REMEDIES OF THE TAXPAYER

1. Where the tax has not been paid

a. Dispute the assessment administratively- file with the BIR a request for reconsideration
of the assessment. If the BIR decides against the taxpayer, he may appeal to the Court of
Tax Appeals.

b. Appeal to the CTA- within 30 days from receipt of the decision of the CIR on the
disputed assessment, the taxpayer may appeal the decision to the CTA. Refunds for
internal revenue taxes, fees or other charges, penalties imposed in relation thereto are
also appealable to the CTA.

The appeal taken to the CTA shall not suspend the payment, levy, distraint and/or sale of
any property of the taxpayer for the satisfaction of his tax liability. However, if in the
opinion of the CTA the collection of the tax may jeopardize the interest of the government
or the taxpayer, the Court at any stage of the proceeding may suspend the collection of
tax and require the taxpayer to deposit the amount claimed, or file a surety bond for not
more than double the amount with the court.

c. Appeal to the Supreme Court.

2. Where the tax has been paid- Claim for a refund

Grounds for claiming refund or tax credit IMPT!!!!!!!!

a. the tax has been erroneously or illegally assessed or collected;
b. the penalty had been collected without authority
c. any sum which have been excessive or in any manner wrongfully collected
d. the tax was paid by mistake.

3. Action to contest forfeiture of chattel

4. Question the validity of the sale of property

5. Action against the revenue officers for damages cased in the performance of duties

6. Appeal the President of the Philippines, where the decision of the Commissioner of
Internal Revenue is a revocation of privilege.
Government Remedies

PRE-ASSESSMENT NOTICE impt!!!

A pre-assessment notice is served by the Government upon the taxpayer under any of
the following circumstances:
1. if the taxpayer fails to file a return where return is required;
2. if he files a return but fails to pay the tax;
3. if he files a return and pays the tax, but payment is insufficient because certain
deductions claimed are disallowed by the BIR.

After the taxpayers receipt of the pre-assessment notice, any of the following situations
can take place:
1. taxpayer accepts liability and pays the tax as appearing on the pre-assessment notice;
2. taxpayer disagrees with the pre-assessment notice and responds by explaining that he
is not liable;
3. taxpayer pays the tax and later on files a written claim for refund;
4. taxpayers enters into a compromise agreement with the BIR;
5. taxpayer ignores the pre-assessment notice.

The tax code states that the period to respond shall be prescribed by implementing rules
and regulations. If the taxpayer fails to respond within such period (30 days), a final
assessment shall issue.

ORDINARY PERIOD FOR ASSESSMENT

The right of the government to asses and later on to collect the tax is subject to
prescription, upon the lapse of which it can no longer exercise this right.

Section 203, of the tax code provides that internal revenue taxes shall be assessed within
3 years after the last day prescribed by law for the filing of the return. The same provision
of law lays down the rules as to when the 3 year prescriptive period for assessment
begins:

1. if the return is filed before the last day prescribed by law for the filing thereof, it shall
be considered as filed on the last day;
2. if the return is filed on the last day prescribed by law, then it is considered as filed on
such day;
3. if the return is filed beyond the period prescribed by law, the 3 year period shall be
counted from the day the return is filed.

So it is clear, that the reckoning point for the 3 year prescriptive period is flexible; if the
return is filed on or before the deadline, the reckoning point is the deadline; if filed
beyond the deadline, the reckoning point is the date the return is actually filed. The 3
year period for assessment begins to run from such a date.

FINAL ASSESSMENT...IMPT!
A final assessment issues:
1. if the taxpayer, having received a pre-assessment notice fails to respond within the
period provided for by the rules and regulations;
2. under the 5 circumstances enumerated under section 228 of the tax code where pre-
assessment notice is not necessary

Section 228. enumerates the exceptional circumstances where a pre-assessment notice is

not necessary: IMPT!!!

1. when the finding for any deficiency tax is the result of mathematical error in the
computation of the tax as appearing on the face of the return;
2. when a discrepancy has been determined between the tax withheld and the amount
actually remitted by the withholding agent; or
3. when a taxpayer who opted to claim a refund or tax credit of excess creditable
withholding tax for a taxable period was determined to have carried over and
automatically applied the same amount claimed against the estimated tax liabilities for
the taxable quarter or quarters of the succeeding taxable year;
4. when the excise tax due on excisable articles has not been paid, or
5. when an article locally purchased or imported by an exempt person, such as, but not
limited to, vehicles, capital equipment, machineries and spare parts, has been sold,
traded, or transferred to non-exempt persons.

Under the foregoing circumstances, the taxpayer shall immediately receive a final
assessment without the benefit of pre-assessment notice.

REMEDIES AVAILABLE TO THE GOVERNMENT IN THE COLLECTION OF THE INCOME

TAX...VERY IMPT!!

1. ADMINISTRATIVE
a. Distraint of personal property;
b. Levy of personal property
c. Enforcement of forfeiture of property
d. Enforcement of tax lien
e. Requiring the filing of bonds
f. Requiring proof of filing income tax returns
g. Deportation of aliens
h. Inspection of books of accounts.

