Tax Remedies By Sababan Reviewer 2008 Ed

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 CHAPTER XXI: REMEDIES  There are two remedies provided in the NIRC: 1. The remedies of the Government, and 2. The remedies of the taxpayer A.THE REMEDIES OF THE GOVERNMENT  The Code provides the Government with TWO remedies: (1) Assessment, and (2) Collection 2 KINDS OF ASSESSMENT AND COLLECTION: (a) Normal or ordinary assessment and collection ↓ Sec. 203; and (b) The Abnormal or extraordinary assessment and collection ↓ Sec. 222 NORMAL OR ORDINARY ASSESSMENT AND COLLECTION (Sec. 203) : available to the Government if there was a return filed by the taxpayer and such return is not FALSE OR FRAUDULENT : Govt may only make the assessment under this section w/in 3 years after the last day prescribed by law for the filing of the return – NOT FROM THE TIME OF PAYMENT. : when the return is filed beyond the period of filing prescribed by law, the 3year period shall be counted from the day of the filing of the return 2 INSTANCES SECTION:

CONTEMPLATED

FIRST – the return is filed BEFORE/ AT THE TIME prescribed by law w/c is ON OR BEFORE APRIL 15 of each year covering the income for the preceding taxable year for those using the calendar year; (Sec 51 c 1)OR -- the return is filed BEFORE/ AT THE TIME prescribed by law w/c is ON OR

↓

THIS

SECOND – when the return is filed beyond the period prescribed by law.

BEFORE the 15th day of the FOURTH MONTH following the close of the FISCAL YEAR for those using the fiscal year (Sec 77B) PRESCRIPTIVE PERIOD begins to run from the begins to run from the deadline: April 15 or time the return is filed. the 15th day of the 4th month following the close of the fiscal year.

Q: Suppose the return for the calendar year 2006 is filed by the taxpayer on April 10, 2007, when will the prescriptive period begin to run? A: the prescriptive period will begin to run AFTER APRIL 15, 2007 – the DEADLINE for filing the return for 2006 Q: Suppose the return for 2005 was filed on April 12, 2007, when will the prescriptive period begin to run? A: the period will commence from ARPIL 12, 2007. A careful analysis of the case wouls show that the return was filed beyond the period for filing the return. The return was for the calendar year 2005 (thus, the return should have been filed before April 15, 2006) but only filed in 2007. The return was filed long AFTER the deadline. Thus, the prescription period should commence from the date the return is filed – APRIL 12, 2007. Note: for collection, the Code does not provide for a prescriptive period. Author’s note: the prescriptive period for abnormal is 5 years from assessment, hence it can be concluded that the prescriptive period for normal is also 5 years. It will create an absurd situation where there is no prescriptive period under the normal but there is a prescriptive period for abnormal. It is more logical to conclude that the legislature intended to provide a prescriptive period under the normal collection. ABNORMAL OR EXTRAORDINARY ASSESSMENT AND COLLECTION (OFF)

: resorted to by the Govt in the ff cases:

♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 (1) The taxpayer OMITS or FAILS to file his return (2) The taxpayer FILED a return but the return was FRAUDULENT (3) The return filed by the taxpayer was FALSE.

(1) notice of informal conference; (2) preliminary notice of assessment (PAN); (3) formal letter of demand and notice to pay the tax (FAN). PROCEDURE FOR ASSESSMENT:

Notice of Informal Conference

: an error in the return filed by the taxpayer does not imply fraud or that the same is FALSE.

: legal presumption the return filed is TRUE and CORRECT. ∴ the burden of proof lies in the govt to prove that such return is fraudulent or false.

w/in 15 days from receipt of notice FILE A REPLY

FAILED TO FILE A REPLY

FILED A REPLY

2 REMEDIES (options) ↓ THIS KIND OF ASSESSMENT AND COLLECTION: (1) assess and collect, and (2) collection w/o assessment (1) For assessment and collection – prescriptive period is 10years from the DISCOVERY of the non-filing of the return or the fraudulent or false return. (Sec 222 a)

SEND NOTCIE AGAIN

15

receipt of PAN

days

upon

FILE A REPLY

period for collection prescribes AFTER 5 years from date of FINAL ASSESSMENT (Sec 222 c)

FAILED TO FILE A

(2) Govt opts to collect w/o assessment – there would be NO PRESCRIPTIVE PERIOD for assessment. period for collection prescribes within 10years from the DISCOVERY of the non-filing of the return or the fraudulent or false return.

