of the evaluation board
1. CIR
2. 4 Deputy Commissioners

ABATEMENT OR CANCELLATION OF TAX LIABILITY

 Grounds
1. the tax or any portion thereof appears to be unjustly or excessively assessed;
2. the administration and collection costs involved do not justify the collection of the amount due.

Suspension of Running of Statute of Limitation.

 the running of the 3-year period or the 10-year period on the making of assessment and the beginning
of distraint or levy or a proceeding in court for collection, in respect to any deficiency, shall be
suspended:
1. when the taxpayer requests for reinvestigation which is granted by the Commissioner.
2. when the taxpayer cannot be located in the address given by him in the return filed upon which a
tax is being assessed or collected (except if the taxpayer informs the Commissioner of any change
in address).
3. No property of the taxpayer can be located
4. When the taxpayer is out of the Philippines.

CIVIL PENALTIES

In addition to the basic tax assessed on the taxpayer, the following civil penalties will also be collected:
1. Surcharge
2. Interest

1. Surcharge

a) 25% Surcharge shall be collected in any of the following cases;

1. Failure to file any return and pay the tax due on time
2. Filing a return with an internal revenue officer other than those with whom the return is required to be
filed, unless authorized by the CIR.
3. Failure to pay deficiency tax within the time prescribed for its payment in the notice of assessment.
4. Failure to pay the full or part of the amount of tax shown on any return or the full amount of tax due for
which no return is required to be filed.

b) 50% Surcharge shall be collected in any of the following cases;

1. Willful neglect to file the return on time

2. there is willful neglect if the taxpayer files only after prior notice in writing from the BIR.

 There is a simple neglect ( 25% surcharge) if the taxpayer voluntarily files the return after the deadline
without notice from the BIR

 Prima facie evidence of false or fraudulent return:

1. Substantial overstatement (more than 30%) of deductions
2. Substantial under declaration (more than 30%) of taxable sales, receipts or income.

2. Interest
 Increment on any unpaid amount of tax , assessed from the date prescribed for payment until the
amount fully paid.
 Kinds of interest

1. Deficiency interest- imposed on any deficiency tax due which interest shall be assessed and
collected from the date prescribed for its payment (whichever comes first)
a. Full payment, thereof;
 b. Upon issuance of as notice and demand by the CIR of his authorized representative

2. Delinquency interest – imposed on the failure of the tax payer to pay:

a. the amount of tax due on any return required to be filed
b. the amount of the tax due for which no return is required
c. a deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice
and demand of the CIR or his authorized representative until the amount is fully paid, which
interest shall form part of the tax.

 Double Imposition of Interest

Upon the effectivity of the Train Law, in no case shall the deficiency and delinquency interest be
imposed simultaneously.

 Tax Deficiency vs Tax Delinquency

Tax deficiency – the amount still due and collectible from the taxpayer upon audit or investigation.

Tax Delinquency – failure of the taxpayer to pay the tax on the date fixed by law or indicated in the
assessment notice (FAN) or letter of demand.

Illustration: (CPA Review in Taxation by Enrico D. Tayag)

A Company is assessed a deficiency income tax of P 1,000,000, exclusive of interest and surcharge
for taxable year 2018. The tax liability remained unpaid despite the lapse of June 20, 2020, the deadline for
payment stated in the notice and demand issued by the Commissioner. Payment was made on February
10, 2021.

1. The correct amount of surcharge, if any, shall be P 250,000 ( 1,000,000 x 25%)

2. The correct amount of deficiency interest shall be: P 145,315.07

3. Thje correct amount of delinquency interest is : 103,215.09

4. The total amount due on February 10, 2021 shall be:

Solution:
Basic tax due 1,000,000.00
Add: 25% surcharge 250,000.00
12% deficiency interest (april 16, 2019 to June 20, 2020)
(1,000,000 x 12% x 442 days/365days) 145,315.07 395,315.07
Total amount due , June 30, 2020 1.395,315.07
Add: 12% delinquency tax ( from July 1, 2020 to Feb. 10, 2021)
(1,395,315.07 x 12% x 225 days/365 days) 103,215.09
Total amount due, February 10, 2020 1,498,530.16

Note: Simultaneous imposition of deficiency and delinquency tax is not allowed under the effectivity of the
TRAIN LAW.
 UNIT II – TAX REMEDIES

