assessment

Tax Remedies of the Government 1- collection

Primary remedies:
1. Assessment: determining the tax liability of a taxpayer in accordance with tax laws
2. Collection: procedure to enforce payment of unpaid taxes

Prescriptive period for assessment:

- 3 years from date of actual filing or the deadline required by law, whichever is later
- 10 years from discovery of:
o Fraudulent return
 Prima facie fraudulent if:
 gross income is understatement by more than 30%; or
 deduction claimed is overstated by more than 30%
o Willful neglect to file a return: in practice, considered willful if more than 3 years of non-
date or Hing
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Deadlines: ASSESSMENT discovery of willful neglect to File a

run on
Tax Deadline
Annual income tax for individual April 15
Annual income tax for corporation 15th day of 4th month following end of taxable year
Quarterly income tax for individual May 15 / Aug 15 / Nov 15
Quarterly income tax for corporation 60 days from close of quarter
CGT on stock: per transaction 30 days from sale
CGT on stock: annual return 15th day of 4th month following end of taxable year
CGT on sale of real estate 30 days from date of sale
Donor’s Tax 30 days from donation
Estate Tax 1 year from date of death
Non-VAT taxpayers, OPT 25 days from end of quarter
Monthly VAT 20 days from month end
Quarterly VAT 25 days from end of quarter

revenue memorandum order

Formal Tax Audit process µ
1. Release of Letter of Authority to revenue officer (RMO 38-88)
a. Official document authorizing BIR Revenue Officer to examine a taxpayer’s books of
accounts and other accounting records
b. Must be served within 30 days from date of issuance
c. Only one LA shall be issued: taxpayers shall inform the concerned BIR officer to formalize
request cancelation of other LAs
a revenue regulation
2. Notice of Discrepancy (NID) (RR 22-2020)
a. Replaces the Notice of Informal Conference (NIC) issued previously under RR 7-2018
b. If a taxpayer is found liable for deficiency tax, the taxpayer shall be informed through an
NID
c. The NID shall be written and describe the discrepancies found
d. Once received, there will be a “Discussion of Discrepancy” which is for a period of
maximum 30 days from the date of receipt. During this period, the taxpayer is given the
 opportunity to present his side of the case. Submission of taxpayer’s documents must be
30 days after receipt of NID. µ
Revenue Regulation

3. Preliminary Assessment Notice (PAN) (RR 18-2013)

a. When taxpayer is found to still be liable after the Discussion, the investigating office shall
endorse the case to the reviewing office and approving official (RR 22-2020)
b. PAN will be issued: 10 days from conclusion of Discussion (RR 22-2020)
c. PAN Shows in detail: proposed assessment, facts, law and rules on which assessment is
based
d. Taxpayer given 15 days from receipt of PAN to respond

NID and PAN not required in the following cases (NIRC Sec 228):
a. When the finding for any deficiency tax is the result of mathematical error in the computation
of the tax as appearing on the face of the return; or
b. When a discrepancy has been determined between the tax withheld and the amount actually
remitted by the withholding agent; or
c. When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding
tax for a taxable period was determined to have carried over and automatically applied the
same amount claimed against the estimated tax liabilities for the taxable quarter or quarters
of the succeeding taxable year; or
d. When the excise tax due on excisable articles has not been paid; or
e. When the article locally purchased or imported by an exempt person, such as, but not limited
to, vehicles, capital equipment, machineries and spare parts, has been sold, traded or
transferred to non-exempt persons.
revenue regulation
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4. Final Letter of Demand (FLD) and Final Assessment Notice (FAN) (RR 18-2013)

(
a. When taxpayer either responds that he still disagrees with the PAN, or fails to reply within
15 days from receipt of PAN
b. Calls for the payment of the delinquent/deficient taxes
c. Taxpayer may dispute the assessment in the following order: process of DISPUTING
the ADEN Mint :

i. File administrative protest within 30 days from receipt. Failure to file a protest
will make the FAN executory. It may be one of the following:
1. Request for reconsideration – pleading to re-evaluate the assessment
administrative
based on existing records
protect
2. Request for reinvestigation – pleading to re-evaluate the assessment on
the basis of newly discovered or additional evidence a taxpayer intends to
present. Taxpayer must submit the relevant supporting documents
within 60 days from filing his protest
ii. If the protest is not acted upon within 180 days from the filing of request for
reconsideration, or from filing the supporting documents for request for
reinvestigation, the taxpayer may either:
1. Appeal to the Court of Tax Appeals within 30 days after the 180-day
period; or
2. Wait for the final decision
 iii. If the protest is denied, in whole or in part, the taxpayer may do either within 30
days from receipt of the decision:
1. File another request for reconsideration, this time to the Commissioner
of Internal Revenue. This is called an administrative appeal. If the
request is again denied, the taxpayer may still resort to #2, but he shall
be limited only to 30 days from the receipt of the denial of the protest.
2. Appeal to the Court of Tax Appeals division.

5. If the taxpayer appeals to the Court of Tax Appeals (RA 9282)

a. The case will be decided first by the Court of Tax Appeals division (only some of the
Justices of the court will hear and decide the case)
b. If the CTA rules against the taxpayer, he may file a motion for reconsideration within 15
days from receipt of the notice
c. If the motion for reconsideration is denied, the taxpayer may file an appeal with the CTA
en banc (all Justices of the court) within 30 days from receipt of notice
d. If the appeal to the en banc is denied, the taxpayer may file a motion for reconsideration
within 15 days from receipt of notice
6. If the CTA en banc still rules against the taxpayer, the taxpayer may appeal to the Supreme Court
(Rule 45 of Rules of Court).
7. Execution: Execution is, in essence, the carrying out of a final decision or judgment that has
become executory. A final decision becomes executory after a party fails to take the next remedy
available to him within the period provided.

Where the decision is against the taxpayer (thus holding him liable for tax
delinquency/deficiency), the decision would order the taxpayer to pay the unpaid tax. However,
the taxpayer may still refuse to pay. The law arms the BIR with methods to otherwise recover the
unpaid tax.
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