5th Authority to terminate taxable period

GR: Prescriptive periods are prescribe by the BIR

Assessment:3 years from the date of filing, either actual filing date or last day of filing
Consequence:Failure to follow prescriptive periods the effect would be that BIR can no longer
issue deficiency assessment against the taxpayer
Exception: when prescriptive periods is terminated
LR-RA (Lahi Ra!)
L= Intending to Leave the philippines
R = Retiring from business
R = Remove/hide/conceal his properties in the Philippines
A =Peformingan Act tending to obstruct the proceedings for collection of the tax for past or
current quarter or year or to render the same ineffective (totally or partially)
Sir: These acts make it impossible for the BIR to timely assess and collect.
6thPrescribe real property values Zonal Valuation
Fair Market Value by the assessor or by the BIR
Purpose: For taxation purposes, in which the property will be based at whichever is higher, FMV by the
assessor or FMV by the BIR
7th Inquire into bank deposit
GR: Bank Secrecy Law
Exception:
1. To inquire into bank deposits of a decedent for purpose of determining his gross estate,
determining the correct estate tax due to the government
2. In an application for compromise of tax liability due to the incapacity to pay tax liability
3. Exchange of information by the BIR on tax matters pursuant to internationally-agreed
standards
a. RA10021
b. FATCA
Ra10021
Conditions:
1.
2.
3.
4.
5.
6.

7.

The identity of the person under examination or investigation;

A statement of the information being sought including its nature and the form in which the said
foreign tax authority prefers to receive the information from the Commissioner;
The tax purpose for which the information is being sought;
Grounds for believing that the information requested is held in the Philippines or is in the
possession or control of a person within the jurisdiction of the Philippines;
To the extent known, the name and address if any person believed to be in possession of the
requested information;
A statement that the request is in conformity with the law and administrative practices of the
said foreign tax authority, such that if the requested information was within the jurisdiction of
the said foreign tax authority then it would be able to obtain the information under its law or in
the normal course of administrative practice and that it is conformity with a convention or
international agreement; and
A statement that the requesting foreign tax authority has exhausted all means available in its
own territory to obtain the information, except those that would give rise to disproportionate
difficulties.

Sir: The most important condition is the last one in relation to the exhaustion of remedies. This law
amended sec 6 of the tax code. Remember, the requesting party is the FTA (foreign tax authority) and
the requested party is the PTA (Philippine Tax Authority)
FATCA (Foreign account tax compliance act)
In 2010, US law requiring financial institution to provide information of citizens who are hiding properties
or money outside the USA. Now, Philippines is now covered because it was ratified by secretary
purisima last July 2015
Philipines obligation is to give a report on suspicious deposit of US any citizen, the report should not be
given directly to the IRS (Internal Revenue System) but first with the Philippines government then go to
US government (IRS).
8th authority to accredit tax agents
Sir: talking about tax agents we are referring to, usually are the bookkeepers or the accountants who
files the returns in behalf of the client. The agents should be duly accredit by the BIR, but insofar as a
BAR passer
9th prescribe additional procedural or documentary requirements
Does the CIR have the power to prescribe penalties for violationof the regulation?
No. it is the SOF who issues the revenue regulations, ergo, it is the SOF who may prescribe the
penalties, the CIR can at most RECOMMEND such
Sir: Cir should not expand the law by prescribing penalties.
10th authority of the Commissioner to delegate power
Exception: non-delegateble power (RICA)
a.
b.
c.

Power to Recommend the promulgation of rules and regulations by the Sec. of Finance
Power to Issue rulings of first impression or to reverse, revoke, modify any existing ruling
Power to Compromise or abate any tax liability, except assessments issued by the regional
offices involving basic deficiency
d. Power to Assign or reassign internal revenue officers to establishments where articles subject
to excise tax are produced or kept
Sir: what is the difference between compromise and abate class, kungmoingonkag compromise it would
REDUCE the amount while abate kay the BIR forgo the the collection from the taxpayer.
Exception to the exception:
1. those involving basic deficiency amounting to P500,000 or less
2. Minor criminal violations.
Sir: Regional Evaluation Board is the one who can enter compromise in relation to Minor criminal
violations
11th authority to make arrests and seizures
Responsible officers: CIR, Deputy commissioners, Regional Directors, RDO and other revenue officers
Reason of the arrest/seizures: violation of penal laws and rules or regulations administered by the BIR
Proceedings: Before a competent court, to be dealt with according to law
Sir: but keep in mind, usually imprisonment not the main penalty in tax laws but more on interests and
surcharges. Can a BIR officer arrest you immediately? Yes in cases of plain view doctrine. You
committed the crime in front of the officer.
12th Authority to assign internal revenue officers
1. Those involved in excise tax functions
a. Limitation up to two years
2. Assignment to other special duties

