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ATENEO SCHOOL OF LAW Tax II REMEDIES UNDER THE TAX CODE OF 1997 TAX DELINQUENCY VS.

TAX DEFICIENCY A taxpayer is considered delinquent in the payment of his tax when (a) the self-assessed tax per return filed by the taxpayer on the prescribed date was not paid or partially paid; or (b) the deficiency tax assessed by the BIR became final and executory. Deficiency means : (1) the amount by which the tax imposed by law, as determined by the commissioner or his duly authorized representative exceeds the amount shown as the tax by the taxpayer on his return; or (2) if no amount is shown as the tax by the taxpayer upon his return or no tax return was filed, then the amount by which the tax was determined by the commissioner or his duly authorized representative exceeds the amount previously assessed (or collected without assessment) as a deficiency. Distinctions A delinquent tax can immediately be collected administratively through the issuance of a warrant of distraint and levy or by judicial action. A deficiency tax can likewise be collected through administrative and/or judicial process except that it has to go through the process of filing of a protest, etc. The filing of a civil action for the collection of the delinquent tax in the CTA or ordinary court is the proper remedy. An action for the collection of a deficiency tax with the CTA or ordinary court requires that the assessment become final and executory, otherwise the same may be dismissed for lack of jurisdiction. CIR vs. Island Garment Manufacturing Corp GR No L-46644 September 11, 1987 ASSESSMENT PROCESS (RR 12-99) (Sec. 228 NIRC) After the filing of the return of the taxpayer together with the payment of taxes. It is the duty of the government to ascertain the correctness of the returns filed and if there exists any deficiency or fraud in the said returns. The process by the government is as follows: 1. 2. 3. 3. Issuance of a valid Letter of Authority, Letter Notice, Tax Verification Notice Examination of Books, paper and records Sec.5 (B) and 6 (A) NIRC Subpoena powers Sec. 5(C) NIRC Notice of Informal Conference Sec. 3.1.1 Rev. Regs. No. 12-99 On matter that taxpayers and BIR agree payment may be made using the "Agreement Form". On other matter not in agreement, the process continues. Issuance of the Preliminary Assessment Notice (PAN) Taxpayer is given 15 days to contest, otherwise he is considered in default, this is done by a "REPLY" within 15 days. The REPLY is not mandatory and does not fully tackle the issues contained in the PAN. Exceptions to the use of PAN Sec. 228 NIRC Issuance of the Formal Assessment Notice (FAN) and letter of demand Requirements: Sec. 3.1.4 RR 12-99 State the facts, laws, rules and regulations which the assessment is based otherwise it is void. Sent by registered mail or by personal delivery, if using the latter, the same should be acknowledged in the duplicate copy with the following information: 1) name, 2) signature, 3) designation and authority, 4) date of receipt. PNZ Marketing vs. Corn. CTA Case No. 5726 Dec. 14, 2001 Artex dev Co vs. NLRC 187 SCRA 611 (opportunity to be heard)

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Protest by taxpayer of the FAN within thirty days otherwise the same becomes final and executory wherein the taxpayer can no longer contest the assessment. COLLECTION PROCESS The issuance of the Final Assessment Notice legally creates a tax liability of the taxpayer which is being demanded in the accompanying letter of demand. The stages are as follows: 5. Filing of an administrative protest by the taxpayer against the assessment a. Done within thirty days from receipt otherwise the assessment becomes final. b. Must specify the following: i. Complete name and address of taxpayer ii. Nature of the request of whether it is for reconsideration or reinvestigation I. If reconsideration question of appreciation of the law 2. If reinvestigation newly discovered evidence which is to be presented. iii. Taxable period covered iv. Assessment number v. Date of receipt of assessment number or demand letter 1. Itemized statement of findings which are agreed upon which should be paid immediately. vi. Itemized schedule of the adjustments to which the taxpayer does not agree to. vii. Statement of facts and law to support the protest. c. Distinction between a request for reconsideration and request for reinvestigation i. RR No. 12-85 Section 6 ii. CIR vs. Philippine Global Communication G.R. No. 167146 October 31, 2006 1. Sec. 269 (c) NIRC 2. Sec. 224 6. Submission of documentary evidence within sixty days of filing of protest. 7. Upon the submission of documentary evidence or memorandum, the commissioner is given the 1 80 days to act upon the protest. - There are issues as to when the 180 day period begins to start. If there is no additional documents filed. If the memo is filed before the lapse of 60 days or after the lapse of 60 days. Oceanic Wireless Network vs. Comm CTA Case 61111, Nov. 3, 2004 8. Issuance of a revised assessment (possibility) i. Collector vs. Batangas Transportation Co. 102 Phil 822 b. Cancellation of the entire assessment. c. Revision of the Assessment in parts. d. Denial of the protest. 9. Denial of the Protest If the protest of the taxpayer is denied in whole or in part the same shall contain the following i. State the facts, the applicable law, rules and regulations, jurisprudence on which such decision is based; otherwise, the decision shall be void. ii. That the same is the final decision of the commisioner. (Sec. 3.1.6 RR 1299) 10. Within 30 days from the denial of the Protest, the taxpayer is given 30 days to appeal to the Court of Tax Appeals (RA 9282 Expanded jurisdiction of the CTA). When does the CTA have jurisdiction? Lascona Realty Corp. vs. Comm. CTA Case No. RCBC vs. CIR GR 168498 apr 24,2007 Section 3, Rule 4 and Section 3(a), Rule 8 of the Revised Rules of the Court of Tax Appeals