Assignment 1: Modified True or False

Instruction: Write “True” if the statement is correct and If the statement is incorrect, write the word or group
of
words that makes the statement

1. In constructive distraint personal property is physically taken.

2. A return filed before the due date shall be considered as filed on such due date.
3. An assessment is always a requirement for collection of tax .
4. The civil remedies for the collection of internal revenue taxes , fees or charges and any increment thereto
resulting from delinquency shall be by summary proceedings and judicial proceedings.
5. The remedy by distraint on personal property and levy on the real property maybe repeated if necessary
until the full amount due, including all expenses, is collected.
6. An assessment issued may be questioned administratively with the BIR.
7. The taxpayer may protest the tax assessment by filing to the BIR Commissioner a written request for
reinvestigation within 60 days from the receipt of such assessment.
8. A tax assessment is necessary to a criminal prosecution for willful attempt to defeat and evade payment of
taxes.
9. A notice for Informal Conference shall be responded to within 30 days after the receipts of the notice.
10. If the tax assessment protest is not acted upon by the BIR Commissioner within 180 days from the
submission of documents, the taxpayer may appeal to the Court of tax Appeals.
11. The appeal to the CTA must be done within 30 days from the receipt of the BIR Commissioner’s decision
on the formal protest filed.
12. If the taxpayer did not make any appeal on the tax assessment, it becomes final , executory and
demandable.
13. Claim for refund must be made within 3 years from the date of payment.
14. Compromise and compromise penalty are basically the same.
15. In case personal property of the taxpayer has been distrained by the government thru the BIR and the
property has been sold at public auction, the taxpayer may exercise the right of redemption.
16. Both the warrants of distraints and garnishment are on personal proprty owned by and in possession of the
taxpayer.
17. The Commissioner only shall have the power to lift order of distraint.
18. In actual distraint personal property is merely held as security to answe for any future tax delinquency,.
19. An assessment is the official action of an officer authorized by law ascertaining the amount of tax due
under the law from a taxpayer.
20. The CTA has exclusive original jurisdiction in tax collection cases involving final and executory
assessment for taxes, fees, charges and penalties.
21. The sixty period for the submission of all relevant supporting documents shall not apply to requests for
reconsideration.
22. The Formal Letter of demand and Final Assessment Notice shall be issued by the Commissioner only.
23. The taxpayer’s remedy against erroneously or illegally paid tax is to file a formal claim for refund with the
BIR within 2 years from the date of discovery of the erroneous payment of tax.
24. The running of the 2-year pre-emptory period cannot be suspended.

25. A refund check or warrant which shall remain unclaimed or uncashed within three years from the date of
said warrant or check was mailed or delivered, shall be forfeited in favor of the government and the amount
shall revert to the general fund.
Assignment 2 – Multiple Choice:

1. Which of the following is not among the administrative powers of the BIR?
a) Compromise tax assessments
b) Distraint of personal property of delinquent taxpayer
c) Levy of real property of delinquent taxpayer
d) Render court decisions concerning tax dispute.

2. The power to interpret the provisions of the NIRC and other tax laws shall be under the exclusive and
original jurisdiction of:
a) CIR, subject to review by the Sec. of Finance
b) Secretary of Finance, subject to review by the President
c) CTA, subject to review by the Supreme Court
d) Regular Courts subject to review by the CTA

3. All of the following , except one, are authorized to act as agents of the BIR for tax collection purposes. Which
one is not?
a) Bureau of Customs for VAT and excise tax on importation
b) ) Land Transportation for energy taxes
c) Accredited banks for certain internal revenue taxes
d) local government executives

4. The BIR shall be under the control and supervision of:

a) Court of Tax appeals b) DILG c) Supreme Court d) Dept. of finance

5. The NIRC provides that the BIR shall have a chief and 6 assistant chiefs to be known as:
a) Commissioner and Deputy Commissioners c) Secretary and Assistant Secretaries
b) Commissioner and Assistant Commissioners d) Secretary and Under Secretaries

6. Where any national internal revenue tax is alleged to have erroneously or illegally collected, as a remedy the
taxpayer should first file an action for refund with the:
a) Regional Trial Court b) BIR c) Court of Tax Appeal d) Court Appeal