a.

Limitation
i. Internal revenue officers assigned to perform assessment or collection
functions shall no remain in the same assignment for more the 3 years
ii. Assignment to special duties shall not exceed one (1) year
Sir: this is to avoid familiarization with the functions and the office.
13th authority to impost duties on certain officer
Unless there is a certification(CAR):
-register of deeds - no registration of transfer in the registry of property transferring real rights or any
chattel mortgage
Atty.A:
As a rule the register of deeds is obliged not to register the transfer unless there is a certificate
authorizing registration
-debts of the deceased shall not pay to the administrator, heirs, legatee, executor, administrator, etc.
Atty.A:
In estate taxation, If you are the debtor you have the duty to make sure there have been payment of the
estate tax
-bank shall not allow withdrawal
Atty.A:
The bank has the duty not to allow withdrawal unless there is proper certification in relation to the bank
account of the decedent except up to 20k for administration purposes.
-lawyer, notary public, or any govt. officer must furnish copies with the BIR
Atty. A:
They are obliged to furnish copies to the BIR or the documents being notarized but in practice notary
publics do not actually send reports to the BIR but usually send reports to the RTC.
14thAuthority to suspend business operation of the taxpayer
RMO 3-2009 - OplanKandado. The closure of the business shall last for a period of no less than 5 days
and shall be in force until the violation is rectified.
Atty. A:
Pertains to business tax. Usually to Vat registered tax payers that:
fail to issue official reciept or invoices,
fail to file their vat returns,
gulty of understating their taxable sales or reciepts by 30% or more,
even not vat registered but already mandated to register under vat.
RATE - Run Against Tax Evaders
Atty. A:

The authority of the other BIR officials emanates from the autority of the CIR which are just delegated to
them. So if you question the authority of these officers you try to question also whether the CIR has
authority to perform that particular function

4 deputy Commissioners plus 2

1.operations group
2.legal and inspection group
3.resource management group
4.information systems group
PLUS 2 deputy for newly created positions
5.tax reform administrative group
6.special concerns group
Att. A:
The tax code mentions about 4 deputy commissioner but there has been an amendment to the addition
of two positions.

Field Service--Regional offices(headed by the regional director)

Powers and duties of the regional director(Sec.10,NIRC)
1.Implementlaws,policies,plans,programs,rules and regulations of the department or agencies in the
regional area
2.administer and enforce internal revenue laws, and rules and regulations, including the assessment
and collection of all internal revenue taxes, charges and fees
3.Issues letters of authority(LOA) for the examination of taxpayers within the region
Atty. A:
LOA may be issued by the CIR if the examination is being undertaken by the national office. If
undertaken by the regional district officers then LOA is issued by the regional director.
4. Provides economical, efficient and effective service to the people in the area
5.Coordinates with the local Governments in the area
6.Coordinates with other regional offices or other departments, bureaus and agencies in the area
7. Exercises control and supervision over the officers and employees within the region
8. performs such other functions as may be provided under the law and as may be delegated by the
CIR
Atty. A:
Regional director is the supervisor of the revenue district officers within the region. The regional director
may decide on assessments.

