TAX

REMEDIES
GROUP 2
 KINDS OF REMEDIES

REMEDIES FOR TAX PAYERS REMEDIES FOR GOVERNMENT

• This are legal actions which the tax • These are course of action
payers avail of to seek relief from provided by or allowed in the law
the undue burden or oppressive to implement the laws or enforce
effect of tax law, or as a means to tax collection.
check possible excesses by revenue
officers in performances of their
duties.
 REMEDIES FOR TAX PAYER

REMEDIES BEFORE PAYMENT REMEDIES AFTER PAYMENT

ADMINISTRATIVE
PROTEST CLAIM FOR
REFUND
REQUEST FOR
RECONSIDERATION
CLAIM FOR TAX
JURIDICAL PROTEST CREDIT
REMEDIES OF GOVERNMENT
FOR COLLECTING TAXES

ADMISTRATIVE JUDICIAL
REMEDIES REMEDIES
REMEDIES FOR

TAX PAYERS
 ASSESSMENT PROCESS

STAGE 1 – TAX AUDIT OR INVESTIGATION

TAX ASSESSMENT – Is the official action of an officer authorized by law in ascertaining

the amount of tax due under the law from a tax payer.

TAX AUDIT – The process of examining, going over or scrutinizing the books and records of
the tax payer to ascertained the correctness of tax declared and paid by the taxpayer.
LETTER OF AUTHORITY (LOA)
Is an official document that empowers a Revenue Officer to examine and
scrutinize a tax payer’s book of accounts and other accounting records in order to
determine the tax payers correct internal revenue tax liabilities.

TAX PAYER PERSON AUTHORIZED

Under the jurisdiction of National Office Commissioner of Internal Revenue (CIR)
Under the jurisdiction of the regional Regional Director
offices
TAX CASES NEED NOT BE COVERED BY AN LOA

Cases involving civil and criminal tax fraud which fall

under the jurisdiction of the National Investigation
Division (NID) under the Enforcement and
Advocacy Services EAS of the BIR.

Policy cases under audit by special teams in National

Offices.
EFFECT OF ISSUANCE OF LOA
A tax return, statement or declaration filed by a tax payer may be
modified changed or amended within three years from the date of filing.

STAGE 2 – ISSUANCE OF PRELIMENARY ASSESSMENT NOTICE (PAN)

• Is a communication issued by the Regional Assessment Division or

PRELIMENARY by the Commissioner or his duly authorized representative
informing tax payer who has been audited of the findings of the
ASSESMENT revenue officer.
• It shall be in writing and show in detail the facts and the law, rules
NOTICE (PAN) and regulations or Jurisprudence on which the proposed assessment
is based otherwise the assessment is void.
 MANDATORY NATURE OF SERVICE OF PAN PRIOR TO FINAL
ASSESSMENT NOTICE (FAN)
As a general rule , issuance of PAN prior to FAN is part of the due process requirement the
absences of which renders nugatory any assessment made by tax authorities.

EXCEPTIONS WERE PAN IS NOT REQUIRED

 When the finding for any deficiency tax is the result of mathematical error in computation of the tax as
appearing on the face of the return

 When a discrepancy has been determined between the tax withheld and the amount actually remitted by the
withholding agent

 When a tax payer 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.

 When the excise tax due on excisable articles has not been paid

 When an article locally purchased or imported by an exempt person , such as but not limited to vehicles,
capital equipment, machineries and spare part has been sold, traded or transferred to no except persons.

WHO HAS THE AUTHORITY TO ISSUE PAN

 COMMISSIONER OF INTERNAL REVENUE

 REVENUE REGIONAL DIRECTORS

 ASSISTANT COMMISSIONER- LARGE TAXPAYERS SERVICE

 ASSISTANT COMMISSIONER
 DUE PROCESS REQUIREMENTS IN THE
ISSUANCE OF A DEFFIENCY TAX
ASSESSMENT
• REMEDY OF TAXPAYER
The taxpayer has 15 days to reply contesting the finding in the PAN
EFFECT OF FAILURE TO REPLY
The payer is considered in default and the BIR will then issue a Final Assessment Notice.
LEGAL EFFECT OF ISSUANCE OF FAN
It creates legal obligation on the part of taxpayer to pay tax to government.
STAGE 3- ISSUANCE OF FORMAL LETTER OF DEMAND/FINAL
ASSESSMENT NOTICE

When issued?
The taxpayer failed to respond to the PAN
The reply to the PAN was found to be without merit

PRESCRIPTIVE PERIODS FOR ASSESSMENT AND COLLECTION

• The right of government to assess and later on to collect the tax is subjected in
prescription.
• Upon lapses or expiration of such period , the government can no longer
exercised such right.
ASSESSMENT OF THE TAX LIABILITY

3 Years – commence to run after date the return is due (last day prescribe by law for filing) or filed whichever
comes later.
 if the returns is filed before the last day for filing the prescriptive period begins to run only after such last day.

