Tax Remedies Ouline

8/10/2019 Tax Remedies Ouline

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REMEDIES

A. IF TAX IS NOT YET PAID

1. Assessment [Bar, 1992]

a. Definition

a-1. An assessment contains not only a

computation of tax liabilities, but also a

demand for payment within a prescribed

period. It also signals the time when penalties

and protests begin to accrue against the

taxpayer. To enable the taxpayer to

determine his remedies thereon, due processrequires that it must be served on and

received by the taxpayer. Accordingly, an

affidavit, which was executed by revenue

officers stating the tax liabilities of a taxpayer

and attached to a criminal complaint for tax

evasion, cannot be deemed an assessment

that can be questioned before the Court of

Tax Appeals [See CIR vs. Pascor Realty and

Development Corporation, G.R. No. 128315,

dated 29 June 1999].a-2. It is the formal letter of demand calling for

payment of the taxpayers deficiency tax or

taxes shall state the fact, the law, rules and

regulations or jurisprudence on which the

assessment is based, otherwise the formal

letter of demand and the notice of

assessment shall be void [See CIR vs. Enron

Subic Power Corporation, G.R. No. 166387,

dated 19 January 2009].a-3. An assessment is presumed to be valid, and

absent proof of any irregularities in the

performance of official duties, it will not be

disturbed. Even an assessment based on

estimates is prima facie valid and lawful

where it does not appear to have been

arrived at arbitrarily or capriciously. The

burden of proof is upon the complaining

party to show clearly that the assessment is

erroneous [See Marcos II v. Court of Appeals,G.R. No. 120880, dated 5 June 1997].

a-4. Until the assessment becomes final and

executory, the government cannot resort to

any civil, criminal and administrative

remedies for the collection of unpaid taxes


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against the taxpayer, except in cases

involving fraudulent returns [See Ungab vs.

Cusi, Nos. L-41919-24, dated 30 May 1980].

a-5. Legal Basis: Commission of Internal Revenue

has the power to assess deficiency tax under

Sections 4-7, 203, 222-223, 228, 232, 235 and

266 of the NIRC [See Fitness by Design, Inc. vs.

CIR, G.R. No. 177982, dated 17 October 2008;

see also Revenue Regs. No. 12-99, dated 6

September 1999, as amended by Revenue

Regs No. 13-2013, dated 28 November 2013].

b. Period to Assess

b-1. General Rule: Internal revenue taxes shall be

assessed within three (3) years after the last

day prescribed by law for the filing of thereturn.

1. In a case a return is filed beyond the

period prescribed by law, the three (3)-

year period shall be counted from the

day the return was filed.

2. A return filed before the last day

prescribed by law for the filing thereof

shall be considered as filed on such last

day [See Section 203, NIRC].

3. Counting of Period [See Article 13 of

the New Civil Code].

b-2. Exceptions:

1. In the case of a false or fraudulent

return with intent to evade tax or of

failure to file a return, the tax may be

assessed, or a proceeding in court for

the collection of such tax may be filed

without assessment, at any time within

ten years after the discovery of thefalsity, fraud or omission [See Section

248(B), NIRC].

2. By agreement in writing between the

taxpayer and the Commissioner of

Internal Revenue, the period to assess

may be extended within the period

agreed upon. The period so agreed

upon may be extended by subsequent

written agreement made before the

expiration of the period previouslyagreed upon [See Section 222, NIRC;

see also RMO 20-90, 4 April 1990 and

RDAO 05-01, 2 August 2001].

b-3. Jurisprudence


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1. The prescriptive period on when to assess

taxes benefits both the government and

the taxpayer. Exceptions extending the

period to assess must be strictly construed.

Due to the defects in the Waiver, that is, its

non-compliance with the proper

procedures, the period to assess taxes was

not extended. Hence, the assessments

were issued by the BIR beyond the three

(3)-year prescriptive period and thus, null

and void [See CIR vs. Kudos Metal

Corporation, G.R. No. 178087, 5 May 2010].