PRELIMINARY NOTICE OF ASSESSMENT (PAN)

REPEAT PAN

DECLARE IN DEFAULT, SEND FORMAL LETTER OF DEMAND AND NOTICE TO PAY TAX w/in 30days fr receipt of

FAN

Q: Can the BIR just collect w/o assessment? A: Fortune Tobacco case – YES. Since the return filed was FRAUDULENT, the BIR can avail of the remedy of collection without assessment. The BIR is allowed to exercise that option. B.PROCEDURE FOR ASSESSMENT (Sec228; RR No. 12-99

FILE A PROTEST: 2 KINDS OF PROTESTS: (1) Motion for reconsideration -60 day period NOT applicable (2) Motion for reinvestigation – 60 days from filing of protest

Sec 228 provides for 2 STEPS for ASSESSMENT: (1) pre-assessment notice; and (2) final assessment notice

SUBMIT COMPLETE SET OF DOCUMENTS

 RR No. 12-99 provides for 3 STEPS:

♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 MATHEMATICAL ERROR in the computation of the tax appearing on the face of the return;

BIR IS GIVEN 180 DAYS TO DECIDE

 PROTEST IS DENIED; or 180 HAS LAPSED

W/in

denial/lapse

30

days

from

APPEAL to the Court of Tax Appeals IN

W/in 15 days from receipt Motion for Reconsideration with the DIVISION

∴ F A N IS IS S U E D IN T H

(2) When a DISCREPANCY has been determined between the tax withheld and the amount actually remitted by the withholding agent; (3) When a taxpayer 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 applies the same amount claimed against the estimated tax liabilities for the taxable quarter or quarters of the succeeding taxable year;

W/in 15 days from receipt

(4) When the EXCISE TAX DUE on excisable articles has not been paid;

APPEAL to the Court of Tax Appeals EN BANC

(5) When

an article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital equipment, machineries and spare parts, has been SOLD, TRADED OR TRANSFERRED TO NON-EXEMPT PERSONS.

W/in 15 days from receipt APPEAL to the SUPREME COURT

In the foregoing instances, the taxpayer shall receive a final assessment notice without the benefit of a pre-assessment notice. b. FINAL ASSESSMENT NOTICE (FAN) from the flowchart, FAN is issued when: a. PRE-ASSESSMENT NOTICE (PAN)

(1) The taxpayer having received a PAN, fails to respond within the period provided for by the rules and regulations (Sec 228, last par)

As a rule: PAN is issued to a taxpayer - who fails to file a return, or - files a return but fails pay the tax, - pays the tax, but the same is INSUFFICIENT  Sec 228, NECESSARY: (MD CES)

when

is

PAN

(2) ↓ the five instances enumerated ↓ Sec 228 where pre-assessment is NOT necessary.

NOT

(1) When the finding for deficiency tax is the result of

c. PROTEST ♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 after receipt immediately appeal to

of

FAN, taxpayer the CTA.

≠

Q:PENDING APPEAL, can the BIR still amend the final assessment?

final

A: 2 VIEWS: 1. Batangas v. Collector – SC held that the BIR may still amend the assessment during the pendency of the appeal to avoid multiplicity of suits.

: in accordance w/ the rule in Admin Law the exhaustion of administrative remedies.

2. Guerrerro v. Commissioner – SC held that BIR ≠ amend the assessment SINCE IT IS NO LONGER A DISPUTED ASSESSMENT.

: BEFORE AN APPEAL, a PROTEST must FIRST be FILED by the taxpayer. PROTEST  assessment.

an

action

disputing

the

: after filing protest, BIR – given a period of 180 days w/in w/c to decide on the matter. IF MR: the 180-day period is to be committed on the day the protest has been filed. IF MI: the 180-day period shall be reckoned on the day the documents or receipts were filed with the 60-day period of time. : Upon denial of the protest/ lapse of the 180-day period w/o the BIR acting on the protest, the tacpayer may appeal to the CTA w/in 30days from receipt of the dnial or lapse of the period; otherwise the decision shall become FINAL, EXECUTORY and DEMANDABLE. Q: If the taxpayer, during the pendency of his protest, received a notice of an action for collection filed by the BIR, what is his proper remedy? A: Yabes v. Flojo + Union Shipping Lines v. Commissioner – SC held that the subsequent filing of a collection suit by the BIR may be considered as a denial of the request for protest, hence, the proper remedy of the taxpayer is to appeal the denial to the CTA. d. APPEAL TO THE CTA  if protest is DENIED, in whole or in part;  or the 180-day period has already lapsed w/o the BIR acting upon the protest taxpayer may appeal the denial to the CTA w/in 30days from the receipt of the denial or the lapse of the period