2. JUDICIAL
a. ordinary civil action
b. criminal action

DISTRAINT- seizure by the government of personal property, tangible or intangible, to

enforce the payment of taxes to be followed by its public sale if the taxes are not
voluntarily paid.
Kinds of Distraint
a. Actual- there is taking of possession of the personal property out of the taxpayer into
that of the government;
b. Constructive- the owner is merely prohibited from disposing of his property.

LEVY- A summary administrative remedy, seizure of real property to enforce payment of

taxes.

A written notice of levy, containing a description of the property upon which levy is made,
the name of the taxpayer and the amounts of the tax and penalty due from them is
served upon the taxpayer.

FORFEITURE- a divestiture of property without compensation, in consequence of a default

or offense. In case of chattels and removal of fixtures of any sort, forfeiture is enforced by
seizure and sale or destruction of the specific forfeited property. The forfeiture of real
property is enforced by a judgment of condemnation and sale in a legal action or
proceeding, civil or criminal, as the case may require.

TAX LIEN- a legal claim or charge on property either real or personal established by law as
a security in default of the payment of taxes. The tax, together with interest, penalties
and cost that may accrue in addition thereto is a lien upon all property and rights to
property belonging to the taxpayer. The lien however, shall not be valid against any
mortgagee, purchaser or judgment creditor until legal notice of such liens should be filed
by the Commissioner of internal revenue in the Office of the Register of Deeds of the
province or city where the property of the taxpayer is located. The lien attaches when the
taxpayer neglects or refuses to pay the tax after demand, but relates back from the time
when assessment was made by the Commissioner.

REQUIRING THE FILING OF BONDS- Filing of performance bond to secure the payment of
taxes or compliance with certain provisions of tax laws and regulations. This may be
required by the BIR for the issuance of a tax clearance.

REQUIRING PROOF OF FILING INCOME TAX RETURNS. Before a license to engage in

trade or business or occupation or to practice a profession can be issued to a person,
partnership, association or corporation, he must submit to the officer issuing such license
or permit, proof that he has filed his income tax return during the preceding year and that
income taxes due have been paid thereon.

DEPORTATION OF ALIENS- any alien who

1. knowingly and fraudulently evades the payment of any internal revenue tax or
2. willfully refuses to pay such tax and its accessory penalties after the decision on the
tax liability rendered by the Commissioner of Internal Revenue, or the CTA or any
competent judicial tribunal shall have become final and executor, is subject to
deportation. The penalty of deportation is not a bar to any proceeding taken by the
government to enforce collection of tax delinquency.
INSPECTION OF BOOKS OF ACCOUNTS

JUDICIAL ACTION
1. Civil Action- After the assessment made by the Commissioner of Internal Revenue has
become final and executory for failure of the taxpayer to dispute the same and appeal
the disputed assessment to the Court of Tax Appeals, the government may institute civil
actions to collect internal revenue taxes in the Regional Trial Court and the Metropolitan
Trial Court, City and municipal courts.

2. Criminal Action- maybe pursued by the authorities for the collection of delinquent
taxes. An assessment of a tax deficiency is not necessary to a criminal prosecution for tax
evasion. The crime is complete when the violator has knowingly and willfully filed a
fraudulent return or neglected to file a return with intent to evade the tax. If the taxpayer
is acquitted, the government may still collect the tax in a civil action, because the
payment of a tax is an obligation imposed by statute and does not arise from a criminal
act.

Prescriptive period for collection.

Where an assessment was made, the period for collection by judicial action or by distraint
or levy is within 3 years after the date of assessment. Where no assessment was made
and a return was filed, and the same is not false or fraudulent, the period for collection by
a proceeding in court is within 3 years after the return was due or filed whichever is later,
except:

Where a return required to be filed was not filed, or even if filed the same is false or
fraudulent, and made with the intent to evade the tax, the period is ten years after
discovery of the omission to file the return or from the discovery of the falsity or fraud.
The other exception relative to the prescriptive periods for assessment are also
applicable.

Where the government makes another assessment on the basis of a reinvestigation

requested by the taxpayer, or a revised assessment because of an amended return or as
a result of a reinvestigation asked for by the taxpayer, the period is counted from the last
assessment or the last revised assessment.

Where the action is brought to enforce a compromise agreement into between the
commissioner and the taxpayer, the prescriptive period is ten years from the time the
cause of action accrues as fixed in the civil code.

The running of the statute of limitation on the making of an assessment, the beginning of
distraint or levy or any proceeding in court for collection is suspended: IMPT!!!!!

1. for the period during which the Commissioner of Internal Revenue is prohibited from
making tax assessment or beginning the distraint or levy or any proceeding in court and
for sixty days thereafter;

2. when the taxpayer requests for a reinvestigation which is granted by the

commissioner;

3. when the taxpayer cannot be located in the address given by him in the return filed
upon which a tax is being assessed or collected, unless the taxpayer informs the
Commissioner of any change in address;

4. when the warrant of distraint and levy is duly served upon the taxpayer, his authorized
representative, or with a member of his household with sufficient discretion and no
property could be located; and

5. When the taxpayer is out of the Philippines.