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TAX REMEDIES before the expiration of the period previously agreed

TAXPAYER’S REMEDIES upon.


(e) Provided, however, That nothing in the
Title VIII, Sections 202-231, NIRC immediately preceding and (a) shall be construed to
RA 1125, as amended by RA 9282 authorize the examination and investigation or
Tax Rights and Remedies, Mamalateo, Ch 19 and 20 inquiry into any tax return filed in accordance with
the provisions of any tax amnesty law or decree.
A. Assessment
1. Nature SEC. 223. Suspension of Running of Statute of
Definition (De Leon): Official action of officer Limitations
authorized by law in ascertaining; involves: The running of the Statute of Limitations provided in
- computation of sum due Sec 203 and 222 on the making of assessment and
- notice to that effect to the taxpayer the beginning of distraint or levy a proceeding in
- making of demand for payment, whether court for collection, in respect of any deficiency, shall
concurrently with that notice or some time after be suspended for the period during which the
** Without any one of the 3, the assessment is void Commissioner is prohibited from making the
assessment or beginning distraint or levy or a
2. Features proceeding in court and for 60 days thereafter; when
the taxpayer requests for a reinvestigation which is
3. Period of limitation granted by the Commissioner; when the taxpayer
SEC. 203. Period of Limitation upon Assessment and cannot be located in the address given by him in the
Collection return filed upon which a tax is being assessed or
Except as provided in Sec 222, IRT shall be assessed collected: Provided, that, if the taxpayer informs the
within 3 years after the last day prescribed by law Commissioner of any change in address, the running
for the filing of the return, and no proceeding in of the Statute of Limitations will not be suspended;
court without assessment for the collection of such when the warrant of distraint or levy is duly served
taxes shall be begun after the expiration of such upon the taxpayer, his authorized representative, or
period: Provided, That in a case where a return is a member of his household with sufficient discretion,
filed beyond the period prescribed by law, the 3-year and no property could be located; and when the
period shall be counted from the day the return was taxpayer is out of the Philippines.
filed. For purposes of this Section, a return filed
before the last day prescribed by law for the filing NAMARCO vs. Tecson
thereof shall be considered as filed on such last day. 3-year prescription period = 1095th day

SEC. 222. Exceptions as to Period of Limitation of Aznar vs. Commissioner


Assessment and Collection of Taxes - False (due to mistakes, carelessness or ignorance)
(a) In the case of a false or fraudulent return with vs. fraudulent (with intent to evade taxes) returns;
intent to evade tax or of failure to file a return, the difference is state of mind
tax may be assessed, or a proceeding in court for - 10-year prescription period applies; substantial
the collection of such tax may be filed without increase in Aznar’s net worth that wasn’t reflected in
assessment, at any time within 10 years after the his returns
discovery of the falsity, fraud or omission: Provided, - Surcharge of 50% applicable to fraudulent returns
That in a fraud assessment which has become final - Sec. 248(b) wider scope in terms of 50% surcharge
and executory, the fact of fraud shall be judicially
taken cognizance of in the civil or criminal action for Commissioner vs. CA
the collection thereof. No need to establish bad faith, just that it was filed
(b) If before the expiration of the time prescribed in beyond the reglementary period
Sec 203 for the assessment of the tax, both the
Commissioner and the taxpayer have agreed in Basilan Estates vs. Collector
writing to its assessment after such time, the tax - For purposes of the government, as long as
may be assessed within the period agreed upon. The assessment is sent out within 5-year period,
period so agreed upon may be extended by regardless of date of receipt; Taxpayer’s point of
subsequent written agreement made before the view: date of filing
expiration of the period previously agreed upon. - Assessments are presumed correct. Burden of
(c) Any internal revenue tax which has been proof that it is otherwise is on the taxpayer
assessed within the period of limitation as prescribed
in (a) may be collected by distraint or levy or by a Philippine Journalists vs. CIR –important case!
proceeding in court within 5 years following the - Purpose of waiver: encourages prompt action by
assessment of the tax. the government; security for taxpayer against
(d) Any internal revenue tax, which has been assessments
assessed within the period agreed upon as provided - Requirements for waiver are strictly construed in
in (b) hereinabove, may be collected by distraint or favor of the taxpayer. Effect: prescription period is
levy or by a proceeding in court within the period tolled
agreed upon in writing before the expiration of the 5- - Date of waiver: when accomplished by taxpayer,
year period. The period so agreed upon may be not when it was received
extended by subsequent written agreements made B. Taxpayers’ Remedies
1. Protesting an assessment Lascona Land Co. vs. CIR, CTA Case
SEC. 228. Protesting of Assessment - there must first be a decision
When the Commissioner or his duly authorized - the remedies are optional: appeal or wait
representative finds that proper taxes should be
assessed, he shall first notify the taxpayer of his Bonifacio Sy Po vs. CTA Case
findings: Provided, however, That a preassessment
notice shall not be required in the following cases: Protector’s Services vs. CA
(a) When the finding for any deficiency tax is the Exhaust administrative remedies before CTA. BIR
result of mathematical error in the computation of first, then CTA within 30 days
the tax as appearing on the face of the return;
(b) When a discrepancy has been determined Aguinaldo Industries vs. CIR
between the tax withheld and the amount actually Don’t raise defenses for the first time on appeal
remitted by the withholding agent;
(c) When a taxpayer who opted to claim a refund or Surigao vs. CTA
tax credit of excess creditable withholding tax for a
taxable period was determined to have carried over RCBC vs. CIR
and automatically applied the same amount claimed - after expiration of the 180-day period and there
against the estimated tax liabilities for the taxable was no decision, RCBS appealed. But it mistakenly
quarter or quarters of the succeeding taxable year; calculated the 30-day period within which it could
(d) When the excise tax due on exciseable articles avail itself of a remedy. After its appeal was
has not been paid; or dismissed, RCBC claims it can still await a decision
(e) When the article locally purchased or imported by from the Commissioner.