 If the return is filed after the last day or due date the period shall be counted from the day the returned is
filed. If the return was amended substantially the period starts from the filling of the amended return.
10 years when
 no return is filed or
 the return is false or fraudulent with intent to evade the tax

* the prescriptive period commences from the date of discovery

 COLLECTION
OF TAX
• Five years- from
assessment
• Ten years- without
assessment and in case
of false or fraudulent
returns with intent to
evade the tax

CRIMINAL LIABILITY
Five years – from commission or discovery of the violation, which ever is later.
SUSPENSION OF PRESCRIPTIVE PERIODS

If before the expiration of the time prescribe for the assessment of the tax both the
commissioner and the tax payer may agree in writing to suspend the running of the
prescriptive period within the period agreed upon.

It is likewise suspended:

 When the commissioner is prohibited from making the assessment or beginning the
distrain or levy or a proceeding in court and for 60 days thereafter, such when there is a
pending petition for review in the CTA from the decision on the protested assessment the
filing of such petition interrupts the running of the prescriptive period for collection.
 When the taxpayers request for a reinvestigation or reconsideration

 When the taxpayer cannot be located in the address given by him in the return

 When the warrant of distrain and levy is duly served ,but no property of the taxpayer could be
located

 When the taxpayer is out of the Philippines.

 DUE PROCESS REQUIREMENTS IN THE ISSUANCE OF A
DEFFICIENCY TAX ASSESSMENT

REMEDY OF THE TAX PAYER

1. File a protest to the CIR or his authorized or representative within 30 days

from the date receipt of the FAN.

2. Submit all supporting documents within 60 DAYS from filing of protest

(in case of request for investigation under RR 18-2013)

NOTE: The 60 day period for the submission of all relevant supporting documents shall not apply to
request for reconsideration.

 Failure to comply within the 60 days period shall means that the “assessment become Final”
 TYPES OF PROTEST (RR 18 -2013)
Request for Reconsideration
AS TO THE NATURE/DEFINITION
Refer to a plea of re-evaluation of an assessment on the
basis of existing records without need of additional
evidence . It may involve both a question
of fact or law or both.
AS TO THE SUSPENSION
Shall not suspend the 3 year period to collect.
•
AS TO EVIDENCE
Limited to evidence already at hand. Hence , additional
submission of additional evidence is no longer required.
Request for Reinvestigation
AS TO THE NATURE/DEFINITION
Refer to a plea of re –evaluation of an assessment on the
•
basis of newly discovered or additional evidence that a
taxpayer intends to present in the reinvestigation .it may
also involve a question of fact or law or both
AS TO THE SUSPENSION
Shall suspend the 3 year period to collect
AS TO EVIDENCE
Entails the reception and evaluation of additional evidence.
Failure to submit additional evidence within 60 days from
the filling of the protest letter will make the assessment
final and executory.
 AS TO THE APPROVAL OF THE AS TO THE APPROVAL OF THE
COMMISSIONER COMMISSIONER

Can be availed so long as the request is duly indicated in BIR Commissioner must first grant the request for
the protest. reinvestigation.

THE TAXPAYER SHALL STATE IN HIS PROTEST

 The nature of protest whether reconsideration or reinvestigation specifying newly discovered or
additional evidence he intends to present if it is a request for reinvestigation.
 Date of the assessment notice and
 The applicable law , rules and regulations or jurisprudence on which his protest is based otherwise
his protest shall be considered void and without force and effect.
 Prior to the issuance of PAN , the taxpayer may be allowed to make voluntary payments of
probable deficiency taxes and penalties.

MODES OF SERVICE (FLD/FAN)

The notice ( PAN/FLD/FAN/FDDA) shall first be served to the taxpayer’s registered address
before the same may be served to tax payer’s known address, or in the alternative, may be served to
the taxpayer’s registered address known address simultaneously.

SEVERAL ISSUES IN FLD/FAN

If there are several issues involved in the FLD/FAN but the taxpayer only disputes or protest against the
validity of some of the issues raised, the assessment to the attributable to the undisputed issues shall
become final and executory and demandable.

