Tax Assessment - Taxpayer's Remedies

Presented by:AMEGO & ASSOCIATES LAW OFFICE

Ground Floor CIT Bldg., Lacson-Luzuriaga Sts.Bacolod City

TAXPAYER’S REMEDIESin

Tax Assessment

A. DETERMINING/ ENFORCING TAX LIABILITY

Audit Process/Tax AssessmentOplan Kandado – suspension or temporary closure of business operations of a VAT- registered/ registrable taxpayer for * failure to issue receipts or invoices* failure to file a VAT return* understatement of taxable sales or

receipts by 30% or more of the correct amount thereof or

* failure to register. Establishment surveillanceRATE program/Criminal Action- to investigate, prosecute and convict tax evaders and other criminal violators of the 1997 NIRC

A. ADMINISTRATIVEBefore Payment Protest – tax assessment contestCompromise – reduction of tax liabilityAbatement - cancellation of the entire tax liability

After Payment Tax Refund- restitution of the money paid as tax

Tax Credit- money so paid be applied to existing tax liability

B. JUDICIALCivil Action•Appeal to the Court of Tax Appeals - tax assessment contest

Taxpayer Remedies Govt. RemediesVS

B. COLLECTION OF TAXES

Compromise Abatement Distraint - seizure by the govt. of tangible/ intangible personal property followed by the public sale of such property

Levy - seizure of real property, and interest in or rights to such property

Tax Lien - the tax, together with interests, penalties, and costs that may accrue in addition thereto is a lien upon all property and rights to property belonging to the taxpayer

Civil action for collection of taxes

B. JUDICIALCivil Action (cont.)Action to contest forfeiture of chattel, at any time before the sale or destruction thereof, to recover the same, and upon giving proper bond, enjoin the sale; or after the sale and within 6 months, an action to recover the net proceeds realized at the sale

Action for damages against a revenue officer by reason of any act done in the performance of official duty

Criminal Action Filing of criminal complaint against erring BIR officials and employees.

Injunction – when the CTA in its opinion, the collection by the BIR may jeopardize taxpayer.

Taxpayer Remedies Govt. RemediesVS

Tax Assessment

Pre-Assessment Notice (PAN)

Final Assessment Notice (FAN)

Protest

Appeal to CTA Division

MR to CTA Division

Appeal to CTA En Banc

Petition for Review to SC

15 days

30 days

30 days

30 days

15 days

15 days

Letter of Authority

Letter of Authority/ Letter NoticeA tax investigation starts with the issuance by the BIR of a written authorization which is usually a

Letter of Authority – for tax audits or Letter Notice – for the Relief/SLSP program

Preliminary Assessment Notice (PAN)

Time for taxpayer to reply: 15 days from date of receipt of PANEffect of failure to reply:-Taxpayer shall be considered in default-a formal letter of demand and assessment notice shall be issued calling for the payment of the taxpayer’s deficiency tax liability, inclusive of all the applicable penalties.

− Notifies the taxpayer of the findings made by the examiner and the deficiency taxes assessed− shows in detail, the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based.

Issuance of FAN is sufficient w/o need of Notice of Informal Conference & PAN:

1. Deficiency tax is the result of mathematical error in the tax computation appearing on the face of the tax return filed by the taxpayer;

2. Discrepancy between the tax withheld and the amount actually remitted by the withholding agent;

3. A taxpayer who opted to claim a refund or tax credit also carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable quarter/s of the succeeding taxable year;

4. Excise tax due on excisable articles not paid;5. Article purchased locally or imported by an

exempt person, such as, but not limited to, vehicles, capital equipment, machineries & spare parts, has been sold, traded or transferred to non-exempt persons.

SAMPLE PAN

PAN

Taxpayer submits a

reply within 15 days?

NO

YES

Issuance of FAN

&LETTER of DEMAND

Commissioner accepts the

explanations.

Commissioner does not accept

the explanations.

Assessment ends.

Final Assessment Notice (FAN) FAN and letter of demand should always go together. The letter of demand explains to the taxpayer how the deficiency assessment was

arrived at, including the reasons and legal bases for the assessment.Sent to the taxpayer only by registered mail or by personal delivery. If sent by personal delivery, acknowledge receipt thereof in the duplicate copy of

the letter of demand by showing the following: (a) his name; (b) signature; (c) designation and authority to act for and in behalf of the taxpayer, if received by a person other than the taxpayer himself; and (d) date of receipt thereof.

2 Types of Administrative Protest Against the FAN:Request for reconsideration –a plea of reevaluation of the assessment on the basis of existing records without need of additional evidence. Request for reinvestigation – a plea of reevaluation of an assessment on the basis of newly discovered or additional evidence that a taxpayer intends to present in the reinvestigation.The Protest may involve a question of fact or law, or both.

Remedy of the taxpayer against the FAN : File Administrative PROTEST

Time for taxpayer to submit Protest: 30 days from date of receipt of FAN

Effect of failure to Protest:-Payment by the TP of the amount due

SAMPLE FAN

FAN &

LETTER of DEMAND

Taxpayer submits a PROTEST within 30

days?

NO

YES

Administrative ProtestMOTION for

RECONSIDERATION or MOTION for

REINVESTIGATION

Assessment ends.Assessment becomes final, executory, and demandable.The government may exercise it remedies for collection.The case may not be appealed to the CTA.

Complete submission of documentary evidence within 60 days from the filing of the protest

Non-submission of documents

Complete submission of

documentsCommissioner’s

action:

Resolution of the assessment based on the documents:- Cancellation of entire assessment/- Issuance of a Revised Assessment

Inaction on the protest w/in 180 days from the time of receipt of the relevant documents

Denial of the administrative protest within 180 days from the receipt of the relevant supporting documents

File a MR to the Commissioner

orAppeal to the CTA Division

PETITION FOR REVIEW to the SC

Taxpayer FAILS to appeal.

ASSESSMENT ENDS.

Motion for Recon to the

CTA Division

Appeal to the CTA EN BANC

Unfavorable Action of the Commissioner

Appeal to the CTA Division

PETITION FOR REVIEW to the SC

Motion for Recon to the

CTA Division

Appeal to the CTA EN BANC

Denial : w/in 30 days from receipt of notice of the denial or

Inaction: w/in 30 days from the lapse of the 180 days from date of submission by the taxpayer of the required documents in support of his protest

DENIAL

INACTION

15 days

15 days

15 days

CTA appeal from the decision of the CIR :SHALL NOT SUSPEND the payment, levy, distraint, and/or sale of any property of the taxpayer for the satisfaction of his tax liability.

If in the opinion of the Court the collection by BIR may jeopardize the interest of the Government and/or the taxpayer:the Court any stage of the proceeding may suspend the collection and require the taxpayer either −to deposit the amount claimed or −to file a surety bond for not more than double the amount

with the Court

30 days

or

Notice of Informal Conference

Pre-Assessment Notice (PAN)

Final Assessment Notice (FAN)

Protest

Appeal to CTA Division

MR to CTA Division

Appeal to CTA En Banc

Petition for Review to SC

15 days

15 days

30 days

30 days

30 days

15 days

15 days

Thank you.

- THE END -

Presented by:AMEGO & ASSOCIATES LAW OFFICE

Ground Floor CIT Bldg., Lacson-Luzuriaga Sts.Bacolod City