an exempt person, such as, but not limited to, - confirms Lascona case. Taxpayer has 2 options:
vehicles, capital equipment, machineries and spare appealwith the CTA or wait. Remedies are indeed
parts, has been sold, traded or transferred to non- optional
exempt persons. - But, they are mutually exclusive. Resort to one
The taxpayers shall be informed in writing of the bars resort to the other remedy
law and the facts on which the assessment is made;
otherwise, the assessment shall be void. 2. Claim for refund
Within a period to be prescribed by implementing SEC. 229. Recovery of Tax Erroneously or Illegally
rules and regulations, the taxpayer shall be required Collected
to respond to said notice. If the taxpayer fails to No suit or proceeding shall be maintained in any
respond, the Commissioner or his duly authorized court for the recovery of any national internal
representative shall issue an assessment based on revenue tax hereafter alleged to have been
his findings. erroneously or illegally assessed or collected, or of
Such assessment may be protested any penalty claimed to have been collected without
administratively by filing a request for authority, of any sum alleged to have been
reconsideration or reinvestigation within thirty (30) excessively or in any manner wrongfully collected
days from receipt of the assessment in such form without authority, or of any sum alleged to have
and manner as may be prescribed by implementing been excessively or in any manner wrongfully
rules and regulations. collected, until a claim for refund or credit has been
Within 60 days from filing of the protest, all duly filed with the Commissioner; but such suit or
relevant supporting documents shall have been proceeding may be maintained, whether or not such
submitted; otherwise, the assessment shall become tax, penalty, or sum has been paid under protest or
final. duress.
If the protest is denied in whole or in part, or is In any case, no such suit or proceeding shall be filed
not acted upon within 180 days from submission of after the expiration of 2 years from the date of
documents, the taxpayer adversely affected by the payment of the tax or penalty regardless of any
decision or inaction may appeal to the Court of Tax supervening cause that may arise after payment:
Appeals within 30 days from receipt of the said Provided, however, That the Commissioner may,
decision, or from the lapse of 180-day period; even without a written claim therefor, refund or
otherwise, the decision shall become final, executory credit any tax, where on the face of the return upon
and demandable. which payment was made, such payment appears
clearly to have been erroneously paid.
Commissioner vs. Algue
SEC. 230. Forfeiture of Cash Refund and of Tax
Comissioner vs. Union Shipping Credit
Decision of the Commissioner denying the protests (A) Forfeiture of Refund. - A refund check or
must be stated in clear, unequivocal terms warrant issued in accordance with the pertinent
provisions of this Code, which shall remain
Commissioner vs. Ayala Securities Corporation unclaimed or uncashed within five (5) years from the
date the said warrant or check was mailed or
Collector vs. Batangas Transportation delivered, shall be forfeited in favor of the
An assessment may be revise, even after a decision Government and the amount thereof shall revert to
is made the general fund.
(B) Forfeiture of Tax Credit. - A tax credit
certificate issued in accordance with the pertinent 7. Other remedies
provisions of this Code, which shall remain unutilized SEC. 231. Action to Contest Forfeiture of Chattel
after five (5) years from the date of issue, shall, In case of the seizure of personal property under
unless revalidated, be considered invalid, and shall claim of forfeiture, the owner desiring to contest
not be allowed as payment for internal revenue tax the validity of the forfeiture may, at any time
liabilities of the taxpayer, and the amount covered before sale or destruction of the property, bring
by the certificate shall revert to the general fund. an action against the person seizing the property
(C) Transitory Provision. - For purposes of the or having possession thereof to recover the same,
preceding Subsection, a tax credit certificate issued and upon giving proper bond, may enjoin the
by the Commissioner or his duly authorized sale; or after the sale and within 6 months, he
representative prior to January 1, 1998, which may bring an action to recover the net proceeds
remains unutilized or has a creditable balance as of realized at the sale.
said date, shall be presented for revalidation with the
Commissioner or his duly authorized representative
or on before June 30, 1998.

Victoria’s Milling Co. vs. Central Bank GOVERNMENT’S REMEDIES


Refund is not an obligation (solutio indebiti).