FAILURE TO FILE A VALID PROTEST

If the taxpayer failed to file a valid protest against the FDL/FAN within 30 days from the date of receipt
therefore the assessment shall become final executory and demandable.
STAGE4- DENIAL OF PROTEST

Ways to deny protest

 Direct denial of protest

 Indirect denial of protest
if the CIR or his duly authorized representative fails to act on the taxpayers protest
within180 days from date of submission , the protest may be considered denied

REMEDY OF TAXPAYER’S
DIRECT DENIAL
file an appeal with a court of tax appeal (CTA) division within 30 days from receipt
of letter of denial.
INDIRECT DENIAL
file an appeal with the CTA division within 30 days from the lapse of the 180 day
period or await the final decision of the CIR or his duly authorized representative
appeal such final decision to the CTA within 30 day after the receipt of a copy of
such decision (RR18-2013)

PROTEST DENIED BYTHE COMMISSIONER DULY AUTHORIZED

REPRESENTATITVE
if the protest is denied in whole or part by the commissioner’s duly representative

TAXPAYERS REMEDY
 appeal to Court of Tax Appeals (CTA) within 30 days from the date of receipt of that decision
 Elevate his protest through request for reconsideration of the Commissioner with 30 days from the
date of receive of said decision.
PROTEST NOT ACTED UPON BY THE COMMISSIONER’S DULY
AUTHORIZED REPRESENTATIVE

If the protest is not acted upon by the Commissioners duly representative within 180 days counted from

 the date of filing of the protest in case of a request reconsideration; or

 the date of submission by the taxpayers of the required documents within 60 days from the date of
filling of the protest case of a request for reinvestigation.

TAX PAYERS REMEDY

 appeal to the CTA within 30 days after the expiration of the 180 day period
 await the final decision of the Commissioners’ duly representative on the dispute assessment.
PROTEST DENIED BY THE COMMISSIONER
If the protest or administrative appeal is denied in part or whole by Commissioner

REMEDY FOR TAX PAYER

 Appeal to CTA within 30 days from the date of the said decision otherwise it shall be final and executory

NOTE: a motion for reconsideration of the Commissioner’s denial of the protest or administrative appeal shall not
toll the 30 day period to appeal to the CTA.

PROTEST NOT ACTED UPON BY THE COMMISSIONER

if the protest not acted upon by the Commissioner within 180 days counted from the date of filling of the
protest.
REMEDY FOR TAXPAYERS

 Appeal to CTA within 30 days from after the expiration of the 180 day period.
 await the final decision of the Commissioner on the dispute assessment and appeal such final decision to the
CTA within 30 days after the receipt of a copy of such decision.

IF IN CASE OF INACTION THE TAXPAYER MAY

 file a petition for review with the CTA within 30 days after expiration of 180 day period
 await the final decision of the Commissioner’s duly authorize representative on dispute of assessment and
appeal such final decision after the receipt of a copy of such decision.

FINAL DECISION ON DESPUTED ASSESSMENT

The decision of the Commissioner or his duly authorized representative shall state the

 facts , the applicable law , rule and regulation or jurisprudence on which such decision is based otherwise the
decision shall be void
 that the same is his final decision
STAGE 5- DENIAL OF APPEAL BY CTA DIVISION
Remedies of the taxpayer
 file motion for reconsideration (MR) before the same CTA division within 15 days
from receipt of the decision
 then if the MR is denied file an appeal with the CTA EN BANC within 15 days
from receipt of the decision

STAGE 6 –DENIAL OF APPEAL BY CTA EN BANC

Remedies of the taxpayer
 file MR before the CTA EN BANC within 15 days from receipt of the decision
 then if the MR is denied file an appeal with the supreme court division within 15
days from receipt of the decision
STAGE 7- DENIAL OF APPEAL BY SC DIVISION
Remedies of the taxpayer
 file MR before the same SC division within 15 days from receipt of the decision
 then if the MR is denied file an appeal with the SC EN banc within 15 days from receipt of the
decision

STAGE 8 –DENIAL OF APPEAL BY SC EN BANC

Remedy of the taxpayer
 file MR before the SC EN banc within 15 days from receipt of the decision

 effect if MR is denied the tax payer has no more remedy the assessment shall become final
executory and demandable

NOTE: from the issuance of FAN all the periods in vailing the remedies are mandatory in which failure
to comply shall result in the assessment being final executory and demandable1
 REMEDIES OF

GOVERNMENT
 COLLECTION
• the BIR may avail of the remedy of collection when the assessment
become final executory and demandable.
PRESCRIPTIVE PERIOD
With Prior Assessment Within 5 years from issuance of
FAN
Return filed is not or fraudulent Three years from:
a. Actual filling of return
b. Deadline for filing
which ever is later
Without Prior Notice 1. Return filed is fraudulent Ten years from discovery
2. No return was filed
METHODS OF COLLECTIONS
The BIR can collect delinquent internal revenue taxes through the following means

► Distraint
the seizure by the government of personal property tangible or intangible to enforce
the payment of taxes.

