TAXATION REVIEW INTRODUCTION AND TAX REMEDIES
Multiple Choice. Identify the letter of the choice that best completes the statement or answers the question.
1. Which of the following statements is most correct?
Statement 1. Internal revenue taxes shall be
assessed within three [3] years after the due date.
Statement 2. Internal revenue taxes shall be
assessed within three [3] years from the day the
return was filed. [A] Statement 1 only. [B]
Statement 2 only. [C] Both statements. [D] None of
the above.
2. A decedent dies on January 1, 2007. The estate tax
return is filed on September 1, 2007. When is the
last day to make a valid assessment? [A] April 15,
2008. [B] July 1, 2007. [C] July 1, 2010. [D]
September 1, 2010.
3. Where a return is filed, as a general rule, the
prescriptive period for assessment after the date
the return was due or was filed, whichever is later,
is within [A] Three years. [B] Five years. [C] Ten
years. [D] Fifteen years.
4. The Commissioner of Internal Revenue has the
authority to do all the following, except: [A]
Compromise the payment of any internal revenue
tax. [B] Cancel or abate tax liability. [C] Credit or
refund. [D] Review the decisions of the Court of Tax
Appeals.
5. The Commissioner of Internal Revenue cannot [A]
Abate or cancel tax liability. [B] Compromise the
payment of any internal revenue tax. [C] Credit or
refund taxes erroneously or illegally collected. [D]
Compromise criminal aspect of tax violations if
already filed in court.
6. Which of the following cases may not be
compromised? [A] Delinquent accounts. [B] Cases
under administrative protest after issuance of the
Final Notice of Assessment to the taxpayer still
pending in the BIR. [C] Civil taxes cases being
disputed. [D] Withholding tax cases where there is
not doubt on the taxpayer’s obligation to withhold.
7. Which of the following statements is most correct?
Statement 1. Compromise may be entered into
based on the doubtful validity of the assessment.
Statement 2. Compromise may be entered into
based on financial incapacity. [A] Statement 1 only.
[B] Statement 2 only. [C] Both statements. [D] None
of the above.
8. Which of the following statements is most correct?
Statement 1. The Commissioner of Internal Revenue
has the sole authority to abate or cancel tax,
penalties and/or interest. Statement 2. The
application for abatement or cancellation of tax,
penalties and/or interest should be acted upon by
the processing office within five [5] days from
receipt by said office, and the BIR National Office
has thirty [30] days within which to act on the case.
[A] Statement 1 only. [B] Statement 2 only. [C] Both
statements. [D] None of the above.
9. The seizure by the Government of personal
property to enforce payment of taxes followed by a
public sale, if taxes were not voluntary paid is
called: [A] Distraint. [B] Levy. [C] Forfeiture. [D] Lien.
10. A warrant of garnishment may be issued against the
taxpayer owing delinquent taxes on his [A] Real
June 2011
property. [B] Personal property. [C] Bank deposits.
[D] Property under custodia legis.
11. Mr. Noel Dagdag filed an income tax return for the
calendar year 2007 on March 10, 2008. The BIR
issued a deficiency assessment income tax on April
10, 2009, which has become final. When is the last
day for the BIR to collect? [A] April 15, 2014. [B]
April 15, 2011. [C] April 15, 2013. [D] March 10,
2011.
12. The income tax return for 1999 was filed on April
12, 2000. An assessment for deficiency tax was
made on October 1, 2002. A warrant of distraint
was issued on June 5, 2003. Statement 1. The
assessment was issued within the allowed period.
Statement 2. The warrant of distraint was issued
within the allowed period. Which of the aforesaid
statements is most correct? [A] Statement 1 only.
[B] Statement 2 only. [C] Both statements. [D] None
of the above.
13. A fraudulent return for 1999 income was filed on
April 15, 2000. The fraudulent return was
discovered on June 10, 2004. When would be the
last day to send valid assessment? [A] April 15,
2003. [B] June 10, 2014. [C] June 10, 2007. [D] April
15, 2015.
14. Using the same data in the immediately preceding
number, assuming that assessment was sent on July
22, 2010, when would be the last day to collect? [A]
July 22, 2013. [B] July 22, 2015. [C] April 15, 2015.
[D] Cannot be collected anymore.
15. Which of the following shall suspend the running of
the prescriptive period on the making of
assessment and the beginning of the distraint or
levy or a proceeding in court for collection, in
respect of any deficiency? Statement 1. When the
taxpayer requests for a reinvestigation, which is
granted by the Commissioner. Statement 2. 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. Statement 3. When the
warrant of distraint or levy is duly served upon the
taxpayer, his authorized representative, or a
member of his household with sufficient discretion,
and no property could be located. Statement 4.
When the taxpayer is out of the Philippines. [A]
Statements 1 and 2 only. [B] Statements 3 and 4
only. [C] All of the above. [D] None of the above.