Obligation by law (A) Remedies Available to the Government for
the Enforcement and Collection of Taxes
CIR vs. Philam Insurance
Only at the final adjustment return that prescriptive
1. Judicial Remedies
period starts to run; only then will it be known if
SEC. 205. Remedies for the Collection of
there’s a refundable amount
Delinquent Taxes
CIR vs. TMX Sales, Inc The civil remedies for the collection of internal
revenue taxes, fees, or charges, and any
CIR vs. Wander Philippines, 160 SCRA 573 increment thereto resulting from delinquency
shall be:
Philex Mining Corp. vs. CIR, GR No. 125704, (a) By distraint of goods, chattels, or effects,
August 28, 1998 and other personal property of whatever
character, including stocks and other
CIR vs. A Soriano, GR No. 113703, Jan 31, 1998 securities, debts, credits, bank accounts,
and interest in and rights to personal
CIR vs. Insular Lumber Corp, GR No. L-24221, property, and by levy upon real property
December 11, 1967 and interest in or rights to real property;
and
CIR vs. CA, GR No. 106611, July 21, 1994 (b) By civil or criminal action
Either of these remedies or both simultaneously
CIR vs. Asturias Sugar Central, GR No. L-15013,
may be pursued in the discretion of the
December 28, 1961
authorities charged with the collection of such
3. Appeal to the Court of Tax Appeals taxes: Provided, however, that the remedies of
Section 228 (see above) distraint and levy shall not be availed of where
the amount of tax involved is not more than
Sections 7 and 11, RA 1125, as amended by RA P100.
9282 The judgment in the criminal case shall not only
impose the penalty but shall also order payment
4. Injunction by the Court of Tax Appeals of the taxes subject of the criminal case as finally
SEC. 218. Injunction not Available to Restrain decided by the Commissioner.
Collection of Tax The BIR shall advance the amounts needed to
No court shall have the authority to grant an defray costs of collection by means of civil or
injunction to restrain the collection of any national criminal action, including the preservation or
internal revenue tax, fee or charge imposed by this transportation of personal property distrained and
Code. the advertisement and sale thereof, as well as of
real property and improvements thereon.
Section 11, RA 1125, as amended by RA 9282
SEC. 220. Form and Mode of Proceeding in
5. Compromise during appeal
Section 204, NIRC
Actions Arising under this Code
Revenue Reg 30-2002 Civil and criminal actions and proceedings
instituted in behalf of the Government under the
6. Appeals from the Court of Tax Appeals authority of this Code or other law enforced by
Sections 18 and 19, RA 1125, as amended by RA the BIR shall be brought in the name of the
9282 Government of the Philippines and shall be
conducted by legal officers of the BIR but no civil interests in and rights to personal property of
or criminal action for the recovery of taxes or the such persons in sufficient quantity to satisfy the
enforcement of any fine, penalty or forfeiture tax, or charge, together with any increment
under this Code shall be filed in court without the thereto incident to delinquency, and the expenses
approval of the Commissioner. of the distraint and the cost of the subsequent
sale.
SEC. 221. Remedy for Enforcement of Statutory A report on the distraint shall, within 10 days
Penal Provisions from receipt of the warrant, be submitted by the
The remedy for enforcement of statutory distraining officer to the Revenue District Officer,
penalties of all sorts shall be by criminal or civil and to the Revenue Regional Director: Provided,
action, as the particular situation may require, That the Commissioner or his duly authorized
subject to the approval of the Commissioner. representative shall, subject to rules and
regulations promulgated by the Secretary of
Finance, upon recommendation of the
2. Administrative Remedies Commissioner, have the power to lift such order
a. Distraint of personal property of distraint: Provided, further, That a consolidated
SEC. 206. Constructive Distraint of the Property report by the Revenue Regional Director may be
of a Taxpayer required by the Commissioner as often as
To safeguard the interest of the Government, necessary.
the Commissioner may place under constructive
distraint b. Levy on real property
 the property of a delinquent taxpayer SEC. 224. Remedy for Enforcement of Forfeitures
 or any taxpayer who, in his opinion: The forfeiture of chattels and removable fixtures
o is retiring from any business subject to tax, shall be enforced by the seizure and sale, or
or destruction, of the specific forfeited property.
o is intending to leave the Philippines or to The forfeiture of real property shall be enforced
remove his property therefrom or by a judgment of condemnation and sale in a
o to hide or conceal his property or legal action or proceeding, civil or criminal, as the
o to perform any act tending to obstruct the case may require.
proceedings for collecting the tax due or
which may be due from him. c. Forfeiture of property
The constructive distraint of personal property SEC. 224. Remedy for Enforcement of Forfeitures
shall be effected by requiring the taxpayer or any The forfeiture of chattels and removable fixtures
person having possession or control of such shall be enforced by the seizure and sale, or
property to destruction, of the specific forfeited property.
 sign a receipt covering the property distrained The forfeiture of real property shall be enforced
and by a judgment of condemnation and sale in a
 obligate himself to preserve the same intact legal action or proceeding, civil or criminal, as the
and unaltered and not to dispose of the same in case may require.
any manner whatever, without the express
authority of the Commissioner. d. Entering into compromise
In case the taxpayer or the person having the SEC. 204. Authority of the Commissioner to
possession and control of the property sought to Compromise, Abate, and Refund or Credit Taxes
be placed under constructive distraint refuses or The Commissioner may:
fails to sign the receipt herein referred to, the (A) Compromise the payment of any internal
revenue officer effecting the constructive distraint revenue tax, when:
shall proceed to prepare a list of such property (1) A reasonable doubt as to the validity of
and in the presence of 2 witnesses, leave a copy the claim against the taxpayer exists; or
thereof in the premises where the property (2) The financial position of the taxpayer
distrained is located, after which the said property demonstrates a clear inability to pay the
shall be deemed to have been placed under assessed tax
constructive distraint. The compromise settlement of any tax liability
shall be subject to the ff minimum amounts:
SEC. 207. Distraint of Personal Property For cases of financial incapacity, 10% of the basic
(A) Upon the failure of the person owing any assessed tax
delinquent tax or delinquent revenue to pay the For other cases, 40% of the basic assessed tax
same at the time required, the Commissioner or Where the basic tax involved exceeds P1,000,000
his duly authorized representative, if the amount or where the settlement offered is less than the
involved is in excess of P1,000,000 or less, shall prescribed minimum rates, the compromise shall
seize and distraint any goods, chattels, or effects be subject to the approval of the Evaluation Board
and the personal property, including stocks and which shall be composed of the Commissioner
other securities, debts, credit, bank accounts, and and the 4 Deputy Commissioners
(B) Abate or cancel a tax liability, when: the return is filed by the executor, administrator
(1) The tax or any portion thereof appears to or the heirs.