2. Estoppel cannot be applied in the

assessment of taxes. The taxpayer is not

estopped from raising the prescriptiondespite the fact that it was the one which

asked for additional time to submit the

required documents. Estoppel is applied in

the collection, not in the assessment, of

taxes [See Collector of Internal Revenue

vs. Suyoc Consolidated Mining Company,

104 Phil 819].

3. Related Cases [See RCBC vs.

Commission of Internal Revenue, G.R.

No. 170257, dated 7 September 2011;

Commission of Internal Revenue vs.

Kudos Metal, G.R. No. 178087, dated 5

May 2010]

c. This is the FIRST remedy of the government to

collect unpaid taxes due against a taxpayer.

c-1. Republic Act 8424 requires that the taxpayer

must be INFORMED, not merely NOTIFIED of

the results of the assessment [See CIR vs.

Azucena Reyes, G.R. No. 159694, dated 27January 2006 and Azucena Reyes vs. CIR,

G.R. No. 163581, dated 27 January 2006]

c-2. While the Tax Code authorizes the use of the

Best Evidence Obtainable, the assessment

must be rest on actual, credible evidence,

not merely hearsay evidence [See CIR vs.

Hantex Trading Co., Inc., G.R. No. 136975,

dated 31 March 2005].

d. Taxpayer DISPUTES the assessment.

d-1. By filing a formal protest within 30 days fromreceipt of the Assessment [See Commissioner

of Internal Revenue vs. First Express

Pawnshop, G.R. Nos. 172045-046, dated 16

June 2009]


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d-2. By submitting evidence in support of the

protest within 60 days from filing of the Protest

[Section 228, Republic Act 8424]

d-3. Notes

1. Inaction of the Commissioner is not

deemed a denial of the protest

[Lascona Land Company, Inc. vs.

Commissioner, G.R. No. 171251, dated 5

March 2002].

2. Under Section 7(a) (2) of Republic Act

No. 9282, the jurisdiction of the Court of

Tax Appeals includes inactions of the

CIR in cases of disputed assessments.

The Supreme Court settled these

conflicting view when it held that incase the Commissioner failed to act on

the disputed assessment within the 180-

day period from date of submission of

documents, a taxpayer can either:

(1) File a petition for review with the

CTA within 30 days after the

expiration of the 180-day period;

or

(2) Await the final decision of the CIR

on the disputed assessments and

appeal such final decision with

the CTA within 30 days after

receipt of a copy of such decision

[See Lascona Land Company,

Inc. vs. Commissioner, G.R. No.

171251, dated 5 March 2002].

3. The filing of a civil case for collection is

deemed a denial of the protest

[Republic vs. Lim Tian Teng & Sons, Inc.,16 SCRA 584; Dayrit vs. Cruz, L-39910,

26 September]

2. Appeals-

a. Court of Tax Appeals-Division [See Republic Act

9282 as amended by Republic Act 9503]

a-1. Jurisdiction [See Section 7]

a-2. Within thirty (30) days from receipt of the

decision, judgment or order finally denying

the protest [See Section 9]

a-3. A party adversely affected by the Decision ofthe CTA-Division is allowed to file a Motion for

Reconsideration or Motion for New Trial

[Section 9]

b. Court of Tax Appeals-En Banc [See Republic Act

9282 as amended by Republic Act 9503]


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b-1. A party adversely affected by the Resolution

or Order of the CTA-Division denying his

Motion for Reconsideration or Motion for New

Trial may file a Petition for Review with the

CTA En Banc

b-2. Period: Within 15 days from receipt of the

denial of the Motion for Reconsideration or

Motion for New Trial

c. Supreme Court

c-1. Within 15 days from receipt of the Resolution,

judgment or final order of the CTA En Banc

via a Petition under Rule 45 of the Revised

Rules of Court [See Section 11].

c-2. If a motion for reconsideration is filed, the 15-

day period is reckoned from denial of saidmotion [See Rule 45, Revised Rules of Court].

3. Collection of Taxes

a. Rules

a-1. Assessment precedes the collection of taxes.

