TAX REMEDIES
Assessment Notice
Definition
•
•
Method by which a cause of action can
be enforced by law or equity
• Procedure which may be availed of as
the means to obtain the relief desired.
Importance
•
•
Enhance and support the government’s
tax collection
Safeguards taxpayer’s rights against
arbitrary action
TAX
GOVERNMENT REMEDIES
TAXPAYER
1. Assessment
Before Payment:
2. Collection
1. Administrative
A. Summary
Remedies
Proceedings
a. Protect
Against
1. Distraint,
Assessment
Levy,
b. Enter into
Garnishment
2. Tax Lien
Compromise
3. Forfeiture
2. Judicial Remedies
4. Compromis
a. Appeal to CTA
b. Payment
Appeal to SC
After
e and
a. Claim Tax Credit
Abatement
b. Claim Tax Refund
5. Suspension
of Business
Operations
6. Informer’s
Reward
7. Surcharges
and
Penalties
B. Judicial
Proceedings
1. Civil Action
2. Criminal
TAX ASSESSMENT
Action
Definition
•
Finding by the taxing authority that
taxpayer has not paid the correct taxes
Formal demand sent to the taxpayer
requiring payment within a specified time
of the tax due including interest and civil
penalties
Power to Assess
•
•
•
•
Vested with the Commissioner of
Internal Revenue
Presumed correct
Burden of proof to show incorrectness
or inaccuracy lies on the taxpayer
Unless rebutted, all presumptions generally
in favor of the correctness by CIR against
taxpayer
NATURE
 Self Assessment process
TAXPAYER
1. Self-assessment by taxpayer
2. Filing of tax return
3. Payment of tax shown on tax
return GOVERNMENT
4. Issuance of proper notice
5. Enforcement/ demand for payment
REQUISITES OF A VALID ASSESSMENT
1. Pre-assessment notice sent to taxpayer
2. In writing
3. Must state the facts and law upon which
it is based
4. Made within the prescribed period
WHEN ASSESSMENT REQUIRED
Tax period is terminated




Failure to file or fraudulent return filed
Deficiency tax liability arise from tax
audit
Tax lien
Dissolving corporation
TERMINATION OF TAX PERIOD
1. Retiring from business
2. Leaving the territorial jurisdiction of
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With Prior
Assessment
a.
b.
c.
a.
b.
c.
return
Return
filed not
false or
fraudulent
.
Return
filed,
deficiency
exist
Return
filed, no
payment
made
Failure/
Falsify/
Fraudulent
Intentional
failure to
file
False
return
Fraudulent
3 years from
date of actual
filing. Or from
last day fixed
by law for
filing return
Without
Prior
Assessment
3 years from
date of actual
filing. Or from
last day fixed
by law for
filing return
COLLECTION:
Within 5 years
from the date
of assessment
10 years from
discovery of
omission or
failure, falsity
or fraud
Taxes may be
collected
even without
prior
assessment.
COLLECTION:
5 years from
date of
PRESCRIPTIVE
PERIOD: 10
years from
assessment
discovery of
failure or
omission,
falsity or
fraud
SUSPENSION OF PRESCRIPTIVE PERIOD
Grounds for Suspension
1.
2.
No property could be allocated
Agreement between the BIR and the taxpayer
pending negotiation
3. BIR is prohibited from a distraint or levy
of real property
4. If the taxpayer is out of the Philippines
5. Address of the taxpayer cannot be located
6. Filing of an answer to the petition for
review executed by a taxpayer with the CTA
7. Request for reinvestigation has been granted
by the BIR.
KINDS OF ASSESSMENT AND COLLECTION
1. Normal or Ordinary Assessment and
Collection
- A return was filed by a taxpayer
- Not false or fraudulent
2. Abnormal or Extraordinary Assessment
and Collection
- Failure to return
- Filed a false or fraudulent return
3.
4.
5.
6.
the Philippines
Removing property from the Philippines
Deliberately concealing property
Obstruction of the proceedings on
tax collection
PRESCRIPTIVE PERIOD
TAX DEEMED COLLECTED
1. By summary remedies
- When the government avails of the summary
method of distraint and levy procedure
2. By judicial remedies
- By filing a complaint through the proper court
COMPROMISE
Definition
•
A contract whereby the parties, by reciprocal
concessions, avoid litigation or put an end to
one already commenced.
Requisites
 Taxpayer has a tax liability
 There must be an offer
 There must be an acceptance
BASIS OF COMPROMISE
Acceptance of Compromise Settlement:
1. Doubtful validity of the assessment
MINIMUM COMPROMISE RATE:
 40% of basic tax assessed
Financial Incapacity
MINIMUM COMPROMISE RATE:
2.

10%/ 20%/ 40% of basic tax assessed
MINIMUM PERCENTAGE OF
COMPROMISE
10% of Basic Assessed Tax
1.
2.
3.
4.
Taxpayer with zero net worth
Taxpayer with negative net worth
Individual without any source of income
Non-operating companies for a period of 3
years or more as of date of application for
compromise settlement
5. Individuals whose only source is from
employment and no leviable/
distrainable assets other than family
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20% of Basic Assessed Tax
1.
2.
3.
Dissolved corporations
Non-operating companies for a period of less
than 3 years
Declared insolvent, bankrupt
40% of Basic Assessed Tax
-
Suffering from surplus or earnings deficit
resulting to impairment in the original
capital by at least 50%
GROUNDS FOR NON-COMPROMISE UNDER
FINANCIAL INCAPACITY
1.
2.
3.
4.
Taxpayer with TCC (Tax Credit Certificate)
issued, on hand or in transit
Taxpayer with pending claim for tax refund or
tax credit
Taxpayer does not waive in writing his
privilege of the secrecy of bank deposits
Taxpayer with existing or prospect of future
agreement with any party that could result to an
increase in the equity
APPROVAL OF OFFER TO COMPROMISE
Majority of All Members of NEB (National
Evaluation Board)
-
Within the jurisdiction of the National Office
Composed of Commissioner and 6 Deputy
Commissioners
- Less than prescribed minimum percentage
Regional Evaluation Board
-
Involving basic deficiency taxes of P500T or
less
- Minor crominal violations discovered by the
Regional and District Offices
Concurrence of the Commissioner
ALL decisions of NEB granting the request or favorable
to the taxpayer
CASES NOT SUBJECT TO COMPROMISE
1.
2.
3.
4.
5.
6.
7.
Withholding tax cases
Criminal tax fraud cases
Criminal violations already filed in court
Delinquent accounts with duly approved
schedule of installment payment
Cases where final reports of reinvestigation or
reconsideration have been issued
Estate tax cases on ground of financial
incapacity
Cases which become final and executory after
final judgment of a court
COMPROMISE IN CRIMINAL VIOLATIONS
General Rule
 Criminal violations may be
compromise
Exceptions


Those already filed in court
Those involving fraud
COMPROMISE
Involves a reduction
of tax liability
Officer authorized:
CIR, NEB and REB
Grounds
1. Doubtful validity
2. Financial
incapacity
ABATEMENT
Involves cancellation
of entire tax liability
Officer authorized:
CIR
Grounds
1. Unjustly or
excessively
assessed
2. Admin and
collection costs do
not justify
collection of
amount due