Actual Distraint
personal property is physically seized by the BIR and offered for sale at public
auction the property is sold to the highest bidder and the proceeds of the sale are
applied to the payment of tax due.

Garnishment - Is the distraint of bank accounts

Constructive Distraint
the person in possession of personal property is made to sign a receipt undertaking that he will preserve
the property and will not dispose of the property without the express authority of bureau of internal revenue
(BIR).

Constructive Distraint may be availed of in the following cases

 the taxpayer is retiring from any business subject tax
 he intends to leave the Philippines
 he remove his property therefrom or hide or conceal his property
 he perform any act tending to obstruct the proceeding for collecting
the tax due or which may be due from him
 PROCEDURES FOR DISTRAINT

 Stocks and other securities shall be distrained by serving a copy of the warrant of
distraint upon the taxpayer and upon the president, manager, treasurer or other
responsible officer of the corporation, company or association which issued the stocks.
 Debts and credits shall be distrained by leaving with the persons owing the debts or
having in his possession or under his control such as credit or with his agent a copy of
the warrant of distraint.
 Bank accounts shall garnished by serving a warrant of garnishment upon the taxpayer
and upon the president, manager, treasurer or other responsible officer of the bank
 CONSTRUCTIVE DISTRAINT ACTUAL DISTRAINT
PROCEDURE
BIR does not take the physical possession of the The personal property is physically taken
personal property
BASIS
There is no finding yet of discrepancy, only that the tax The tax payer is already delinquent in the payment of
payer is leaving the country or disposing of his property his tax.
in fraud of creditors or is in the process of liquidation
DISPOSITION OF THE PERSONAL PROPERTY
The personal propertyis merely held as security to Personal property is taken to be sold in order to satisfy
answer for any future tax delinquency the tax delinquencies.
PURPOSE
Is the protection of government revenues and ensures The deficiency taxes already determined
that there are properties of the government that could
proceed against after a determination of the amount of
deficiency taxes
 PERSON AUTHORIZED TO COMMENCE DISTRIANT PROCEEDING
AMOUNT INVOLVE PERSON AUTHORIZED
More than Php1,000,000 CIR

Php1,000,000 revenue district officer

Right of Pre-Emption
if at any time prior to the consummation of the sale all proper charges (taxes, interest
and penalties) are paid to the officer conducting the sale the goods or effect distrained shall
be restored to the owner

► Levy
the seizure by the government of real properties and interest in or rights to such
properties in order to enforce the payments of taxes
RIGHT OF REDEMPTION
for period of one year from the date of sale the property may be redeemed by the
taxpayer during this period the taxpayer is not deprived of the possession and fruits
from the property if the taxpayer fails to redeem the property a final deed of sale is
executed in favor of the buyer .

Rights of the owner during the one year period of redemption

During the one year period of redemption the owner shall not be deprived of the
possession of the said property and shall be entitled to the rents and another income
thereof until the expiration of the time allowed for its redemption.
► Judicial Proceeding
filing of civil case for collection
file a crime case (tax evasion)

COMPROMISE
Grounds
• A reasonable doubt as to the validity of the claims against the taxpayer
exists
• The financial position of the taxpayer demonstrates a clear inability to pay
the assessed

All the criminals violation may be compromised except

• those already field on court
• those involving fraud
MINIMUM AMOUNTS

• for the case of financial incapacity a minimum compromise rate equivalent to ten
percent of the basic assessment tax
• for other case a minimum compromised rate equivalent to forty percent
of the basic assessed tax .