7. Where a return is filed, as a general rule, the prescriptive period for assessment after the date the return was
due or filed, whichever is later is within:
a) 3 years b) 5 years c) 10 years d) 15 years

8. Who has the power to lift the warrant of levy?

a) Secretary of Finance
b) Commissioner of Internal Revenue exclusively
c) Commissioner of Internal Revenue or his duly authorized representative
d) Revenue District Officer

9. Who shall order the distraint of personal property if the amount of delinquent tax or delinquent revenue is in
excess of P1,000,000.
a) Secretary of Finance
b) Commissioner of Internal Revenue exclusively
c) Commissioner of Internal Revenue or his duly authorized representative
d) Revenue District Officer

10. The seizure by the government of personal property to enforce payment of taxes followed by a public sale, if
taxes were not voluntarily paid is called:
a) Distraint b) levy c) Forfeiture d) Lien

11. A warrant of distraint may be issued against the taxpayer owing delinquent taxes on his:
 a) real property b) Bank deposits c) personal property d) not given

12. A warrant of levy may be issued against the taxpayer owing delinquent taxes on his:
a) real property b) Bank deposits b) personal property d) not given

13. The official action of an officer authorized by law in ascertaining the amount of tax due under the law from a
taxpayer.
a) Assessment b) Collection c) Levy d) distraint

14. A formal assessment notice shall become final if:

I – Relevant supporting documents not submitted within 60 days from filing the protest
II – Not responded within 30 days after receipt.

a) Yes to I and II b) Yes to I only c) No to I and II d) Yes to II only

15. The following remedies are available to the government to collect taxes, except:
a) Distraint and levy c) Inquiring into bank deposit accounts of
taxpayers
b) Entering into compromise of tax cases d) Enforcement of forfeiture of property

16. The following are coercive means in the collection of taxes by the BIR, except one:
a) Distraint and levy
b) Seizure of goods on which the government has claim for unpaid taxes
c) Enforcement of tax liens
d) Compromise

18. In filing a protest with the BIR, what remedies may be availed by the taxpayer simultaneously?
a) Reinvestigation and abatement c) Reinvestigation and reconsideration
b) Reinvestigation and compromise d) reinvestigation and review

19. Which of the following cases falls within the jurisdiction of the Court of Tax Appeals?
a) Criminal action for violation of the national Internal Revenue Code
b) Question of whether or not to impose a deficiency tax assessment upon a taxpayer
c) Appeal from an undisputed tax assessment
d) Action for refund of real property tax
20. A tax credit certificate becomes invalid:
a) if it remains unutilized after 2 years from date of issue
b) if it remains unutilized after 5 years from date of issue
c) if it is revalidated after 2 years from date of issue
d) if it remains unutilized but revalidated after 5 years

21. The remedies and levy shall not be availed of where the amount is not more than:
a) P 100 b ) P 1,000 c) P 10,000 d) P 100,000

22. Distraint proceeding as tax collection remedy could be carried out by the Revenue District Office when the
pertinent liability is:
a) Not more than P 1,000,000 c) Not more than P 1,500,000
b) Not more than P 10,000,000 d) No more than P 15,000,000

23. Levy of real property for tax delinquency could be implemented:

a) Before distraint proceedings is done
b) After distraint proceedings is done
b) Simultaneously with distraint proceedings
d) Before, after or simultaneously with distraint proceedings.

24. In which case could tax assessment be done?

a) after a tax return has been filed c) when the prescribed time for filling a tax return has lapsed
b) before a ax return is filed d) All of the above
25. Compromise as a tax remedy is available to:
a) the government c) Both the government & the taxpayer
b) the taxpayer d) Taxpayer who has not committed any tax violation

26. Where any national internal revenue tax is alleged to have been erroneously or illegally collected the
taxpayer should first:
a) File a claim for refund or credit
b) File an action for refund with the Regional Trial Court
c) File an action for refund with the Court of Tax Appeal;
d) File a suit against the Commissioner for the illegal collection

27. What is the prescriptive period for an assessment fraud?

a) 5 years from discovery
b) 10 years from discovery
c) 5 years from date of return or deadline prescribe by law whichever is later
d) 10 years from date of return or deadline prescribe by law whichever is later

28. The income tax return for 2018 was filed on April 12, 2019. An assessment for deficiency tax was made on
June 5, 2021. A warrant of distraint was issued on June 5, 2022.