Revenue district officers - implement programs, methods, and procedures necessary for the efficient,
effective and economical assessment and collection of internal revenue taxes in the revenue district

Compositions of RDOs:
A. Field men and examiners
B. Collection agents and clerks
ATTy. A.:
Assessment and collection is stated repeatedly because it is the main function of the BIR

What are the duties and functions of revenue district officers and other internal revenue officers?
Authority of revenue officers(Assessors/examiners) to:
1.Examine taxpayers within the jurisdiction of the district in order to collect the correct amount of tax
2.Recommend the assessment of any deficiency tax.
pursuant to a LOA issued by the Regional Director

-fine
-penalty
-etc.
Judicial
-filing a civil case
-Filing a criminal case for tax evasion
Base on procedure
-Through assessment and collection(usual)
-collection only(unusual)
atty. A:
BIR does not anymore assess it because probably it is already provided under the law.

Presrciptive period for assessment(sec.203.NIRC)

if the taxpayer filed a return, internal revenue taxes shall be assessed within 3 years after the last day
presricbed by law for the filing of return
Atty. A:
ex.1 Income tax return deadline is 15th day of fourth month(April 15), you filed it Jan. 5, when will the 3
year prescriptive period start to run? April or Jan.?
ANS: April 15th because the law states after the last day presrcibed by law
--------------------------------------------------------------------NIRC REMEDIES
-Remedies of the Govt.
Atty. A:
Two remedies in the NIRC.Remedies of the Govt. and Remedies of the tax payer. insofar as the
remedies of the govt. is concerned, the provisions exist to guide the govt. on how to properly assess
and collect tax and to guide the tax payer on how to question if there are arbritrary actions of the govt.
Basic remedies
-assessment
-collection
Nature
-administrative
-judicial
administrative
-lien
-defray
-levy
-forfieture
-compromise
-abatement

If a return is filed beyond the period prescribed by law, the 3 year period shall be counted from the day
the return was filed.
Atty. A:
ex.2 Income tax return deadline is 15th day of fourth month(April 15), you filed it July 5, when will the 3
year prescriptive period start to run? April or July?
ANS: July
Exception(sec.203,NIRC):
a.false return
b.fraudulent return with intent to evade tax
c.failure to file a return
Atty. A:
Intentional = fraudulent return
Negligence = false return

ASSESSMENT
General rule: taxes are self-assessing
Exceptions:(when there is a need for assessment)
1.tax period of a tax payer is terminated(sec. 60)
2.deficency tax liability arising from a tax audit by BIR(sec.56b)

3.tax lien(sec. 219)

4.Dissolving corporation(sec. 52c)

Without authority meaning the bir is given the authority to subject you to a particular tax, probably the
customs is the one that has authority, or you are exempted from a particular tax but the BIR has
assessed tax against you, then it is void

Principles Governing tax assessments

1.Presumed in favor of tax assessment
2.must be based on actual facts not on presumptions
3.discretionary upon the commissioner
Atty. A:
the commissioner cannot be compelled by mandamus to make an assessment or audit against a
person because it is not a ministerial duty rather it is discretionary upon the commissioner.
However, you can question the arbritrariness through filing a certiorari grounded on grave abused of
discretion.

By the BIR, with authority

-defeciency assessment
Atty. A:
tax computation by the BIR is way higher than the tax declared and paid by the taxpayer then the BIR
will issue a defeciency assessment

4.the authority to assess may be delegated

Atty. A:
Can be delegated to a position not lower than a division chief
5.must be directed to the right party
Atty. A:
the assessment must be duly served and recieved by the tax payer

Kinds of assessment
By the tax payer
-self assessment
By the BIR, without authority
-illegal and void assessment
Atty. A:

-erroneous assessment
Atty. A:
There is authority by the BIR but the BIR official commits an error in the computation in the amount
payable. you cannot file a case against the BIR official who committed an error because of the regularity
of duty(office) unless there is arbritrariness
-jeopardy assessment
-disputed assessment
atty. A:
usually starts in a deficiency assessment by the BIR but the taxpayer questions the propriety of the
assessment so it becomes a disputed assessment. The taxpayer either request for reconsideration or
reinvestigation.
Assessment process
Atty. A:
Assessment conducted by the BIR usually starts with the issuance of the letter of authority, may be
issued by the commissioner if the one who conducts the audit or investigation is the national office but if
it will be conducted by the revenue district officer, then LOA is issued by the regional director.
After the issuance of the LOA, assessment will be conducted.
If the BIR discovers defeciency, the BIR will inform the taxpayer through a written report.