ASPECTS, STAGES

5. Signed by the CIR or his authorized

representative
6. Served by personal delivery or through
OR PROCESSESS OF registered mail

TAXATION - the letter is deemed duly made when it is properly

addressed with postage prepaid and when it is
mailed

3 Aspects of 2 Stages of -through personal sending or registered mail

Taxation Taxation
Levy 1. Involves the Tax Policy -ordinary mail is not allowed
passage of
tax laws or -Case: In cases where the taxpayer refuses to
ordinances acknowledge the receipt of assessment notice from
2. through
the BIR, it is the burden of the BIR to prove that such
legislature
notice was indeed received by the taxpayer
Assessment 1. Involves the Tax
concerned
act of the Administration
administratio
7. Issued on account of a valid letter of
n and
authority
implementati
on of the tax Q: What are the METHODS of INCOME
laws DETERMINATION?
2. by the
executive
A: The methods of income determination are
branch of
the Inventory o The CIR anytime during the
government
Method taxable year may order
(determinati
inventory-taking of goods of
on of tax
a taxpayer to determine his
liability)
internal revenue tax.
Tax Payment Involves the act
o He may also place any
or Collection of collecting the
business under surveillance.
tax (tax
o The findings are deemed
collections)
prima facie correct.
Constructive o If a taxpayer failed to issue
Method receipts and invoices or there is
Government Remedies ground to believe the records
Q: What is the concept of assessment? and books do not reflect the
return
A: An ASSESSMENT is o CIR may look into sales,
receipts, income, or other
1. a written notice and demand
taxable base of similarly-
2. made by the BIR on the taxpayer
3. for the settlement of a due tax liability that situated business/persons to
is set and fixed. prescribe a minimum amount of
4. It is presumed to be gross receipts/sales that will
a. correct and serve as tax base.
b. made in good faith
Issuance of o When the taxpayer is:
Q: What are REQUISITES of a VALID Jeopardy 1. R retiring from business
ASSESSMENT? (FINAL ASSESSMENT NOTICE) Assessment subject to tax;
2. I intending to leave the
1. Computation of tax liabilities Philippines or remove his
2. Statement of factual and legal basis for property;
assessment 3. S SEEKING to hide or
3. Demand for payment on the taxpayer conceal property; and
4. Made within prescriptive period 4. A performing ACTS
tending to
- means that the tax assessment is made or deemed a. obstruct proceeding for
made when it is released or sent to the taxpayer collection of tax for the
 past/current year/quarter or a. 25% surcharge,
b. render it partially or totally b. interest,
ineffective unless c. compromise penalty.
proceedings begin Deficiency tax 1. Deficiency tax has to be
immediately assessed first and go through
o Effect of Jeopardy Assessment: the whole process since the
1. The tax period is amount is not yet settled.
terminated 2. It can immediately be
2. The CIR sends the taxpayer collected
notice of the decision and a. administratively (levy or
DEMAND for the immediate distraint) or
payment of taxes yet b. judicially.
3. Subject to
unpaid
a. interest, and
3. Taxes are due and payable
b. compromise penalty.
immediately and subject to
penalties if not paid within
the prescribed period.
Q: What are the POWERS to make ASSESSMENT
and PRESCRIBE requirements for tax
Q: Who is a DELINQUENT TAX PAYER?
administration and enforcement?
A: A DELINQUENT taxpayer is
1. To EXAMINE The CIR can
books and 1. require production of
1. Self-assessed
2. Based on RETURN records and records
a. Not paid at all or OBTAIN 2. take testimony under oath.
b. Not completely paid information 3. issue both subpoenas
duces tecum and ad
Q: What is SELF-ASSESSMENT? testificandum
4. also have revenue
A: SELF-ASSESSMENT means that officers/employees conduct
a canvass.
1. When the taxpayer earns income,
2. He has the responsibilitiy to This power does NOT include
i. Compute, the ability to inquire into bank
ii. File and deposits, because it would be a
iii. Pay his tax to the BIR violation of the secrecy of bank
deposit
Q: Are national internal revenue taxes self-
UNLESS, exceptions exist.
assessing? 2. To INQUIRE in (when allowed)
bank deposits
A: Yes, by nature, national internal revenue taxes are of taxpayers 1. For a decedent to
self-assessing.
determine gross estate.
2. Taxpayers who filed
Q: When may the government do assessment? application for compromise
of tax liability based on
A: A government may do assessment
financial incapacity (THE
TAXPAYER MUST EXECUTE
1. BEFORE a tax return is filed
A WAIVER TO THIS EFFECT.)
a. After prescription period expired
b. If the taxpayer intends to leave the
country or close business *Republic Act No. 10021
2. AFTER a fraudulent tax return is uncovered. (an act to allow the exchange of
information by the BIR of tax
Q: Compare DELINQUENCY TAX and DEFICIENCY matters pursuant to
TAX. internationally-agreed tax
standards pursuant to request
Delinquency 1. Delinquency tax can by proper authority from a
tax immediately be collected treaty country)
a. administratively (levy or Effect: such
distraint) or information obtained
b. judicially. from the banks and
2. Subject to
other financial
 institutions may be or abate any tax
used by the for tax liability;
assessment, >>>except:
verification and Regional
enforcement purposes assessments
Only the courts may involving basic tax
authorize the release of P500,000 or less,
of ITRs under this law and minor criminal
(but upon order of the violations
President) 4. Power to assign or
reassign revenue
Duty of Bank that discovers officers to
death of a person holding an establishments where
account (joint or single) articles subject to
The bank will disallow excise tax are
withdrawals without the produced or kept
certification by the CIR that
6. To PRESCRIBE to divide the Philippines into
transfer taxes have been
REAL different zones or areas and
paid.
PROPERTY shall, upon consultation with
The maximum amount of
values competent appraisers both
P20,000 only will be allowed
from the private and public
as withdrawal.
sectors, determine the fair
3. To ASSESS The non-filing of a return does
market value of real properties
and COLLECT not bar the CIR from
located in each zone or area
tax authorizing assessment of a
(ZONAL VALUE)
taxpayer.