be unjustly or excessively assessed; or (B) Extension of Time - When the
(2) The administration and collection costs Commissioner finds that the payment on the due
involved do not justify the collection of date of the estate tax or of any part thereof
the amount due would impose undue hardship upon the estate or
All criminal violations may be compromised any of the heirs, he may extend the time for
except: payment of such tax or any part thereof not to
(a) Those already filed in court exceed 5 years, in case the estate is settled
(b) Those involving fraud through the courts, or 2 years in case the estate
(C) Credit or refund taxes erroneously or is settled extrajudicially. In such case, the
illegally received or penalties imposed without amount in respect of which the extension is
authority, refund the value of internal revenue granted shall be paid on or before the date of the
stamps when they are returned in good condition expiration of the period of the extension, and the
by the purchaser, and, in his discretion, redeem running of the Statute of Limitations for
or change unused stamps that have been assessment as provided in Section 203 of this
rendered unfit for use and refund their value upon Code shall be suspended for the period of any
proof of destruction. No credit or refund of taxes such extension.
or penalties shall be allowed unless the taxpayer Where the taxes are assessed by reason of
files in writing with the Commissioner a claim for negligence, intentional disregard of rules and
credit or refund within 2 years after the payment regulations, or fraud on the part of the taxpayer,
of the tax or penalty: Provided, however, That a no extension will be granted by the
return filed showing an overpayment shall be Commissioner.
considered as a written claim for credit or refund. If an extension is granted, the Commissioner
(D) A Tax Credit Certificate validly issued under may require the executor, or administrator, or
the provisions of this Code may be applied beneficiary, as the case may be, to furnish a bond
against any internal revenue tax, excluding in such amount, not exceeding double the amount
withholding taxes, for which the taxpayer is of the tax and with such sureties as the
directly liable. Any request for conversion into Commissioner deems necessary, conditioned
refund of unutilized tax credits may be allowed, upon the payment of the said tax in accordance
subject to the provisions of Sec 230 of this Code: with the terms of the extension.
Provided, That the original copy of the Tax Credit (C) Liability for Payment - The estate tax
Certificate showing a creditable balance is imposed by Section 84 shall be paid by the
surrendered to the appropriate revenue officer for executor or administrator before delivery to any
verification and cancellation: Provided, further, beneficiary of his distributive share of the estate.
That in no case shall a tax refund be given Such beneficiary shall to the extent of his
resulting from availment of incentives granted distributive share of the estate, be subsidiarily
pursuant to special laws for which no actual liable for the payment of such portion of the
payment was made. estate tax as his distributive share bears to the
The Commissioner shall submit to the Chairman value of the total net estate.
of the Committee on Ways and Means of both the For the purpose of this Chapter, the term
Senate and House of Representatives, every 6 "executor" or "administrator" means the executor
months, a report on the exercise of his powers or administrator of the decedent, or if there is no
under this Section, stating therein the following executor or administrator appointed, qualified,
facts and information, among others: and acting within the Philippines, then any person
 Names and addresses of taxpayers whose cases in actual or constructive possession of any
have been the subject of abatement or property of the decedent.
compromise
 Amount involved SEC. 101. Exemption of Certain Gifts
 Amount compromised or abated The following gifts or donations shall be exempt
 Reasons for the exercise of power from the tax provided for in this Chapter:
Provided, That the said report shall be presented (A) In the Case of Gifts Made by a Resident
to the Oversight Committee in Congress that shall (1) Dowries or gifts made on account of
be constituted to determine that said powers are marriage and before its celebration or within
reasonably exercised and that the Government is one year thereafter by parents to each of
not unduly deprived of revenues. their legitimate, recognized natural, or
adopted children to the extent of the first
e. Requiring bonds to assure compliance P10,000:
SEC. 91. Payment of Tax (2) Gifts made to or for the use of the
(A) Time of Payment - The estate tax National Government or any entity created by
imposed by Section 84 shall be paid at the time any of its agencies which is not conducted for
profit, or to any political subdivision of the against which such credit is taken,
said Government; and which the donor's net gifts situated
(3) Gifts in favor of an educational and/or outside the Philippines taxable under
charitable, religious, cultural or social welfare this title bears to his entire net gifts.
