Tax Remedies: Buslaw3 Atty. MGCD

TAX REMEDIES
BUSLAW3
Atty. MGCD
TAX REMEDIES
• Available to Govt and Taxpayers
• Lifeblood Theory – all ways to collect
taxes
• Due process – remedies such as
compromise, assessment, amendment of
returns, etc.
ASSESSMENT
• Internal Revenue Taxes are naturally self-assessing
• Taxpayers earns income = compute, file, and pay
• Determine correctness as per tax regulations
• Written notice of the finding to the taxpayer
• Demand for payment within period
• Tax Assessment
• Formal letter
• WRITTEN
• FACTS and BASIS
• LAW/REGULATION
• Marks the basis for application of surcharges and other
penalties
ASSESSMENT
• Presumption of regularity
• Made by the BIR/Rep.
• CIR may authorize examination of taxpayer
• Assessment Period:
• Violation:
• SIMPLE NEGLECT = Within 3 years from filing
• WILLFUL NEGLECT = Within 10 years from discovery
of fraud
• NO Assessment = Court proceeding within 10
Years.
ASSESSMENT PERIOD
• Return filed before last day = as if last day
• Return filed after last day = actual date
• Amendment
• Within three years from filing
• No notice of investigation/audit
• Assessment not needed prior to filing a

criminal complaint
• If NOT assessed within the period = deemed
paid
WHEN TO EFFECT
ASSESSMENT
• BEFORE filing
• After expiration of prescription period
• Absconds or closes business
• AFTER discovery of fraudulent tax return
KINDS OF
ASSESSSMENTS
• Self-assessment = from the taxpayer (TP)
• Prospective = PAN (15 days to Reply)
• Disputed = questioned (protest + recon or
reinvestigation)
• Final = not disputed within period (waived)
• Deficiency = from assessor showing correct
amount
• Jeopardy = no tax audit to prevent delay (TP
fault)
• Illegal or Void = no authority/violation of law
KINDS OF
ASSESSMENTS
• PAN
• Issued by the CIR or Rep
• Followed by Formal Letter of Demand (FLD) and Final
Assessment Notice (FAN)
• If no Reply within 15 days
• Disagrees with the findings of deficiency tax
• Not required (automatic FAN):

• Math error
• Discrepancy between withheld and remitted
• Automatic application of credit/refund for the succeeding tax year
• Paid excise tax
• Exempt person transfers to a non-exempt person
ASSESSMENT
PROCEDURE DENIAL/
DOCS
FILE ITR 60 days from INACTION
protest 180 days
ISSUE PROTES CTA Div

LA (within T 30 days 30 days from
30 days from
ITR) from FAN denial/lapse
CTA En
AUDIT banc
within 120 FAN
days from LA 15 days from
reso
REPLY SC
PAN 15 days from 15 days from
PAN CTA EB
PAN
FLD
DoD
PROTEST
App for
Comp
Comp
letter
COLLECTION
-Lifeblood Doctrine
-Due Process
-Administrative Feasibility (Efficiency)
-Within FIVE years from assessment
Delinquency
- Admin
- Distraint
- Levy
- Others
- Judicial (Civ or Crim)

DISTRAINT
-Personal Property
-Only for PhP100 and above
Kinds
-Constructive (prohibits)
-Actual
-- to cover the tax and expenses
-- excess shall be returned to the TP
-- short (purchase at tax due as cost)
LEVY
-PhP100 and above
- May happen before, while, and after
- Written certificate
- Further Levy is also allowed until full
satisfaction
REDEMPTION
-one year from sale
-pay taxes, penalties, and interest
COLLECTION REMEDIES
1) Injunction
2) Tax Lien
3) Forfeiture
4) Compromise
5) Bonds
6) Proof of filing
7) Informer’s reward
8) Arrest, search, and seizure
9) Deportation
10)Inspection of books
11)National Tax Register
12)Civil and Criminal action
INJUNCTION
- Generally NOT allowed
- Exception:
- - Only applicable within the discretion of the
Tax Court
- - Injunction of distraint/levy
- - Jeopardize the interest of the Govt or TP
- - File bond
TAX LIEN
- A legal claim for payment of ALL dues
- Seizure and Sale
- Notice annotated
- Seizure = proceeds applied to tax liability

FORFEITURE
-confiscation without compensation
- May be ordered destroyed
- Not to be destroyed for at least 20 days
after seizure
- No bidder (the Gov’t) gets to keep it.