Were the assessment and the warrant of distraint issued within the allowed period?
Assessment Warrant of Distraint Assessment Warrant of Distraint
a) Yes Yes c) No No
b) Yes No d) No Yes

29. A taxpayer filed an income tax return for 2014 on April 1, 2015. When is the last day to make a valid
assessment?
a) April 1, 2018 b) July 1, 2015 c) April 15, 2018 d) September 1, 2018

30. J. C filed an income tax return for the calendar year 2014 on March 10, 2015. The BIR issued a deficiency
assessment income tax on April 10, 2016, which has become final. When is the last day for the BIR to
collect?
a) April 10, 2021 b) April 15, 2018 c) April 15, 2020 d) March 10, 2018

31. A fraudulent return for 2018 income was filed on April 15, 2019. The fraudulent return was discovered on
June 10, 2023. When would be the last day to send valid assessment?
a) April 15, 2022 b) April 15, 2029 c) June 10, 2033 d) June 10, 2025

32. Using the same data in no. 20, assuming that assessment was sent on July 22, 2025, when would be the last
day to collect?
a) July 22, 2028 b) April 15, 2030 c) July 22, 2030 d) Cannot be collected anymore

33. The taxpayer seasonably filed his protest together with all the supporting documents. It is already July 31,
2019 or 180 days from the submission of the protest but the BIR Commissioner has not yet decided his
protest. Desirous of an early resolution on his protested assessment, the taxpayer should file his appeal to
the Court of Appeals not later than:

a) August 31, 2019 b) August 30, 2019 c) P August 15, 2019 d) August 1, 2019

34 Date of Tax erroneously paid June 20, 2018

Claim for refund was filed with the BIR January 17, 2020
Received BIR decision of denial June 3, 2020

The last day to appeal to the Court of Tax Appeals is:

a) April 13, 2020 b) June 20, 2020 c) July 3, 2020 d) December 3, 2020
35. All criminal violations may be compromised:
A. Except those already filed in court
B. Except those involving fraud

a) True, True b) True, False c) False, False d) False, True

36. The taxpayer filed his 2018 income tax return on April 14, 2019. On May 20, 2020, he received an
assessment from the BIR. The last day for him to file a request for reconsideration is:

a) April 15, 2020 b) April 14, 2021 c) June 20, 2020 d) June 19. 2020

37. Date of filing the Income tax Return March 28, 2019
Date Assessment was received June 20, 2021
Request for reconsideration was filed July 4, 2021
Relevant supporting documents submitted August 26, 2021

The BIR should act on the protest not later than:

a) September 26, 2021 b) April 15, 2022 c) February 26, 2020 d) February 22, 2022

38. Refer to no. 37: Assuming the BIR did not act on the protest, the last day for the taxpayer to appeal to the
Court of Tax Appeal is:

a) March 22, 2021 b) March 24, 2022 c) March 24, 2021 d) April 15, 2021

39. A taxpayer received an assessment notice on January 5 2019. He files a motion for reconsideration with the
BIR on January 15, 2019. When is the last day for the submission of complete documents to support his
motion for reconsideration?
a) February 4, 2019 c) January 15, 2021
b) March 16, 2019 d) Not required to submit.

40. Aubrey filed her 2019 income tax return and paid the tax due thereon on April 1, 2020. The last day for the
BIR to send an assessment is:

a) April 1, 2023 b) April 15, 2023 c) April 15, 2024 d) April 1, 2029

41. Teddy filed his ITR for the taxable year 2019 on May 10, 2020. After an investigation, it was discovered that
the tax paid was deficient.The last day for the BIR to send an assessment:
a) April 15, 2023 b) May 10, 2023 c) May 10, 2030 d) April 15, 2030

42. False tax return for 2017 income was filed on April 15, 2018
False tax return was discovered on June 10, 2021
FAN was send on September 16, 2021

Last day for the government to collect

a) September 16, 2024 c) June 10, 2026
b) September 16, 2026 d) September 16, 2031

43. Mr. Cruz filed his 2018 ITR and paid the tax due on April 13, 2019. On July 15, 2019, he found out that
there was overpayment of P 50,000. The last day to file claim for refund is on:
a) April 13, 2021 b) April 15, 2021 c) April 13, 2022 d) April 15, 2022