corporation, institution, accredited
nongovernment organization, trust or SEC. 137. Removal of Spirits Under Bond for
philanthropic organization or research Rectification
institution or organization: Provided,  Spirits requiring rectification may be removed
however, That not more than 30% of said from the place of production to another
gifts shall be used by such donee for establishment for such purpose, without
administration purposes. For the purpose of prepayment of the excise tax
the exemption, a 'non-profit educational  The distiller removing such spirits and the
and/or charitable corporation, institution, rectifier receiving them shall file with the
accredited nongovernment organization, trust Commissioner their joint bond conditioned upon
or philanthropic organization and/or research the payment by the rectifier of the excise tax
institution or organization' is a school, college due on the rectified alcohol
or university and/or charitable corporation,  In cases where alcohol has already been
accredited nongovernment organization, trust rectified, either by original and continuous
or philanthropic organization and/or research distillation or by redistillation, no loss for
institution or organization, incorporated as a rectification and handling shall be allowed and
nonstock entity, paying no dividends, the rectifier shall pay the excise tax due on
governed by trustees who receive no such losses
compensation, and devoting all its income,  Where a rectifier makes use of spirits upon
whether students' fees or gifts, donation, which the excise tax has not been paid, he shall
subsidies or other forms of philanthropy, to be liable for the payment of the tax otherwise
the accomplishment and promotion of the due
purposes enumerated in its Articles of
Incorporation. SEC. 158. Storage of Goods in Internal-Revenue
(B) In the Case of Gifts Made by a Nonresident Bonded Warehouses
Not a Citizen of the Philippines An internal-revenue bonded warehouse may be
(1) Gifts made to or for the use of the National maintained in any port of entry for the storing of
Government or any entity created by any of its imported or manufactured goods which are
agencies which is not conducted for profit, or to subject to excise tax. The taxes on such goods
any political subdivision of the said Government shall be payable only upon removal from such
(2) Gifts in favor of an educational and/or warehouse and a reasonable charge shall be
charitable, religious, cultural or social welfare made for their storage therein. The
corporation, institution, foundation, trust or Commissioner, may, in his discretion, exact a
philanthropic organization or research bond to secure the payment of the tax on any
institution or organization: Provided, however, goods so stored.
That not more than 30% of said gifts shall be
used by such donee for administration SEC. 159. Proof of Exportation; Exporter's Bond
purposes. Exporters of goods that would be subject to
(C) Tax Credit for Donor's Taxes Paid to a excise tax, if sold or removed for consumption in
Foreign Country the Philippines, shall submit proof of exportation
(1) In General. - The tax imposed by this Title satisfactory to the Commissioner and, when the
upon a donor who was a citizen or a resident at same is deemed necessary, shall be required to
the time of donation shall be credited with the give a bond prior to the removal of the goods for
amount of any donor's tax of any character and shipment, conditioned upon the exportation of the
description imposed by the authority of a same in good faith.
foreign country
(2) Limitations on Credit. - The amount of the SEC. 160. Manufacturers' and Importers' Bond
credit taken under this Section shall be subject Manufacturers and importers of articles subject to
to each of the following limitations: excise tax shall post a bond subject to the
(a) The amount of the credit in respect to following conditions:
the tax paid to any country shall not (A) Initial Bond - In case of initial bond, the
exceed the same proportion of the tax amount shall be equal to P100,000: Provided,
against which such credit is taken, That if after 6 months of operation, the amount of
which the net gifts situated within such initial bond is less than the amount of the total
country taxable under this Title bears excise tax paid during the period, the amount of
to his entire net gifts; and the bond shall be adjusted to twice the tax
(b) The total amount of the credit shall not actually paid for the period.
exceed the same proportion of the tax
(B) Bond for the Succeeding Years of Operation - SEC. 282. Informers’ Reward to Persons
The bonds for the succeeding years of operation Instrumental in the Discovery of Violations of the
shall be based on the actual total excise tax paid NIRC and in the Discovery and Seizure of
during the period the year immediately preceding Smuggled Goods
the year of operation. (A) For violations in the NIRC
Such bond shall be conditioned upon faithful Any person, except an internal revenue official or
compliance, during the time such business is employee or his relative within the sixth degree of
followed, with laws and rules and regulations consanguinity, who voluntarily gives definite and
relating to such business and for the satisfaction sworn information, not yet in the possession of
of all fines and penalties imposed by this Code. the BIR, lading to the discovery of frauds upon
the internal revenue laws or violations of any of
f. Requiring proof of filing of income tax the provisions thereof, thereby resulting in the
return and payment of tax due thereon recovery of revenues, surcharges and fees and/or
before license to engage in conviction of he guilty party and/or the imposition
business/profession is granted of any fine or penalty, shall be rewarded in a sum
R.A.15381 equivalent to 10% of the revenues, surcharges
SEC. 1. No person, partnership, association or and fees recovered and/or fine or penalty
corporation required by law to file an income tax imposed and collected or P1M per case, whichever
return shall be issued a license to engage in any is lower. The same amount of reward shall also
trade, business or occupation or practice a be given to an informer where the offender has
profession unless he shall have presented to the offered to compromise the violation of law
officer issuing such license or permit proof that he committed by him ad his offer has been accepted
has filed his income tax return during the by the Commissioner and collected from the
preceding year and that income taxes due have offender; provided, that should no revenue,
been paid thereon. For the purpose of this Act, a surcharges or fees be actually recovered or
copy of such income tax return on which is shown collected, such person shall not be entitled to a
a certification or statement by the Collector of reward; provided, further, that the information
Internal Revenue or his duly authorized mentioned herein shall not refer to a case already
representative that the original has been filed pending or previously investigated or examined
with and received by him or a certification or by the Commissioner or any of his deputies,
statement by the Collector of Internal Revenue or agents or examiners, or the Secretary of Finance
his duly authorized representative that the or any of his deputies or agents; provided, finally,
aforesaid income tax return has been duly filed that the reward provided herein shall be paid
with and received by him even without the copy under the rules and regulations issued by the
of such income tax return, and the corresponding Secretary of Finance, upon recommendation of
receipts showing payment of all income taxes due the Commissioner.