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TAX REMEDIES (NATIONAL TAXES); Title VIII (Sec. 202-231) A. Remedies of the Government 1. Collection of tax liability 1.1 No court injunction against tax collection rule Sec. 218, NIRC Rule 12, CTA Rules to implement R.A. 1125 (CTA may issue an injuction) 16 SCRA 584 (when a case has Republic vs. Lim Tian Teng, already prescribed, taxpayer is barred from questioning the case) Sec. 56 [A] [1] (when taxes are to be paid) Sec. 228 (When assessment not necessary to collect taxes) TRO vs RA 9337 (still pending) 1.2 Summary remedies Sec. 205-217 Sec. 222 (C), NIRC 1.3 Civil action & Criminal Actions Sec. 205, NIRC

Sec. 220, NIRC 1.4 Form & Mode of Proceedings 20 SCRA 32 (lack of approval of Arches vs. Bellosillo commissioner is not jurisdictional, it affects only the capacity of parties) G.R. No. 130430 Dec. 13, 1999 (summary Republic vs. Salud Hizon proceedings on collection, prescriptive period had lapsed and had become final, lack of approval of commissioner is not a bar) Sec. 7, NIRC Policies of decentralization 1.5 Cases 97 SCRS 877 (criminal actions are to be Ungab vs. Cusi filed in court, criminal actions need not have the computation of the tax due.) 20 SCRA 712 (criminal action does not People vs. Patanao amount to a decision for unpaid taxes under the old nirc) 257 SCRA 200, June 4,1996 (fortune CIR, et.al . vs. CA, et. al., tobacco cases) G.R. No. 120880, June 5, 1997 Marcos vs. CA, 2. Forfeiture Secs. 224-226, NIRC Republic vs. Enriquez of tax lien, distraint over seizure) 3. Compromise 4. Abatement/Cancellation B. Deficiency Tax Assessment 1. Meaning of Assessment/Deficiency 2. Kinds of Tax Assessment Sec. 56 (B) (1) & (2), NIRC RR No. 12-85