Author’s Note: favors the first ruling.

e. APPEAL TO THE SC  after appealing to CTA, and after rendering an unafvorable decision, taxpayer may file a motion for reconsideration of said decision within 15 dyas from receipt of the decision of the CTA sitting IN DIVISION.  if decision is still UNFAVORABLE, to the CTA En Banc. if CTA EB still renders an unfavourable decision, taxpayer has remedy to file PETITION FOR CERTIORARI↓ RULE 65, only on the ground of GRAVE ABUSE OF DISCRETION amounting to lack/excess of jurisdiction. SEVERAL INSTANCES WHERE THE ASSESSMENT BECOMES FINAL EXECUTORY: (SONA)

FINAL AND

(1) SUPPORTING DOCUMENTS NOT filed w/in the 60-day period (2) Protest NOT filed ON TIME; (3) NO APPEAL was filed with the CTA w/in 30days after the lapse of the 180-day period; and (4) There was an APPEAL FILED but it was BEYOND the period to appeal. C.FORMS OF PROTEST

♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 : Protest is a remedy afforded to the taxpayer in cases where the BIR issues a final assessment to the taxpayer .

: made by a TP who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property.

3 FORMS OF PROTEST AFFORDED TO THE TAXPAYER:

: TP may, w/in 60days from date of receipt of the written notice of assessment, appeal to the Local Board of Assessment Appeals (LBAA) of the province or city.

(1) ↓ Local Tax (2) ↓ Real Property Tax (3) ↓ Tariff and Customs Code NB: A 4th may be added – ADMIN PROTEST ↓ NIRC. 1. PROTEST ↓ LOCAL TAX (Sec 195, LGC) LGC provides: when the local treasurer or his duly authorized representative finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating the nature of the tax, fee, or charge the amount of deficiency, the surcharges, interest and penalties. : it is from this assessment that the taxpayer may file a protest w/in 60days from receipt of notice of assessment. If taxpayer does not file the protest w/in said period, the assessment shall become final and executor. :local treasures shall decide the protest within 60days from its filing. He may either grant/deny the protest. : GRANT – if he finds that it is, wholly or partly, meritorious. - ∴ he shall issue a notice CANCELING wholly or partly the assessment. : DENY – wholly/party, if he finds that the assessment is wholly or partly CORRECT, w/ NOTICE to the taxpayer : the taxpayer is given a period of 30days from receipt of denial or the lapse of the 60-day period, w/in w/c to appeal to the court of competent jurisdiction – RTC. : RTC – renders unfavourable decision, TP may appeal to CTA EN BANC – is still unfavourable  SC. 2. PROTEST ↓ REAL PROPERTY TAX (Secs 226, 230, 252 LGC)

: BEFORE ENTERTAINED, Sec PAYS THE TAX. PROTEST)

THIS PROTEST MAY BE 252 LGC requires TP FIRST (PAYMENT UNDER

: Protest may only be filed w/in 30 days from the payment of the tax. (the words “paid under protest” shall be annotated on the tax receipt) : LBAA shall decide w/in 120 days from receipt of the appeal. The Board after hearing, shall render a decision based on substantial evidence. : LBAA- renders unfavourable decision, TP may appeal to the Central Board of Assessment Appeals (CBAA) – if still unfavourable  CTA then to SC. 3. PROTEST ↓ THE TARIFF AND CUSTOMS CODE (Sec 2313, as amdd by RA No. 7651) : appeals ↓ TCC include those requests for protests as well as for FORFEITURES. FIRST SITUATION ↓ TCC: : if importer loses his case, remedy = APPEAL w/in 15 days OFFICE OF THE COMMISSIONER : Commr rules for the Govt – importer may file appeal to the CTA sitting IN DIVISION w/in 30 days from recipt of the decision. : CTA for Govt – importer to file MR before the same division w/in 15days  still unfavourable appeal before the CTA En Banc. : CTA EB – still unfavourable, importer appeal w/in 15 days from receipt of decision  SC SECOND SITUATION ↓ TCC: : importer prevails government.