thereon shall be sufficient proof. (B) For Discovery and Seizure of Smuggled
Any person, partnership, association or Goods
corporation who obtains a license mentioned in To encourage the public to extend full cooperation
the preceding paragraph without presenting the in eradicating smuggling, a cash reward
aforementioned certification of the Collector of equivalent to 10% of the FMV of the smuggled
Internal Revenue or his duly authorized and confiscated goods or P1M per case, whichever
representative, under the pretext that he or it is is lower, shall be given to persons instrumental in
not required by law to file an income tax return the discovery and seizure of smuggled goods.
when in truth he or it is so required, or under any
other misrepresentation, shall be liable to a fine h. imposition of surcharge and interest
of not more than five hundred pesos or SEC. 248. Civil Penalties
imprisonment of not more than one year, or both, (A) There shall be imposed, in addition to the tax
in the discretion of the court. In the case of a required to be paid, a penalty equivalent to 25%
partnership, association or corporation, the of the amount due, in the following cases:
manager of the equivalent officer thereof shall be (1) Failure to file any return and pay the tax
held responsible and in addition to the license due thereon as required under the provisions of
issued shall be revoked. this Code or rules and regulations on the date
prescribed; or
g. giving reward to informers (2) Unless otherwise authorized by the
Commissioner, filing a return with an internal
revenue officer other than those with whom the
1
An Act Requiring the Presentation of Proof of the Filing return is required to be filed; or
of Income Tax Returns and Certification of the Payment (3) Failure to pay the deficiency tax within the
of Taxes During the Preceding Year Before Issuing any time prescribed for its payment in the notice of
License or Permit to Engage in any Trade, Business or assessment; or
Occupation or Practice a Profession
(4) Failure to pay the full or part of the amount prescribed for its payment, or where the
of tax shown on any return required to be filed Commissioner has authorized an extension of
under the provisions of this Code or rules and time within which to pay a tax or a deficiency tax
regulations, or the full amount of tax due for or any part thereof, there shall be assessed and
which no return is required to be filed, on or collected interest at the rate hereinabove
before the date prescribed for its payment. prescribed on the tax or deficiency tax or any part
(B) In case of willful neglect to file the return thereof unpaid from the date of notice and
within the period prescribed by this Code or by demand until it is paid.
rules and regulations, or in case a false or
fraudulent return is willfully made, the penalty to i. making arrest, search ad seizure in
be imposed shall be 50% of the tax or of the certain cases
deficiency tax, in case, any payment has been SEC. 15. Authority of Internal Revenue Officers
made on the basis of such return before the to Make Arrests and Seizure
discovery of the falsity or fraud: Provided, That a The Commissioner, the Deputy Commissioners,
substantial under declaration of taxable sales, the Revenue Regional Directors, the Revenue
receipts or income, or a substantial District Officers and other internal revenue
overstatement of deductions, as determined by officers shall have authority to make arrests and
the Commissioner pursuant to the rules and seizures for the violation of any penal law, rule or
regulations to be promulgated by the Sec of regulation administered by the Bureau of Internal
Finance, shall constitute prima facie evidence of a Revenue. Any person so arrested shall be
false or fraudulent return: Provided, further, That forthwith brought before a court, there to be dealt
failure to report sales, receipts or income in an with according to law.
amount exceeding 30% of that declared per
return, and a claim of deductions in an amount j. deportation of aliens who violate tax laws
exceeding 30% of actual deductions, shall render (RA 1093)
the taxpayer liable for substantial under
declaration of sales, receipts or income or for k. inspection and examination of books
overstatement of deductions, as mentioned SEC. 5. Power of the Commissioner to Obtain
herein. Information, and to Summon, Examine, and Take
Testimony of Persons
SEC. 249. Interest In ascertaining the correctness of any return, or
(A) In General. - There shall be assessed and in making a return when none has been made, or
collected on any unpaid amount of tax, interest at in determining the liability of any person for any
the rate of 20% per annum, or such higher rate internal revenue tax, or in collecting any such
as may be prescribed by rules and regulations, liability, or in evaluating tax compliance, the
from the date prescribed for payment until the Commissioner is authorized:
amount is fully paid. (A) To examine any book, paper, record, or other
(B) Deficiency Interest. - Any deficiency in the data which may be relevant or material to such
tax due, as the term is defined in this Code, shall inquiry;
be subject to the interest prescribed in Subsection (B) To obtain on a regular basis from any person
(A) hereof, which interest shall be assessed and other than the person whose internal revenue tax
collected from the date prescribed for its payment liability is subject to audit or investigation, or
until the full payment thereof. from any office or officer of the national and local
(C) Delinquency Interest. - In case of failure to governments, government agencies and
pay: instrumentalities, including the BSP and GOCCs,
1) The amount of the tax due on any return any information such as, but not limited to, costs
to be filed, or and volume of production, receipts or sales and
2) The amount of the tax due for which no gross incomes of taxpayers, and the names,
return is required, or addresses, and financial statements of
A deficiency tax, or any surcharge or interest corporations, mutual fund companies, insurance
thereon on the due date appearing in the notice companies, regional operating headquarters of
and demand of the Commissioner, there shall be multinational companies, joint accounts,
assessed and collected on the unpaid amount, associations, joint ventures of consortia and
interest at the rate prescribed in Subsection (A) registered partnerships, and their members;
hereof until the amount is fully paid, which (C) To summon the person liable for tax or
interest shall form part of the tax. required to file a return, or any officer or
(D) Interest on Extended Payment. - If any employee of such person, or any person having
person required to pay the tax is qualified and possession, custody, or care of the books of
elects to pay the tax on installment under the accounts and other accounting records containing
provisions of this Code, but fails to pay the tax or entries relating to the business of the person
any installment hereof, or any part of such liable for tax, or any other person, to appear
amount or installment on or before the date before the Commissioner or his duly authorized
representative at a time and place specified in the (d) The power to assign or reassign internal
summons and to produce such books, papers, revenue officers to establishments where articles
records, or other data, and to give testimony; subject to excise tax are produced or kept.