166 SCRA 608, Oct. 21, 1988 (superiority

Sec. 204 (A), NIRC Sec. 204 (B), NIRC Rev Reg. 7-2001

RR No. 12-99 Sec. 228 RR No. 2-98 Sec. 2.80 (C), (D) & (E) Pay as you file Sec 56 [A] [1] 1997 NIRC Self assessing Republic vs Ricarte, G.R. No. L-46893, Nov. 12, 1985 Tupaz vs. Ulep 316 SCRA 118 Exception Taxpayer period is terminated Tax Audits Tax Liens Dissolution b. Deficiency Assessment Sec. 56 (B) (1) & (2), NIRC c. Illegal and Void Assessment Sec. 228 Victorias Milling Co. Inc. vs. CTA L-24213, mar. 13, 1968 d. Erroneous Assessment 3. PRINCIPLES GOVERNING ASSESSMENTS RMC No. 23-00 What are tax assessments CIR vs. Pascor Realty & Dev. Co. GR 128315 June 1999 Presumption of correctness of assessment Bonifacia Sy Po vs. CTA 164 SCRA 524 (presumption of correctness in assessments) CIR vs. Antonio Tuason Inc., 173 SCRA 397 (incumbent upon the taxpayer to disprove the assessment.) Marcos vs. CA, G.R. No. 120880, June 5, 1997 Assessments are not based on presumptions no matter how logical CIR vs. Benipayo GR No. 13656 Jan 13, 1962 (assessments cannot be based on mere presumptions) Assessment is discretionary on the part of the commissioner Meralco Securities vs. Savellano L-36181 and L-36748, Oct. 23, 1992 Authority to assess may be delegated City Lumber vs. Domingo L-18611 Jan. 30, 1964 Assessment must be delegated to the proper party L-21108, Nov. 29, 1966 Republic vs. Dela Rama Investigative powers of the comm issioner Sec. 5 and 6 (F) NIRC G.R. No. 117254 Jan 21, 1999 (on claims CIR vs. CA for refund, the period commences on the date of actual payment and not on the last day of filing.) Commissioner must state in a clear and unequivocal language the decision 185 SCRA 547, May 21, 1990 CIR vs. Union Shipping Corp. 133 SCRA 765, Dec. 28, 1984 Advertising Assoc. Inc. vs. CIR Fraud cases Aznar vs. CIR 58 SCRA 519 a. Self Assessment

4. NO ESTOPPEL AGAINST THE GOVERNMENT CIR vs. Abad G. R No. L-19627, June 27, 1968 (state cannot be estopped by the neglect of its agents and officers) Visayan Cebu Terminal vs. CIR L-19530 and 19444, Feb. 27, 1965 Phil Bank of Corn vs. CIR G.R. No. 112024 Jan 28, 1999 (state cannot be put in estoppel by the mistake or errors of its agents, period to start from the filing of the adjustment return and final payment of the tax.) exception CIR vs. CA G.R. No. 117982, Feb 6, 1997 (exception to the no estoppel rule in the interest of justice and fair play) CIR vs. CA GR No. 107135, Feb 23, 1999 5. Disputable presumption: Duly directed and mailed letter is deemed received. 21 SCRA 17 Basilan Estates vs CIR 149 SCRA 351 (burden shifts to bir to prove Republic vs. CA & Nielson, receipt) Marcos vs. CA, G.R. No. 120880, June 5, 1997 CIR vs. Bautista G.R. No. L-12250, May 27, 1959 GR L22492 September 5, 1967 Basilan Estates, Inc. vs. CIR Nava vs. CIR GR L-19470 January 30, 1965 CIR vs. Pascor Realty & Dev. Co. GR 128315 June 1999 6. Assessment and payment of deficiency tax. Sec. 56 (B) NIRC C. Prescription of Right to Assess and Collect Taxes 1. Prescription of Right to Assess. Secs. 203 & 222 NIRC

BIR Unnumbered Ruling 1 - 30 - 07 addressed to SGV 1.1 Cases 19 SCRA 790 Guagua Electric vs. Collector 104 Phil 819 (taxpayer cannot claim CIR vs. Suyoc Consolidated mining prescription when it was the party asking for reinvestigation) 117 Phil. 575, 578 (1963) (period wherein Republic vs. Lopez reinvestigation was conducted to be deducted from prescriptive period.) 117 Phil 892, 895 (1963) Comm. Vs. sison Bisaya Land Transportation Co vs. Collector L-12100 & L-11812, May 19, 1959 16 SCRA 277, Feb.28, 1961 Butuan Sawmill, Inc. vs CTA 70 SCRA 204, Mar. 31, 1976 CIR vs. Ayala Securities 58 SCRA 519 Aznar vs. CIR 199 SCRA 824, July 31, 1991 CIR vs. Javier Jr. Republic vs. Acevedo 22 SCRA 1356 26 SCRA 136 Sinforosa Alca vs. CA 10 SCRA 738 RP vs. Lim De Yu G.R. no. 104171, Feb 24, 1999 CIR vs. BF Goodrich CTA Case No. 2858, March 30, 1987 Boise Cascade Phils, Inc. vs. CIR, CTA Case No. 4263, January 26, 1993 Carnation Phils., Inc. vs. CIR G.R. No. 120880, June 5, 1997 Marcos vs. CA, G.R. No. 128315, June 29, 1999 CIR vs. Rascor GR 127777, October 1, 1999 Tupaz vs. Ulep