INSTANCES WHEN APROVAL OF THE EVALUTATION BOARD IS

REQUIRED
• where the basic tax involved exceed one million pesos(1,000,000 )
• where the settlement offered is less than the prescribed minimum rates
COMPOSITION OF THE EVALUATION BOARD
• CIR
• four deputy commissioners

ABATEMENT OR CANCELLATION OF TAX LIABILITY

GROUNDS
• the tax or any portion thereof appears to be unjustly or excessively assessed
• the administration and collection cost involved do not justify the collection of the
amount due
SUSPENSION OF THE RUNNING OF STATUTE OF LIMITATION
the prescriptive period for assessment and the beginning of distraint or levy or a
proceeding in court for collection of any tax deficiency may be suspended under the
following situation:
• taxpayers request for investigation was granted
• taxpayer can not be located in the address given in return
• no property of the taxpayer can be located
• the taxpayer is out of the country

NOTE: the suspension shall be for the duration of the situation plus 60 days
CIVIL PENALTIES
in addition to the basic tax assessed on the taxpayer the following civil penalties will
also be collected
• Surcharge
• Interest
SURCHARGE
A 25% surcharge shall be collective in any of the following case
• failure to file any return and pay the tax due on time
• filing return with an internal revenue officer other than those with whom the return
is required to be filed unless authorized by the commissioners of Internal revenue
• failure to pay the deficiency tax within the time prescribed for its paymentin the
notice of assessment
• failure to pay the full of part of the amount of tax shown on any return the full
amount of tax due for while no return is required to be filed
A 50%SURCHARGE shall be collected in any of the following cases
• willful neglect to file the return on time
• there willful neglect if the taxpayer files only after prior notice in writing from the
BIR.

there is simple neglect( 25% surcharge)if the taxpayer voluntarily files the
Return after the deadline without notice from the BIR

Prima facie evidence of false or fraudulent return

• substantial overstatement (more than 30%)of deduction
• substantial under declaration (more than 30%) of taxable sales receipts or income
INTEREST
interest is an increment on any unpaid amount of tax assessed from the date
prescribe for payment until the amount is fully paid
• prior to train law 20% per annum
• upon effectively of the train law 12% per annum

KIND OF INTEREST
DEFICIENCY-interest imposed on any deficiency tax due which interest shall be
assessed and collected from the date prescribe for its payment until (which ever
come first)
• full payment thereof
• upon issuance of a notice and demand by the commissioner or his authorize
representative
DELINQUENCY INTEREST
refers to interest imposed on the failure of the taxpayer to pay the following
• the amount of the tax due on any return required to be filed
• the amount of the tax due for which no return is required
• a deficiency tax or any surcharge or interest thereon on the due date appearing in
the notice and demand of the CIR or his authorized representative until the
amount is fully paid which interest shall form part of the tax

DOUBLE IMPOSITION
upon the effectively of the train law in no case shall deficiencyand delinquency interest
be imposed simultaneously
 TAX DEFICIENCY
The amount still due and collectible from a
taxpayer upon audit or investigation
TAX DELIQUENCY
failure of the taxpayer to pay the
tax due on the date fixed by law or
indicated in the assessment notice
Investigation ( FAN )or letter of demand

TAX REFUND
• a tax was erroneously or illegally collected by the BIR
• the taxpayer should file a written claim for refund or tax credit with the CIR within 2years from the
date of payment of the tax or penalty
• if the claim for refund is denied by the CIR file a petition for refund with the CTA
 within 30 days from receipt of the denial
 within 2 years from the date of payments of the tax or a penalty
The rules on recovery of input vat can be found under Section112 of the tax code while
the rules on recovery of tax erroneously or illegally collected can be found under section
229

SECTION 229
provides that in case of recovery of any national Internal revenue tax alleged to have
been erroneously or illegal assessed or collected or any of penalty claimed to have been
collected without authority or of any sum alleged to have been excessively or in any
manner wrongfully corrected the taxpayer must file a claim with the CIR within two
years from the date of the payment of the tax or penalty regardless of any supervening
cause
  For a claim based on erroneous payment of tax various cases decide by the
supreme court for the requirements as follows
 there must be a written claim filled by the taxpayer with CIR
 the claim must also categorically demand for reimbursement
 the taxpayer must show proof of payments of the tax

RULES ON THE COMMENCEMENT OF THE 2-YEAR PERIOD

 first when the tax sought to be refunded is illegally or erroneously collected it
Commences from the date the tax was paid
 second when tax is paid only in installment or only in part it commences from the date
the last or final installment of payments was made because for tax purpose there is no
payment until the whole or entire tax liability is fully paid
 The third in case the taxpayer merely made a deposit is counted from the conversation
of the deposit payment

 That tax has been withheld from source it is counted from the date the withholding
tax fails due at the end of the tax table year