(D) To take such testimony of the person
concerned, under oath, as may be relevant or n. inventory-taking, surveillance, etc
material to such inquiry; and SEC. 6. Power of the Commissioner to Make
(E) To cause revenue officers and employees to assessments and Prescribe additional
make a canvass from time to time of any revenue Requirements for Tax Administration and
district or region and inquire after and concerning Enforcement
all persons therein who may be liable to pay any (C) Authority to Conduct Inventory-taking,
internal revenue tax, and all persons owning or surveillance and to Prescribe Presumptive Gross
having the care, management or possession of Sales and Receipts. - The Commissioner may, at
any object with respect to which a tax is imposed. any time during the taxable year, order
The provisions of the foregoing paragraphs inventory-taking of goods of any taxpayer as a
notwithstanding, nothing in this Section shall be basis for determining his internal revenue tax
construed as granting the Commissioner the liabilities, or may place the business operations of
authority to inquire into bank deposits other than any person, natural or juridical, under
as provided for in Sec 6(F) of this Code. observation or surveillance if there is reason to
believe that such person is not declaring his
l. use of national register correct income, sales or receipts for internal
(RA 2070) revenue tax purposes. The findings may be used
as the basis for assessing the taxes for the other
m. obtaining information on potential months or quarters of the same or different
taxpayers and examination of any person taxable years and such assessment shall be
regarding his tax liability deemed prima facie correct.
SEC. 5. (see above) When it is found that a person has failed to
issue receipts and invoices in violation of the
SEC. 7. Authority of the Commissioner to requirements of Sections 113 and 237 of this
Delegate Power Code, or when there is reason to believe that the
The Commissioner may delegate the powers books of accounts or other records do not
vested in him under the pertinent provisions of correctly reflect the declarations made or to be
this Code to any or such subordinate officials with made in a return required to be filed under the
the rank equivalent to a division chief or higher, provisions of this Code, the Commissioner, after
subject to such limitations and restrictions as may taking into account the sales, receipts, income or
be imposed under rules and regulations to be other taxable base of other persons engaged in
promulgated by the Secretary of finance, upon similar businesses under similar situations or
recommendation of the Commissioner: Provided, circumstances or after considering other relevant
however, That the following powers of the information may prescribe a minimum amount of
Commissioner shall not be delegated: such gross receipts, sales and taxable base, and
(a) The power to recommend the promulgation of such amount so prescribed shall be prima facie
rules and regulations by the Secretary of Finance; correct for purposes of determining the internal
(b) The power to issue rulings of first impression revenue tax liabilities of such person.
or to reverse, revoke or modify any existing
ruling of the Bureau; o. termination of tax period
(c) The power to compromise or abate, under SEC. 6. Power of the Commissioner to Make
Sec. 204 (A) and (B) of this Code, any tax assessments and Prescribe additional
liability: Provided, however, That assessments Requirements for Tax Administration and
issued by the regional offices involving basic Enforcement
deficiency taxes of P500,000 or less, and minor (D) Authority to Terminate Taxable Period. -
criminal violations, as may be determined by When it shall come to the knowledge of the
rules and regulations to be promulgated by the Commissioner that a taxpayer is retiring from
Secretary of finance, upon recommendation of the business subject to tax, or is intending to leave
Commissioner, discovered by regional and district the Philippines or to remove his property
officials, may be compromised by a regional therefrom or to hide or conceal his property, or is
evaluation board which shall be composed of the performing any act tending to obstruct the
Regional Director as Chairman, the Assistant proceedings for the collection of the tax for the
Regional Director, the heads of the Legal, past or current quarter or year or to render the
Assessment and Collection Divisions and the same totally or partly ineffective unless such
Revenue District Officer having jurisdiction over proceedings are begun immediately, the
the taxpayer, as members; and Commissioner shall declare the tax period of such
taxpayer terminated at any time and shall send
the taxpayer a notice of such decision, together
with a request for the immediate payment of the
tax for the period so declared terminated and the SEC. 203. Period of Limitation Upon Assessment
tax for the preceding year or quarter, or such and Collection
portion thereof as may be unpaid, and said taxes Except as provided in Section 222, internal
shall be due and payable immediately and shall revenue taxes shall be assessed within 3 years
be subject to all the penalties hereafter after the last day prescribed by law for the filing
prescribed, unless paid within the time fixed in of the return, and no proceeding in court without
the demand made by the Commissioner. assessment for the collection of such taxes shall
be begun after the expiration of such period:
p. inquiring into bank deposit accounts of a Provided, That in a case where a return is filed
decedent beyond the period prescribed by law, the 3-year
SEC. 6. Power of the Commissioner to Make period shall be counted from the day the return
assessments and Prescribe additional was filed. For purposes of this Section, a return
Requirements for Tax Administration and filed before the last day prescribed by law for the
Enforcement filing thereof shall be considered as filed on such
(F) Authority of the Commissioner to inquire into last day.