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Prescription of Right to Collect. Sec 203 & 222, NIRC

3. Suspension of Prescriptive Period. Sec. 223, NIRC 3.1 Cases CIR vs. Sison 7 SCRA 824 Repuplic vs. Ablaza 108 Phils., 1705 CIR vs. Capitol Subd. 10 SCRA 773 Palanca vs. CIR 4 SCRA 263 Republic vs. Ker & Co. Ltd. 18 SCRA 207 Sept. 29,1966 CIR vs. Algue 158 SCRA 9, Feb. 17, 1988 CIR vs. Wyeth Suaco Laboratories inc. & CTA 202 SCRA 125, Sept. 30, 1991 CIR vs. Union Shipping Corp. 185 SCRA 547, May 21, 1990 D. Remedies of the Taxpayer 1. Remedies before payment of the tax 1.1 Cases Delta Motors Co., vs. CIR Basa vs. Republic Marcos vs. CA, 2. Taxpayers defenses against the assessment 2.1 Cases Aguinaldo Industries Co. vs. CIR 112 SCRA 136, Feb. 25, 1982 Abra Valley College vs. Hon. Aquino, L-39086, June 15, 1988 CIR vs. Procter & Gamble PMC 204 SCRA 377, December 2, 1991 3. Remedies after payment of tax 3.1 Cases Bermejo vs. Collector 87 Phil. 96 Chemphil Mfg. Corp. vs. CIR/CC CTA Case 3891, Nov. 27, 1986 CIR vs. CA, Citytrust & CTA, GR No. 106611, July 21, 1994 CC & CIR vs. CA & Planters GR 82618, march 16, 1989 Gibbs vs. CIR 15 SCRA 318 ACCRA Investment Corp. vs. CA 204 SCRA 957, Dec. 20, 1991 CIR vs. TMX Sales, Inc. & CA204 SCRA 184, Jan. 13, 1992 Citibank, NY vs. CIR, CTA Case No. 3378, August 30, 1991 CIR vs. Wander Phils., Inc., 160 SCRA 573, April 19, 1988 160 SCRA 560, Dec. 2, 1991 CIR vs. Procter & Gamble PMC 4. Judicial Remedies 4.1 RA 9282 Expanding the jurisdiction of the Court of Tax Appeals 4.2 CTA Jurisdiction (revised CTA jurisdiction contained in RA 9282) 4.2.1 4.2.2 What decision are appealable? When should the appeal to the CTA be made? CTA Case no. 5777 Jan 4. 2000 Sec. 204 & 229, NIRC Sec. 228, NIRC, RR No. 12-85 Case No. 3782, May 21, 1986 138 SCRA 34, August 5, 1985 G.R. No. 120880, June 5, 1997

Lascona Land vs. CIR

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Cases L-25289, June 28, 1974 L-23938, Jan. 22, 1968 22 SCRA 3 133 SCRA 765, Dec. 28, 1984 GR 39910 September 26, 1988 Sec. 11, RA 1125 22 SCRA 1058 61 SCRA 238, Nov. 29, 1974

Surigao Electric Co. vs. CA, CIR vs. Villa, Advertising Assoc. Inc. vs. CIR Dayrit vs. Cruz 4.3 Procedure of appeal. CIR vs. Jose Concepcion 4.4 CTA finding of fact conclusive Nasiad vs. CTA 4.5 Appeal of CTA decisions To the CTA en banc To the Supreme Court DBP vs. CA

RA 9282 Section 11 amending Sec 18 of RA 1125 RA 9282 Section 12 amending Sec. 19 180 SCRA 609, Dec. 22, 1989

E. Statutory Offenses and Penalties; Title X (Secs. 247-281) 1. Additions to the tax 1.1 Civil Penalties 1.2 Interest CIR vs. ESSO, Sec. 248 Sec. 249 RMC 46-99 (June 18, 1999) RR No. 3-91 172 SCRA 364 Sec 253-268 Sec. 269

2. Crimes, other offenses and forfeitures 3. Penalties imposed on public officers

3.1 Violation of withholding tax provision Sec. 272 4. Other penal provisions Secs.. 274 - 282

4.1 Prescription for violations of NIRC Sec 281 4.2 Lim vs. CA & People 190 SCRA 616, Oct. 18, 1990