over

the

♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 : in this case, there will be an AUTOMATIC REVIEW w/n 5days. : AUTOMATIC REVIEW shall be filed before 1. SEC of FINANCE – if value of commodity = P5M or  2. Office of Commr – if value of commodity is < P5M : in 2 above, the Commr is given a period of 30dyas w/in w/c to decide. : if Commr REVERSES the ruling, ∴ he rules for the Govt, this decision shall become FINAL AND EXECUTORY. : if Commr AFFIRMS the Collector/ does not render a decision w/in 30-day period, then AUTOMATIC REVIEW before the Sec of Finance. : from this Atutomatic Review the decision of the Sec – if unfavourable to importer-TP, shall be appealable to CTA. ( what is appealable is the Sec’s decision from AR of Commr’s decision ↓ RA 9282.) D. COMPROMISE Commr may compromise payment of any internal revenue tax ↓ 2 INSTANCES: (1) When a reasonable doubt exists as to the validity of the claim ≠ the TP (2) When the financial position of the TP demonstrates a clear inability to pay the assessed tax. Q: May the govt compromise both criminal and civil cases? Suppose the civil case is already final and executory, can it still be subject to compromise? A: in civil cases, the govt may compromise the liability of the TP at ANY STAGE of the proceeding except when the case is already final and executory. In this case, if the govt would allow a compromise even if the case is already final and executory, the doctrine of separation of powers will be violated. In criminal cases, compromise is allowed except if the criminal case is already filed before the RTC or if the case involves fraud. Q: Suppose the corporation is already dissolved, can the stockholder still be compelled to pay the tax liability?

A: GR: NO. 2 EXECEPTIONS: (1) there is evidence to prove that the assets of the corporation were taken by the SH; or (2) if the SH has unpaid subscription. : the amount to be compromised – limited by the Code. For cases of financial incapacity, the minimum rate shall be equivalent to 10% of the basic assessed tax. For other cases, the minimum rate shall be equivalent to 40% of the basic assessed tax. In other words, the minimum amount to be assessed shall be: (1) In cases of financial inacapacity – not < 10% of the original assessment; and (2) For other cases, not < 40% of the original assessment. Q: Is there any instance where the amount assessed is lower than the limitations provided? A: GR: the compromised amount should not be lower than the limitations provided by the Code. EXC: where the basic tax involved exceeds P1M or where the settlement offered is less than the prescribed rates, the compromise shall be subject to the approval of the Evaluation Board w/c shall be composed of the Commr and 4 Deputy Commrs. E. REMEDIES FOR COLLECTION OF DELINQUENT TAXES (Sec 205)) 2 GROUPS OF REMEDIES PROVIDED BY THE CODE: 1. JUDICIAL ACTION: a. Civil action b. Criminal action 2. ADMINISTRATIVE ACTION a. Distraint b. Levy c. Tax lien NB: a determination of whether the final assessment is under normal/abnormal assessment/collection is material in order to determine the remedies available to the govt. in case of abnormal, where the return filed is false or fraudulent, the govt may not only avail of judicial action, also of levy or distraint. F. DISTRAINT ♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 - bank accounts 3 KINDS 1. 2. 3.

OF DISTRAINT: Constructive Distraint of intangible properties Actual Distraint

(1) CONSTRUCTIVE DISTRAINT (Sec 206) the Commr may place ↓ CD the property of a delinquent TP or any TP who in his opinion is: (1) Retiring from any business subject to tax; (2) Intending to leave the Phils; (3) Intending to remove his properties in the Phils; (4) Intending to hide/conceal his property; (5) Intending to perform any act tending to obstruct proceedings for collecting tax due/ w/c may be due to him. : subject of distraint PROPERTY OF TP

=

PERSONAL

this is effected by: (1) Requiring the TP or any person having possession or control of such property to sign a receipt covering the property distrained; and (2) Obligate himself to preserve the same intact and unaltered and not to dispose of the same in any manne whatever, w/o the authority of the Commr. if TP or person authorized REFUSES/ FAILS to sign receipt, the revenue officer effecting the CD shall proceed to prepare a list of such property and in the presence of 2 witnesses, leave a copy thereof in the premises where the property distrained is located, after w/c the said property shall be deemed to have been placed ↓ CD.