It is after the assessment became final and

executory that the government may enforce

the collection of the corresponding tax

liabilities. In fact, the NIRC provides that no

proceeding in court shall begun without the

prior assessment for the collection of taxes

[See Section 203, NIRC].

a-2. Any internal revenue tax which has been

assessed within the prescribed period shall be

collected by the government within the

period of five (5) years reckoned from the

assessment [See Section 222(c), NIRC]. The

collection may be enforced thru judicial or

administrative remedies.

a-3. The period of prescription of action to collecta taxpayer's deficiency income tax

assessment is interrupted when the taxpayer

request for a review or reconsideration of said

assessment, and starts to run again when said

request is denied [See CIR vs. Capitol

Subdivision, Inc., G.R. No. L-18993, dated 30

April 1964].

a-4. Judicial remedies may be in the form of a

Civil Action for Collection OR a criminal

action for non-payment of taxes [See Section221, NIRC; see also Republic vs. Salud Hizon,

G.R. No. 130430, dated 13 December 1997;

PNOC vs. Commissioner of Internal Revenue,

G.R. No. 109976, dated 26 April 2005]. Judicial

action may be instituted in cases of


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Fraudulent Returns without an assessment

[See Section 269, NIRC; see also Adamson

Management Corporation vs. Court of

Appeals, G.R. No. 120935, dated 24 May

2009].

4. Other REMEDIES

a. Compromise [Section 204, NIRC; see also Revenue

Regs. 7-2001 and 13-2001; CIR vs. Azucena T. Reyes,

G.R. No. 159694, dated 27 January 2006].

b. Abatement [Section 204, NIRC; see also Revenue

Regs 7-2001 and 13-2001].

c. Tax Amnesty

c-1. Definition It is a general pardon to

taxpayers who want to start a clean tax slate.

It also gives the government a chance tocollect uncollected tax from tax evaders

without having to go through the tedious

process of a tax case [See Baas, Jr. vs. Court

of Appeals, G.R. No. 102967, dated 10

February 2000].

c-2. See Republic Act 9480.

B. IF TAX HAS ALREADY BEEN PAID

1. This is understood to be a remedy granted to the

taxpayer. The government is not expected to grant a

refund or tax credit for tax erroneously or illegally paid

motu proprio.

2. Remedies available

a. Claim for refund [See Section 229, NIRC; see also

CIR vs. Acesite Philippines, G.R. No. 147295, dated

16 February 2007]

b. Claim for tax credit [Section 229, NIRC; see also

Revenue Regs. 14-11, dated 29 July 2011]3 Period to Claim

a. Generally, within two (2) years after payment [See

CIR vs. PNB, G.R. No. 144653, dated 28 August 2001]

b. If paid in installments, the 2-year period is counted

from the payment of the last installment or, if paid

late, from the date the last return should have

been filed

c. In case of corporate quarterly returns, the 2-year

period is counted from the date of payment of the

last quarter tax, or, if paid late, from the date thefinal return should have been filed [Commissioner

of Internal Revenue vs. Philam Life Insurance

Company, Inc., G.R. 105208, 29 May 1995]

4. Where to File Claim


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a. With the Commissioner of Internal Revenue to

afford him an opportunity to correct the mistake, if

any, committed by him or his subordinate [See P.J.

Kiener Co., Ltd. vs. David, 92 Phil. 945]

b. Court of Tax Appeals-Division

b-1. Within 30 days from receipt of an adverse

decision of the Commissioner; or

b-2. Prior to the lapse of the 2 year prescriptive

period if no action is taken by the

Commissioner [Sections 204 and 229, NIRC]

c. Court of Tax Appeals-En Banc

c-1. A party adversely affected by the Resolution

or Order of the CTA-Division denying his

Motion for Reconsideration or Motion for New

Trial may file a Petition for Review with theCTA En Banc [Section 11, Republic Act 9282].

c-2. Within 15 days from receipt of the denial of

the Motion for Reconsideration or Motion for

New Trial

d. Supreme Court

d-1. Within 15 days from receipt of the Resolution,

judgment or final order of the CTA En Banc

via a Petition under Rule 45 of the Revised

Rules of Court [Section 11, Republic Act

9282].

d-2. If a motion for reconsideration is filed, the 15-

day period is reckoned from denial of said

motion [Rule 45, Revised Rules of Court].

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Tax Remedies Ouline