Bank Deposit Accounts. - Notwithstanding any
contrary provision of Republic Act No. 1405 and SEC. 222. Exceptions as to Period of Limitation
other general or special laws, the Commissioner is of Assessment and Collection of Taxes
hereby authorized to inquire into the bank (a) In the case of a false or fraudulent return
deposits of: with intent to evade tax or of failure to file a
(1) a decedent to determine his gross estate; return, the tax may be assessed, or a proceeding
and in court for the collection of such tax may be filed
(2) any taxpayer who has filed an application without assessment, at any time within 10 years
for compromise of his tax liability under Sec. after the discovery of the falsity, fraud or
204 (A) (2) of this Code by reason of financial omission: Provided, That in a fraud assessment
incapacity to pay his tax liability. which has become final and executory, the fact of
In case a taxpayer files an application to fraud shall be judicially taken cognizance of in the
compromise the payment of his tax liabilities on civil or criminal action for the collection thereof.
his claim that his financial position demonstrates (b) If before the expiration of the time prescribed
a clear inability to pay the tax assessed, his in Section 203 for the assessment of the tax, both
application shall not be considered unless and the Commissioner and the taxpayer have agreed
until he waives in writing his privilege under RA in writing to its assessment after such time, the
1405 or under other general or special laws, and tax may be assessed within the period agreed
such waiver shall constitute the authority of the upon. The period so agreed upon may be
Commissioner to inquire into the bank deposits of extended by subsequent written agreement made
the taxpayer. before the expiration of the period previously
agreed upon.
(c) Any internal revenue tax which has been
(B) Estoppel assessed within the period of limitation as
prescribed in paragraph (a) hereof may be
collected by distraint or levy or by a proceeding in
court within 5 years following the assessment of
the tax.
(C) Nature and Extent of Tax Lien
(d) Any internal revenue tax, which has been
SEC. 219. Nature and Extent of Tax Lien
assessed within the period agreed upon as
If any person, corporation, partnership, joint-
provided in paragraph (b) hereinabove, may be
account (cuentas en participacion), association or
collected by distraint or levy or by a proceeding in
insurance company liable to pay an internal
court within the period agreed upon in writing
revenue tax, neglects or refuses to pay the same
before the expiration of the 5-year period. The
after demand, the amount shall be a lien in favor
period so agreed upon may be extended by
of the Government of the Philippines from the
subsequent written agreements made before the
time when the assessment was made by the
expiration of the period previously agreed upon.
Commissioner until paid, with interests, penalties,
(e) Provided, however, That nothing in the
and costs that may accrue in addition thereto
immediately preceding and paragraph (a) hereof
upon all property and rights to property belonging
shall be construed to authorize the examination
to the taxpayer: Provided, That this lien shall not
and investigation or inquiry into any tax return
be valid against any mortgagee purchaser or
filed in accordance with the provisions of any tax
judgment creditor until notice of such lien shall be
amnesty law or decree.
filed by the Commissioner in the office of the
Register of Deeds of the province or city where
the property of the taxpayer is situated or
located.
(D) Form and mode of proceeding in actions
arising under the Tax Code
SEC. 220. Form and Mode of Proceeding in
Actions Arising under this Code
Civil and criminal actions and proceedings
instituted in behalf of the Government under the
authority of this Code or other law enforced by
the Bureau of Internal Revenue shall be brought
in the name of the Government of the Philippines
and shall be conducted by legal officers of the
Bureau of Internal Revenue but no civil or
criminal action for the recovery of taxes or the
enforcement of any fine, penalty or forfeiture
under this Code shall be filed in court without the
approval of the Commissioner.

(E) Remedy for enforcement of statutory penal


provisions
SEC. 221. Remedy for Enforcement of Statutory
Penal Provisions
The remedy for enforcement of statutory
penalties of all sorts shall be by criminal or civil
action, as the particular situation may require,
subject to the approval of the Commissioner.

(F) Disposition of funds recovered in legal


proceedings or obtained from forfeitures
SEC. 226. Disposition of funds Recovered in
Legal Proceedings or Obtained from Forfeitures
all judgments and monies recovered and received
for taxes, costs, forfeitures, fines and penalties
shall be paid to the Commissioner or his
authorized deputies as the taxes themselves are
required to be paid, and except as specially
provided, shall be accounted for and dealt with
the same way.

(G) Satisfaction of judgment recovered against


any internal revenue officer
SEC. 227. Satisfaction of Judgment Recovered
Against any IR Officer
When an action is brought against any Internal
Revenue officer to recover damages by reason of
any act done in the performance of official duty,
and the Commissioner is notified of such action in
time to make defense against the same, through
the Solicitor General, any judgment, damages or
costs recovered in such action shall be satisfied
by the Commissioner, upon approval of the
Secretary of Finance, or if the same be paid by
the person used shall be repaid or reimbursed to
him.
No such judgment, damages, or costs shall be
paid or reimbursed in behalf of a person who has
acted negligently or in bad faith, or with willful
oppression.