How distraint is made: Stocks and other securities: : shall be distrained by serving a copy of the warrant of distraint upont the tp and upon the president, manager, treasurer, or other responsible officer of the corporation, company or association, w/c issued the said stocks or securities. Debs and other credits: : shall be distrained by leaving with the person owing the debts or having in his possession or under his control such credits, or his agent, a copy of the warrant of distraint. Bank accounts: : shall be garnished by serving a warrant of garnishment upon the tp and upon the president, manager, treasurer, or other responsible officer of the bank. (3) ACTUAL DISTRAINT (Secs 207 a and 209) : means that the personal property of the tp is PHYSICALLY taken by the distraining officer. : w/in 10days from receipt of warrant, a report on the distraint shall be submitted by the distraining officer to the Revenue District Officer and to the Revenue Regional Director. : prop distrained  SOLD in PUBLIC AUCTION. :209 provides that a notice shall be posted in not less than 2 public places in the municipality or city where the distraint is made, specifying the time and place of sale and articles distrained. The time of sale shall not be less than 20 days after notice to the owner or possessor of the property and the publication or posting of such notice.

(2) DISTRAINT OF INTANGIBLE PROPERTIES (Sec 208)

: w/in 2 days after the sale, the officer making the same shall make a report of his proceedings in writing to the Commr and shall himself preserve a copy of such report as an official record (Sec 211)

Intangible props w/c can be ↓ distraint: - stocks and other securities - debts and other credits

: NO RIGHT OF REDEMPTION in sale of personal prop distrained ABSOLUTE RULE ♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 : OWNER has RIGHT OF PRE-EMPTION: :Sec 210 provides, if at any time prior to the consummation of the sale all charges are paid to the officer conducting the sale, the good or effects distrained shall be restored to the owner. DURING AUCTION SALE, 2 instances w/c may happen: (1) There is a BIDDER but the bid is enough (2) NO BIDDER/ there is a BIDDER but bid is NOT enough. : in (1), when the amount is insufficient to cover the amount of the liability, Sec217 allows the govt to conduct further distraint as necessary until the full maount due, including all expenses, is collected. If there’s an excess, such shall be returned to TP. : Sec 212 – provides for the rule when the amount bid for the property ↓ distraint is ≠ equal to the amount of the tax or is very much less than the acgtual market value of the articles offered for sale. the Commr/his deputy may purchase the same in behalf of the Natl Govt for the amount of the taxes, penalties and costs thereon. :the govt shall purchaser the property and thereafter SELL the same in AUCTION. if proceeds are insufficient, NO FURTHER distraint may be conducted by the govt. Nota Bene: Sec 217 is applicable ONLY to the situation where there is a BIDDER or there is a bidder and the BID is NOT ENOUGH. In case of any excess, the same shall be returned to the TP, but shall be remitted to the National Treasury. G. LEVY  this remedy is applicable to real property : Sec 207 B : real property may be levied upon, before, simultaneously or after the distraint of personal property belonging to the delinquent TP.

How effected: : by writing upon the certificate, a description of the property upon w/c levy is made : at the same time, WRITTEN NOTICE of the levy shall be MAILED to/ SERVED UPON:

(1) The Register of Deeds of the province or city where the prop is located; and (2) Upon the delinquent TP, or if he is ABSENT from the Phils, to his agent or the manager of the business in respect to w/c the liability arose, of if there be none, to the occupant of the property in question. : Sec 213 provides: that any time before the day fixed for the sale, the TP may discontinue all proceedings by paying the taxes, penalties and interest.  RIGHT OF PRE-EMPTION afforded to TP. Q: by way of comparison, in the case of levy, is there also NO RIGHT OF REDEMPTION as in the case of distraint? A: unlike in cases of distraint, in cases of levy of real prop, the TP is afforded, NOT ONLY w/ the RIGHT OF PRE-EMPTION but also the RIGHT OF REDEMPTION as provided in sec 214, w/c provides: : that w/in 1 year from the date of sale, the DQ TP, or any one for him, shall have the RIGHT OF PAYING to the RDO the amount of public taxes, penalties, and interest thereon from the date of delinquency to the date of sale xxx, and such payment shall entitle the person paying to the delivery of the certificate issued to the purchaser and a certificate from the said RDO that he has REDEEMED the property. : Sec 216: in case the real prop is levied by the govt, it shall be SOLD IN PUBLIC AUCTION.  it is required however, that the Commr shall give not less than 20days notice before the sale and dispotsition of the real prop in public auction. The real prop levied may also be sold in a PRIVATE SALE but this sale is subject to the PRIOR APPROVAL of the Sec of Finance. RESULTS if PROP SOLD in PUBLIC AUCTION: (1) There is a bidder and the bid is enough; or (2) NO BIDDER/ there is a bidder but bid is NOT enough.

♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 :Sec 215: governs the situation where there is NO bidder. in case where there is no bidder for real prop levied and sold at public auction or if the highest bid is for an amount insufficient to pay the tax due, the Internal Revenue Officer conducting the sale shall declare the prop forfeited to the Govt in satisfaction of the claim in question and w/in 2 days thereafter, shall make a return of his proceedings

↓ RAs 1125 and 9282, the CTA is allowed to isse writs of injunctions provided the contested tax is ↓ the NIRC.

RD is also mandated by the Code to transfer the title of prop forfeited to the govt w/o the necessity of an order from a competent court.  the tp is given 1 year from the date of forfeiture to REDEEM the property. If there is NO REDEMPTION MADE, forfeiture ∴ BECOMES ABSOLUTE! No further levy is allowed by the code in this case.

 proviso : the lien constituted shall NOT BE VALID ≠ any mortgagee, purchaser or judgment creditor until the notice of such lien is filed by the Commr to the Office of the RD of the province / city where the prop of the tp is situated or located. before such lien can affect the rights of the mortgagee or purchases of such property, the lien shall FIRST be registered with the Office of the Reigster of Deeds.

In case of (1) above: the rules on distraint of real prop shall be applicable. If there’s still deficiency after the proceeds are applied to the tax liability, there SHALL BE FURTHER LEVY on the real props of the tp. In case of (2) above, the property is FORFEITED by the govt. (in contrast, in cases of distraint, the prop shall be PURCHASED by the govt) Q:What is the implication of this difference? A: in case the prop is forfeited, the TITLE TO THE PROP IS AUTOMATICALLY TRANSFERRED TO THE GOVT AFTER REGISTRATION OF SUCH FORFEITURE WITH THE RD; While in cases of distraint, where the prop is PURCHASED by the govt, the TITLE TO THE PROP IS NOT AUTOMATICALLY REGISTERED IN THE NAME OF THE GOVT. H. INJUNCTION (Sec 218) : refers to a PROHIBITORY INJUNCTION – the purpose is to “restrain the collection of any National Internal Revenue tax, fee, or charge.” :218 prohibits any court to have any authority to grant an injunction for the purpose abovementioned. : the prohibition shall ≠ be applied to taxes other than those mentioned in the NIRC. CTA – given authority to issue writs of injunction.

I. TAX LIEN (Sec 219) in cases where the TP neglects / refuses to pay an internal revenue tax, the amount due shall constitute as a lien in favor of the govt from the time the assessment was made until payment thereof is made.

Q: Suppose the govt levied a parcel of land w/c is being foreclosed by the mortgagee. Which of the two shall be preferred? A: IT DEPENDS. Before the right of a mortgagee is affected, the lien created must FIRST be registered with the Office of the Register of Deeds – in this case, the govt shall be preferred; otherwise, it is the mortgagee who will prevail over the government. J. APPROVAL OF THE COMMISSIONER (Sec 220)  BEFORE an action, civil or criminal, may be filed in court, the Commissioner must FIRST APPROVE such filing of the action. : the action or proceeding must be instituted ↓ the name of the Govt of the Philippines. Sec 220 + Sec 7 sec7 provides that the Commr may delegate the powers vested in him under the Code to any or such subordinate official with the rank equivalent to a division chief or higher. POWERS of the DELEGATED (RICA):

COMMR

w/c

≠

be

(1) The power to RECOMMEND the promulgation of rules and regulation by the Sec of Finance

♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 (2) The power to ISSUE rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau; (3) The power to COMPROMISE or ABTE ↓ sec 204 A and B of the Code, any tax liability; and (4) The power to ASSIGN or REASSIGN internal revenue officers to establishments where articles subject to excise tax are produced or kept. Sec 4 adds: the Commr has the exclusive and original jurisdiction to interpret the provisions of the NIRC, subject to review by the Sec of Finance. : ↓ said sec, the Commr has the power to DECIDE disputed assessment, refunds of internal revenue taxes, fees or charges, penalties imposed in relation thereto, or other matters arising ↓ the NIRC or other laws or portions thereof administered by the BIR.  this decision is subject to the exclusive appellate jurisdiction of the CTA. K. SUSPENSION OF THE RUNNING OF STATUTE OF LIMITATIONS (Sec 223) : the periods ↓ 203 and 222 shall be SUSPENDED for the following reasons: (1) When the TP REQUESTS for a REINVESTIGATION w/c is GRANTED by the Commr. (2) When the TP ≠ be LOCATED in the address given by him in the return filed upon w/c a tax is being assessed or collected, PROVIDED – that if the TP informs the Commr of any change in address, the running of the statute of limitations will NOT BE SUSPENDED. (3) When the warrant or distraint or levy is DULY SERVED upon the TP, his authorized rep or a mem of his household with sufficient discretion, and no prop could be located; and (4) When the tp is OUT of the country. Q: after 15 years, A, a Filipino tp, went back to the Phils. The BIR assessed him ↓ the normal assessment. Has the action prescribed?

A: NO. the running of the prescriptive period shall be suspended when he is out of the country. ∴ the tp, for 15 years was out of the country, suspension is AUTOMATIC in this case. The action has not yet prescribed. L. CLAIM FOR REFUND (Sec 229) claim or refund shall first be filed before the Commr BEFORE a suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected w/o authority, or of any sum alleged to have been excessively, or in any manner wrongfully, collected. : the suit/proceeding shall be filed after the expiration of 2 years from the payment of the tax. However, the Code further provides that the Commr may, although there is no written claim for refund or credit filed by the tp, refund or credit any tax, if upon the face of the return upon w/c payment was made, such payment appears clearly to have been erroneously made. HOW TO DETERMINE PERIOD IN COMPUTING TAX REFUND: TP – classified CORPORATIONS.

into

INDIVIDUAL

and

INDIVIDUAL: reckoning period should be on the day the tax has been paid. if paying ↓ the withholding tax system: the period shall start at the end of the taxable year.  if paying by way of installment: the period shall be reckoned on the date of the last instalment. for tps subjected to distraint/levy: if prop was sold in public auction, the date the proceeds were applied for the satisfaction of the tax liability shall be considered. CORPORATE TPS 2 groups are also considered: the EXISTING and NON-EXISTING CORPOS. EXISTING NON-EXISTING 2-yr period starts to run 2-yr period commences from the day the from the day the annual adjusted return annual return is filed. is filed – since it is only For these types of from this time that the corpos, upon receipt of tax liability can be the notice from SEC of ♥ NOTES

TAXATION LAW REVIEW. Sababan. 2008 ed. Ppg 181-200 correctly determined.

the dissolution of the corpo, a return should be filed after 30 days. The dissolved corpo is not required to wait for the end of the taxable year to file the return.

2-YEAR PERIOD IS ABSOLUTE. : even if there’s a supervening event w/c could prevent the tp from filing a written claim for refund/credit, the claim should still be filed w/in the 2-year period. BUT if the Commr has not yet acted on the claim and the 2yr period is abpout to expire, tp’s remedy = file appeal with CTA sitting in DIVISION. The inaction of the Commr can be considered a DENIAL. : if BIR denies the claim w/in the 2yr period, tp’s remedy = file appeal with CTA w/in 30days from the denial. NOTE that such 30day period MUST BE WITHIN THE 2-YEAR PERIOD. ∴ if there are only 21 days remaining in the 2-year period and the BIR denied the claim, tp has only 21 days w/in w/c to file his appeal. EXCEPTION  Sec 204 C: a return filed showing an OVERPAYMENT shall be considered as a written claim for refund. in that case, no written claim for refund or credit is required to be filed. :In cases of written claim for refund or credit in determining the gross value of the estate, the Commr may open the bank account of the tp. written consent is NOT REQUIRED. But in cases of compromise ↓ 204 A, written consent is required for the Commr to inquire into the bank account of the tp.

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