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INTRODUCTION
1. Stages in the imposition of tax
a. Levy It is a legislative act which determines that a tax of a certain
amount or of a certain percentage shall be imposed on the persons,
properties or acts.
b. Assessment It is the official action of an officer authorized by law in
ascertaining the amount of tax due under the law from a taxpayer.
c. Collection IT is the getting by the proper government agency of the taxes
imposed.
Assessment should be made within 3 years from the date of filing of return, or
from the last day required by law for filing, if the return was filed before such last
day.
Collection should be made within 5 years from the date of assessment, either by
summary proceedings or judicial proceedings.
2. Remedies available to the government
a. Administrative Remedies
i. Distraint of personal property
ii. Levy of real property
iii. Enforcement of forfeiture
iv. Enforcement of tax lien
v. Entering into compromise of tax cases
vi. Constructive distraint
b. Judicial Remedies
i. Civil actions
ii. Criminal actions
3. Remedies available to the taxpayer
a. Administrative Remedies
i. Reinvestigation or reconsideration
ii. Compromise
iii. Claim for refund
b. Judicial Remedies
i. Appeal to Court of Tax Appeals
ii. Criminal actions
iii. Civil actions
REMEDIES IN GENERAL
1. Period of limitation (Statute of Limitation)
Assessment
Assessment should be made within 3 years from the date of filing of return, or
from the last day required by law for filing, if the return was filed before such last
day.
No proceeding in court without assessment for the collection of such taxes shall
be begun after the expiration of such period.
Collection
Collection should be made within 5 years from the date of assessment, either by
summary proceedings or judicial proceedings.
Any internal revenue tax which has been assessed within the extended period
agreed upon may be collected by distraint or levy or by a proceeding in court
within the period agreed upon in writing before the expiration of the 5 year period.
The period so agreed upon may be extended by subsequent written agreements
made before the expiration of the period previously agreed upon.
The prescribed minimum rates for the compromise settlement of tax liabilities,
reckoned on a per tax type assessment basis, are
1. 40% in cases of doubtful validity;
2. 10% in cases of financial incapacity;
3. 50% in cases of delinquent accounts and disputed assessments of taxpayer
registered under the LTS and ETS.
Applications for the compromise settlement of tax liabilities will be evaluated and
approved/disapproved by the:
1. National Evaluation Board (for basic assessed tax exceeding P1 million and
for offers less than the prescribed minimum rates);
2. Regional Evaluations Board (for basic assessed tax of P500,000.00 or less);
3. Commissioner of Internal Revenue (for basic assessed tax exceeding
P500,00.00 but not over P1 million).
b. Abate or cancel a tax liability, when:
a. The tax or any portion thereof appears to be unjustly or excessively assessed;
b. The administration and collection costs involved do not justify the collection of
the amount due.
All criminal violations may be compromised except:
a. Those already filed in court, or
b. Those involving fraud.
c. Credit or refund taxes erroneously or illegally received or penalties imposed without
authority
Kinds of distraint:
a. Actual Distraint taking of possession of the personal property out of the
taxpayer.
b. Constructive Distraint the owner is merely prohibited from disposing of his
property.
taxpayer from disposing of his property pending final determination of his tax
liability.
When and by whom distraint may be made:
1. It shall be made not earlier than 3 months nor later than 6 months from receipt
of demand by the taxpayer;
2. The distraint of personal property shall be made by the Commissioner of
Internal Revenue of his duly authorized representative if the amount involved
is more than P1,000,000 or the Revenue District Officer, if the amount
involved is P1,000,000 or less.
Levy refers to act or seizure of real property in order to enforce the payment of
taxes and the property may be sold at public sale, if after seizure, the taxes are
not voluntarily paid.
The Bureau of Internal Revenue (BIR) files civil or criminal action before the
Municipal Trial Court, Regional Trial Court or the Court of Tax Appeals with
appropriate jurisdiction.
PROTEST OF ASSESSMENT
1. Protest of assessment
Assessment is the official action of the Bureau of Internal Revenue in
ascertaining the amount of tax due under the law from a taxpayer.
Assessment should be made within 3 years from the date of filing of return, or
from the last day required by law for filing, if the return was filed before such last
day.
Jeopardy Assessment
Jeopardy assessment is a tax assessment which was made without the benefit of
complete or partial audit by an authorized revenue officer who has reason to
believe that the assessment and collection of a delinquency tax will be
jeopardized by delay because of taxpayers failure to comply with audit and
investigation requirements to present his books of accounts or to substantiate all
or any of the deductions, exemptions or credits claimed.
ii.
are ended.
If the BIR rejects the taxpayer explanations, the proceedings are ended
or an assessment issued based on the findings. (Sec. 228)
b. If the taxpayer fails to respond within 15 days from receipt of the PreAssessment Notice, the BIR ends the proceedings, or an assessment issued
based on the findings. (Sec. 228)
3. The BIR issues the assessment.
4. If the taxpayer does not do anything within 30 days from receipt of the notice of
assessment, the assessment becomes that, executor, demandable and not
appealable to the Court of Tax Appeals, and the BIR could avail of its remedies to
collect the tax.
The decision of the CTA en banc may be appealed to the Supreme Court within 15
days.
In case of undisputed assessment:
1. The BIR may file an action with the CTA Division where the principal amount of
taxes and fees, exclusive of charges and penalties, claimed is P1,000,000.00 or
more.
The BIR may file an action with the Regional Trial Court or the Municipal Trial
Court as the case my be, where the principal amount of taxes and fees, exclusive
of charges and penalties, claimed is less than P1,000,000.00
2. The decision of the Regional Trial Court in the exercise of its original jurisdiction
or appellate jurisdiction is appealable to the CTA Division.
3. The decision of the CTA division is appealable to the CTA en banc. The decision
of CTA en banc is appealable to the Supreme Court.
Collection cases where the principal amount of taxes and fees, exclusive of
charges and penalties, claimed is P1,000,000.00 or more.
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