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Aban
CABANEIRO) A2011
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011
. Failure/Falsify/Fraudulent
a. Intentional failure to file
a return
b. False return
c. Fraudulent return
COLLECTION: 5 years
from the date of
assessment.
omission, falsity or
fraud.
Notes:
The rule is if prior assessment has been made, the
BIR can avail of the administrative and judicial remedy. But if
without prior assessment, the BIR can only avail of the judicial
remedies.
Return must be the one prescribed by the BIR. SO, if you file
your Books of Accounts in lieu of that return, that does not
constitute return.
assessment and
prescriptive period is
years from the
discovery of failure or
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011
General Rule
Collection may be instituted within 5 years following the
assessment of the tax
[Sec. 222C]
Exception
A proceeding in court for collection, without assessment,
may be instituted within ten years after the discovery of
falsity, fraud, or omission in the case of a false or fraudulent
return with intent to evade tax or failure to file a return [Sec.
222A]
PRINCIPLES GOVERNING THE FILING OF AN ACTION FOR
COLLECTION BY THE BIR
ASSESSMENT PROCEDURE
1. File tax return
2. Letter of authority to examine
If satisfied, collection.
3. Notice of Informal Conference
If satisfied with explanation, collection.
4. Pre-assessment notice
5. Response 15 days
6. Notice of assessment and letter of demand
7. Administrative
protest
Reconsideration
or
reinvestigation
Submission of all relevant supporting documents
within 60
days from protest
8. Denial or non-action of the Commissioner 180 days
9. Appeal to the CTA within 30 days from decision or the
lapse of 180 days
10. Appeal to the CA within 15 days from notice
CA decides within 12 months
11. Petition for review on certiorari to the Supreme Court
COLLECTION
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011
EXERCISES:
BIR: Prescriptive Period; Assessment & Collection (1999)
A Co., a Philippine Corporation, filed its 1995 Income Tax Return (ITR) on April 15,
1996 showing a net loss. On November 10, 1996, it amended its 1995 ITR to
show more losses. After a tax investigation, the BIR disallowed certain deductions
claimed by A Co., putting A Co. in a net income position. As a result, on August 5,
1999, the BIR issued a deficiency income assessment against A Co. A Co.
protested the assessment on the ground that it has prescribed: Decide.
SUGGESTED ANSWER:
The right of the BIR to assess the tax has not prescribed.
The rule is that internal revenue taxes shall be assessed within three
years after the last day prescribed by law for the filing of the return. (Section 203,
NIRC), However, if the return originally filed is amended substantially, the
counting of the three-year period starts from the date the amended return was
filed. (CIR v. Phoenix Assurance Co., Ltd., 14 SCRA 52). There is a substantial
amendment in this case because a new return was filed declaring more losses,
which can only be done either (1) in reducing gross income or (2) in increasing the
items of deductions, claimed.
What is the purpose of a waiver of the statute of limitations to assess
and collect internal revenue taxes?
SUGGESTED ANSWER
A waiver of the statute of limitations under the NIRC, to a certain extent,
is a derogation of the taxpayers' right to security against prolonged and
unscrupulous investigations and must therefore be carefully and strictly
construed. The waiver of the statute of limitations is not a waiver of the right
to invoke the defense of prescription. It is an agreement between the taxpayer
and the BIR that the period to issue an assessment and collect the taxes due is
extended to a date certain.
The waiver does not mean that the taxpayer
relinquishes the right to invoke prescription unequivocally particularly where
the language of the document is equivocal. For the purpose of
safeguarding taxpayers from any unreasonable examination, investigation or
assessment, our tax law provides a statute of limitations in the collection of
taxes. Thus, the law on prescription, being a remedial measure, should be
liberally construed in order to afford such protection. As a corollary, the
exceptions to the law on prescription should perforce be strictly construed.
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011
(Philippine Journalists, Inc. v. CIR, G.R. No. 162852, December 16, 2004)
A taxpayer requested for reinvestigation of his tax liability.
Did it suspend the period to assess and collect?
SUGGESTED ANSWER:
No. A mere request for reinvestigation does not suspend the period
to assess and collect. Section 223 of the NIRC provides that the period shall
be suspended when the taxpayer requests for a reinvestigation which is
granted by the Commissioner.
Thus, it is not only the request for
reinvestigation which will toll the period. There must be a showing that the
same was granted by the CIR. (BPI v. CIR, GR No. 139736, 17 October 2005)
Collection of Taxes: Prescription (2001)
May the collection of taxes be barred by prescription? Explain your answer.
SUGGESTED ANSWER:
Yes. The collection of taxes may be barred by prescription.
The prescriptive periods for collection of taxes are governed by the tax law
imposing the tax. However, if the tax law does not provide for prescription, the
right of the government to collect taxes becomes imprescriptible.
Imprescriptibility of Tax Laws (1997)
Taxes were generally imprescriptible; statutes, however, may provide otherwise.
State the rules that have been adopted on this score by The National Internal
Revenue CCode.
SUGGESTED ANSWER:
The statute of limitation for assessment of tax if a return is filed is within three (3)
years from the last day prescribed by law for the filing of the return or if filed after
the last day, within three years from date of actual filing. If no return is filed or the
return filed is false or fraudulent, the period to assess is within TEN YEARS from
discovery of the omission, fraud or falsity.
The period to collect the tax is within FIVE YEARS from date of assessment. In the
case, however, of omission to file or if the return filed is false or fraudulent, the
period to collect is within TEN YEARS from discovery without need of an assessment.