COMPROMISE
- Contract
- Avoid litigation
- At any stage of litigation
When:
- Doubtful validity
- Clear inability to pay
COMPROMISE
HOW
1) Tax Liability
2) Offer
3) Acceptance
- The offer should be paid upon application

– If disapproved, pay the balance
COMPROMISE
MAY BE COMPROMISED
1. Delinquent
2. Pending FAN
3. Civil tax cases
4. Collection case filed in court
5. Criminal tax frauds
NO COMPROMISE
6. Withholding tax (unless with legal basis)
7. Criminal Tax Fraud
8. Criminal Violations already filed in court
9. Delinquent account with installment payment
10.Reinvestigation/Reconsideration = TP agreeable
11.Final judgment yet based on doubtful validity
12.Estate Tax compromise request based on Financial Incap
COMPROMISE
PERCENTAGE
- 10% (financial incap)
1) Compensation earner (10.5k/21k)
2) No income
3) Zero/negative net worth
4) Non operating companies for 3 or more years (date of compromise)
- 20% (financial incap)

1) Dissolved Corporation
2) Non-operating companies for less than 3 years
3) Insolvent or Bankrupt
- 40% = Impairment of capital by at least half

- 40% = doubtful validity
- --------Waive Bank Secrecy

POSTING OF BOND
-Customs duties
-Excise Taxes
- Delays in the computation and the
payment, posting of the bond will assure
payment
- Exporter’s bond = subject to tax if sold

locally.
INFORMER’S REWARD
- Voluntary SWORN information
- Leads to discovery of frauds and
collection
- 10% of recovered/FMV or PhP1M,
whichever is lower
- Information not yet possessed by the BIR
- Info. Leads to discovery and collection
- Not a BIR employee, public employee, or
6th degree relative
ADDITIONS TO TAX
-Surcharges (civil penalty)
-Delinquency = failure to pay taxes
-Misrepresentation = from fraudulent
returns
-Mandatory payment (not waivable)
SURCHARGES
• SIMPLE NEGLECT (25%)
1) Fails to file a return on the prescribed
date
2) Files ITR to the wrong BIR officer
3) Fails to pay deficiency tax within
prescribed period
4) Fails to pay the FULL amount of tax as
per return or as per liability on time.
SURCHARGES
• WILLFUL Neglect (50%)
1) False or Fraudulent Return*
2) Willfully neglects to file within the period
-- applicable AFTER prior notice of BIR
*failure to report actual income (30%) or

excessive deduction (30%)
INTEREST
-Runs from the date prescribed for
payment
- 20% per annum or higher as determined
INSTALLMENT PAYMENT
• Request for extension should be made
BEFORE or on the deadline
• If excess of 2,000 tax due (not corp), may
elect to pay in TWO installments
• Upon extension, no 25% surcharge, but
20% interest is still imposable as per
unpaid amount.
INTEREST ON
Deficiency/Delinquency
• Deficiency = amount still due
• Delinquency = NOT paid at all
• Rules:
1) 20% interest on deficiency from deadline
until paid
2) 20% delinquency interest on top of the
20% deficiency. It’s an additional interest
on top of that computed in the FAN
CRIMINAL OFFENSES
• Alien = Deported
• Public Officer – maximum penalty +
dismissal
• CPA = revoked license
• P’ship/Corps/assocs = penalty is imposed
on the President, GM, BM, Treasurer, OIC,
and employees responsible for the
violation
PRESCRIPTIVE PERIOD
RETURN FILED ASSESSMENT COLLECTION
PERIOD PERIOD
Regular Return Within THREE years Within FIVE years
from filing; or from assessment; or
Agreed period within Within FIVE years

THREE year from assessment
assessment period
Fraudulent, False, or Within TEN years Within FIVE years
Failure to file from discovery; or from the
assessment; or
No assessment
Within TEN years
from discovery, court
proceeding to collect
REMEDIES OF TAXPAYER
• Admin
• Judicial
ADMIN REMEDIES
• TAX AVOIDANCE
• AMEND RETURNS
• Within THREE years from filing
• No notice of audit or investigation
• TENTATIVE ANNUAL ITR
• Final upon no final amended return is filed within
THREE years from original filing.
• DEMAND FOR LETTER OF AUTHORITY
• LA = 30 days effectivity
• National or Regional?
JUDICIAL REMEDIES
• CIVIL ACTION
• Appeal to the CTA
• Senior Justice + 5 Associate Justice
• 4 quorum en banc
• 2 quorum div
• BIR can’t make appeal to the CTA
• Injunction order from CTA
• Suspend collection through distraint/levy
• If will jeopardize the interest of the Govt or TP
• Appeal to SC
JUDICIAL REMEDIES
• CRIM ACTION
• File against erring BIR officials and
employees
• Extorting or conspiring to violate the NIRC
• OTHER ACTIONS
• Damages – against officer
• Contest the forfeiture of chattel– before sale
or destruction + bond + within 6 months +
net proceeds if any
FIN

Tax Remedies: Buslaw3 Atty. MGCD

Uploaded by

Copyright:

Available Formats

Tax Remedies: Buslaw3 Atty. MGCD

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Tax Remedies: Buslaw3 Atty. MGCD

Uploaded by

Copyright:

Available Formats

TAX REMEDIES

• Assessment not needed prior to filing a

• Not required (automatic FAN):

ISSUE PROTES CTA Div

- Judicial (Civ or Crim)

- Seizure = proceeds applied to tax liability

- No bidder (the Gov’t) gets to keep it.

- The offer should be paid upon application

- 20% (financial incap)

- 40% = Impairment of capital by at least half

- --------Waive Bank Secrecy

- Exporter’s bond = subject to tax if sold

-- applicable AFTER prior notice of BIR

*failure to report actual income (30%) or

Agreed period within Within FIVE years

You might also like