44. Refer to no. 43: Mr. Cruz filed a claim for refund on July 30, 2019. His claim for refund was denied by the
BIR and denial was received on May 15, 2020. The proper remedy available to Mr. Cruz is:
a) Appeal to the court of tax appeals on or before May 30, 2020.
b) Appeal to the court of tax appeals on or before June 15, 2020.
c) File a motion for reconsideration on or before June 15, 2020
d) File a motion for reconsideration on or before June 1, 2020
 45. In which of the following shall a 25% surcharge be collected?
I. Failure to file and pay the tax due on time
II. Willful neglect to file the return on time
III. Filing of tax return after prior notice in writing from the BIR.

a) I only b) I and II only c) III only d) I, II and III

46. A civil penalty of 50% of the basic tax is imposed in case of:

a) Failure to file and pay the tax due on time

b) Willful neglect to file the return on time
c) Filing of tax return with unauthorized revenue officer.
d) Failure to pay the deficiency tax within the time prescribed for payment.
.
47. On March 1, 2016 Mew Foods Corp. received a notice of assessment and a letter of demand on the April
15, 2014 final adjustment return from the BIR. New Foods filed a request for reinvestigation together with
the supporting documents on April 25m 2016. On June 2, 2016, the BIR issued a final assessment
reducing the amount of tax demanded. Since New Foods is satisfied with the reduction, it did not do
anything anymore. On April 15, 2021, the BIR garnished the corporation’s bank deposits to answer the tax
liability. Was the action of the BIR proper?

a) Yes. The BIR has 5 years from the filing of the protest within which to collect.
b) Yes. The BIR has 5 years from the issuance of the final assessment within which to collect.
c) No. The taxpayer did not apply fot a compromise,
d) No. without the taxpayer’s prior authority, the BIR’s action violated the Bank Deposit Secreacy Law.

48. Ardon Corporation received a notice of assessment and a letter from the BIR demanding the payment of
P 2,000,000 in deficiency income taxes for the year 2016. The financial statement s of the company show
that it has been suffering financial losses from the year 2017 to present, Its position shows that it could pay
only P 500,000 which it offered as a compromise to BIR. Which among the following may the BIR require to
enable it to enter into a compromise with Ardon Corporation?

a) Ardon must immediately deposit the P 500,000 with the BIR.

b) Ardon must show it has faithfully paid taxes before 2016.
c) Ardon must promise to pay its deficiency tax when financially able.
d) Ardon must waive its right to the secrecy of its bank deposit

49. What should the BIR do when the prescriptive period for assessment of the tax deficiency is about to
prescribed but the taxpayer has not yet complied with the BIR requirements for the production of books of
accounts and other records to substantiate the claimed deductions, exemptions and credits?
a) Call the taxpayer to a conference to explain the delay
b) immediately conduct an investigation of the taxpayer’s activities
c) issue a jeopardy assessment coupled with a letter of demand
d) issue a notice of constructive distraint to protect government interest.

50. Ms. Little paid excessive tax on April 15, 2018. On May 1, 2019 she filed a claim for refund. Her claim was
denied by the BIR and she receive the denial on March 15, 2020. Ms. Little filed a motion for reconsideration
with the BIR on March 25, 2020. On April 20, 2020, she reveived the final denial nof the BIR. What will be
the taxpayer’s remedy?

a) File another motion for reconsideration with the BIR within 30 days after the receipt of the final
denial.
b) File an appeal with the CTA with 30 days after the receipt of the final denial.
c) File an appeal with the CTA within 15 days after the receipt of the final denial
d) The taxpayer has no more remedy against the final denial

End
 Unit II – Tax Remedies
ANSWER SHEET – ACTIVITIES

Name: ____________________

I – Modified True or False II – Multiple Choice

1. 1. 26.
2. 2. 27.
3. 3. 28.
4. 4. 29.
5. 5. 30.
6. 6. 31.
7. 7. 32.
8. 8. 33.
9. 9. 34.
10. 10. 35.
11. 11. 36.
12. 12. 37.
13. 13. 38.
14. 14. 39.
15. 15. 40.
16. 16. 41.
17. 17. 42.
18. 18. 43.
19. 19. 44.
20. 20. 45.
21. 21. 46.
22. 22. 47.
23. 23. 48.
24. 24. 49.
25. 25. 50.