16. A declaration of deficiency taxes issued to a
taxpayer who fails to respond to a Pre-Assessment
Notice within the prescribed period of time or
whose reply to the PAN was found to be without
merit. This shall inform the taxpayer of this fact,
and that the repot of investigation submitted by the
Revenue Officer conducting the audit shall be given
due course. [A] Notice of Informal Conference. [B]
Preliminary Assessment Notice. [C] Letter of
Authority. [D] Formal Assessment Notice.
17. An official document that empowers a Revenue
Officer to examine and scrutinize a taxpayer’s books
of accounts and accounting records, in order to
determine the taxpayer’s correct internal revenue
tax liabilities. [A] Notice of Informal Conference. [B]
 Preliminary Assessment Notice. [C] Letter of incapacity under the following situations, except
Authority. [D] Formal Assessment Notice. when [A] The taxpayer has tax credit certificate
18. A Preliminary Assessment Notice shall not be issued, on hand, or in transit. [B] The taxpayer is
required in the following cases, except: [A] When suffering from a net worth deficit. [C] The taxpayer
the finding for any deficiency tax is the result of has a pending claim for tax refund or tax credit,
mathematical error in the computation of the tax as with BIR, Department of Finance One-Stop Shop Tax
appearing on the face of the return. [B] When a Credit and Drawback Center and/or other courts.
discrepancy has been determined between the tax [D] The taxpayer has an existing finalized agreement
withheld and the amount actually remitted by the or prospect of future agreement with any party that
withholding agent. [C] When the taxpayer who resulted or could result to an increase in the equity
opted to claim a refund or tax credit of excess of the taxpayer at the time of the offer for
creditable tax for a taxable period was determined compromise or at a definite future time.
to have carried over and automatically applied the 25. Which of the following statements makes a formal
same amount claimed against the estimated tax assessment notice final? Statement 1. Relevant
liabilities for the taxable quarters of the succeeding supporting documents not submitted within sixty
taxable year. [D] When the taxpayer failed to pay [60] days from filing the protest. Statement 2. Not
the correct income tax. responded within thirty [30]days after receipt. [A]
19. Which of the following statements makes a formal Statement 1. [B] Statement 2. [C] Both statements.
assessment notice final? Statement 1. Relevant [D] None of the above.
supporting documents not submitted within sixty 26. A Notice for Informal Conference shall be
[60] days from filing the protest. Statement 2. Not responded to within [A] Fifteen [15] days after
responded within thirty [30] days after receipt. [A] receipt of the notice. [B] Thirty [30] days after the
Statement 1 only. [B] Statement 2 only. [C] Both receipt of the notice. [C] Two [2] months after the
statements. [D] None of the above. receipt of the notice. [D] Six [6] months after the
20. A taxpayer filed his income tax return for 2000 on receipt of the notice.
April 2001 and paid the tax of P12,000. Upon audit 27. A communication issued by the Regional
of the BIR, an assessment notice was issued on May Assessment Division, or any other concerned BIR
2, 2003 requiring the taxpayer to pay a deficiency Office, informing a taxpayer who has been audited
tax of P50,000 not later than July 15, 2003. The of the findings of the Revenue Officer, following the
taxpayer may [A] Go to the Supreme Court if the review of these findings. [A] Notice of Informal
issues involved are pure question of law. [B] Ignore Conference. [B] Preliminary Assessment Notice. [C]
the assessment at the date of collection is beyond Letter of Authority. [D] Formal Assessment Notice.
three [3] years as the taxable year covers 2000. [C] 28. The following remedies are available the
Request for an extension of time to pay the Government to collect taxes, except: [A] Distraint
deficiency income tax. [D] Go to the Court of Tax and levy. [B] Inquiring into bank deposit accounts of
Appeals to appeal the assessment made by the BIR. taxpayers. [C] Entering into compromise of tax
21. The following administrative remedies available to a cases. [D] Enforce of forfeiture of property.
taxpayer in connection with collection of taxes,
except: [A] Filing of claim for tax refund or credit.
[B] Filing of petition for reconsideration or
reinvestigation. [C] Filing of criminal complaint
against erring BIR officials or employees. [D]
Entering into a compromise.
22. For cases involving financial incapacity, which of the
following is not subject to 10% compromise rate
based on the basic assessed tax? [A] Taxpayer is an
individual whose sole source of income is from
employment, and whose monthly salary is P10,500
or less, if single, or P21,000 or less, if married. [B]
Taxpayer is an individual without any source of
income. [C] Taxpayer has a zero net worth or
negative net worth. [D] Taxpayer is suffering from
surplus or earning deficit resulting in impairment in
the original capital by at least 50%.
23. For cases involving financial incapacity, which of the
following is not subject to 20% compromise rate
based on the basic assessed tax? [A] Dissolved
corporation. [B] Already non-operating companies
for a period of less than 3 years. [C] Already non-
operating companies for 3 years or more as of the
date of application for compromise settlement. [D]
Taxpayer is declared insolvent or bankrupt.
24. The Commissioner shall not consider any offer for
compromise settlement on the ground of financial