*assessed value: done by

The CIR can resort to BEST
assessors
EVIDENCE available when
7. To ACCREDIT based on their
there is failure to file a required
TAX 1. professional competence,
return or when a false or 2. integrity and
REGISTER
fraudulent return is filed. 3. moral fitness,
agents
4. NOT to General Rule: individuals and general
ALLOW the Return, Statement, Declaration professional partnerships
withdrawal of filed with the BIR cannot be and their representatives
return, withdrawn. who prepare and file
statement, or tax returns, statements,
declaration >>>Exception: reports, protests, and other
It may be amended within 3 papers with or who appear
years, as long as there is no before, the Bureau for
notice for audit or investigation taxpayers.
of the return served upon the 8. To PRESCRIBE prescribe the manner of
taxpayer. additional compliance with
5. To DELEGATE Limit: not lower than division procedural or any documentary or procedural
his powers to chief documentary requirement in connection with
subordinate requirements the submission or
official Q: What are powers that preparation of financial
CANNOT be delegated? statements accompanying the
A: Powers that cannot be tax returns.
delegated are the following:
1. Power to recommend
RULES and Tax Assessment Period
REGULATIONS by the
Q: What is the TAX ASSESSMENT PERIOD?
Secretary of Finance
2. Power to issue rulings
a) Within 3 years to assess
of first impression or
b) Within the 10-year prescription period
reverse, revoke,
modify any existing
ruling.
3. Power to compromise
A: The TAX ASSESSMENT PERIOD is within the 3-year
prescription period, when the taxpayer filed an
accurate tax return. (Sec. 203, NIRC)
3 years to assess
a. from the last day allowed by law to file the
return or
b. if filed after the last day, count 3 years from
date of actual filing
The CIR may still issue a REVISED ASSESSMENT
within the original prescriptive period, and even if
there is already pending appeal of the original
assessment.
If deadline falls on a Saturday, Sunday or a holiday,
deadline is on the next business day.
If under the Electronic Filing and Payment
System (EFPS) (different deadline of filing and
payment)
OR
under the Online eBlR Form System (same
deadline of filing and payment)
= transmission of electronic returns and electronic
payment must be completed/made on and actually
received by the BIR on or before 12 midnight.
Within the 10-year prescription period, when the BIR
discovers that the tax return filed was fraudulent.
(Sec. 222 (a), NIRC)
10 years to assess from discovery of a false or
fraudulent return, or non-filing thereof.
If erroneous return was filed, it is deemed not filed.
So the 10 year period applies.
Q: When is a tax return considered fraudulent?
Fraudulent Return
a. Failure to report an income in an amount
exceeding 30% of that declared per Tax
Return
b. Over statement of deduction in an amount
exceeding 30% of the actual deductions.
Before the expiration of the 3-year period, the BIR
and the taxpayer may agree on the period of
assessment. (Sec. 222 (b), NIRC)
Q: What are the REQUISITES of a VALID waiver?
1. Acceptance date, the fact of receipt must be
indicated in the copies, copy furnished taxpayer
2. Date of expiry, specify the new extended period.
The taxes must not have prescribed.
3. It must be made within the prescription period.
4. It must be signed by the CIR if it is a tax case
involving more than P1 million. It must be signed
by the taxpayer too.
RDO can sign only in cases of tax pending
investigation and period is about to prescribe
regardless of amount.
CASE: RCBC v. CIR
RCBC was assessed. Before period to assess has
already prescribed, RCBC and CIR executed a
waiver of prescriptive period. There were
discussions and RCBC agreed to pay 2 out of 10
items it was assessed for. RCBC claimed that for the
other 8 items, there was already prescription. RCBC
claimed the waiver was defective because the CIR
did not sign the waiver and the amount was 1M or
more. Is RCBC correct?
HELD: NO. RCBC is considered estopped through its
partial payment of the revised assessments within
the extended period provided in the said waivers.
Thus, it had impliedly admitted the validity of the
said waivers. Had it believed that the waiver was
invalid and that the period to assess had effectively
prescribed, RCBC could have refused to make any
payment based on any assessment against it.