m Bureau of Internal Revenue Officials ² are charged

with the assessment & collection of all national internal

revenue taxes, fees & charges, including penalties & fines
for the violations of certain provisions of the 2005
National Internal Revenue Code (Tax Code) & special laws
administered by the BIR.
m Remedy ² a method by which a cause of action can be
enforced by law or equity. It is the procedure or type of
action which may be availed of by the plaintiff as the
means to obtain the relief desired.
. Commissioner of Customs & his subordinates ²
collection of VAT & excise tax on imported goods.
2. Head of appropriate government office & his
subordinates ² collection of energy tax.
3. Authorized agent banks ² receipt of payments of
internal revenue taxes authorized to be made
trough banks.
. Summary ² at the administrative level that are
executed without delay.
2. Substantive ² provide for by the law.
3. Procedural ² involving law of pleading, evidence,
jurisdiction, etc.
4. Administrative ² at the administrative (BIR) level.
5. Judicial ² enforced through judicial action, which
may be civil or criminal.
Senior Administrative Authority 2

  

 


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Imposition of Withholding Tax on Certain Income
Payments
mSecretary of Finance may, upon the recommendation of the
Commissioner, require the withholding of a tax on the items
of income payable to natural or juridical persons, residing in
the Philippines, by payor-corporation/persons as provided for
by law, at the rate of not less than  percent ( ) but not
more than thirty-two (32 ) thereof, which shall be credited
against the income tax liability of the tax payer for the
taxable year (Sec. 57[B], NIRC).
m Secretary of Finance ² promulgate all needed rules &
regulations for the effective enforcement of the provisions of
the Tax Code.
m Rules & regulations of BIR ² shall contain provisions
specifying, prescribing or defining the time & manner of
canvassing the revenue regions, forms of labels, conditions to
be observed by revenue officers respecting the institutions &
conduct of legal actions.
m Administrative agencies are clothed with rule-making
powers because the lawmaking body finds it impracticable to
anticipate & provide for the multifarious & complex
situations & difficulties in administering the law.
m The grant of the rule-making power to administrative
agencies is a relaxation of the principle of separation of
powers & is the exception to the non-delegation of legislative
powers.
m Regulation should be germane to the objects & purposes &
conform to the standards prescribed by law.
m Regulations promulgated by authority of law which
are not in conflict with the statue are binding upon
everyone falling under their provisions.
m Regulations have the force & effect of law,
whenever they are found to be in consonance & in
harmony with the general purpose & objects of the
law.
m (istinction of Administrative Issuances According to
Nature & Substance:
. Legislative rule ² designed to implement a primary
legislation by providing the details.
2. Interpretative rule ² provide guidelines on the law
which the administrative body is in charge of
enforcing.
m Any person who, being duly summoned to appear to
testify, or to appear & produce books of accounts,
records, memoranda or other papers, or to furnish
information as required under pertinent provisions of
the Tax Code, neglects to appear or to produce such
books of accounts, records, memoranda or other papers,
or to furnish such information, shall, upon conviction,
be punished (Sec. 266, NIRC).
m Any declaration, return & other statements required
under the Tax Code, shall in lieu of an oath, contain a
written statement that they are made under the
penalties of perjury. Any person who wilfully files a
declaration, return or statement containing information
which is not true & correct as every material matters
shall, upon conviction, be subject to penalties
prescribed for perjury under the Revised Penal Code
(Sec. 267, NIRC).
m The law concedes to administrative bodies the
authority to act on & decide claims & applications in
accordance with their judgment, in the exercise of
their adjudicatory capacity. Because of their acquired
expertise, the findings of these administrative bodies
merit only not great weight but also respect & finality.
Where there as been failure to interpret & apply the
statutory provisions in question, judicial power should
assert itself.
m Re-enactment of statute substantially unchanged is
persuasive indication of the adoption by the Congress
of a prior executive construction. It applies with more
cogency in a case where what is involved is not a
mere opinion of the Commissioner of Internal Revenue
or ruling rendered on a mere query, but a Revenue
Memorandum Circular issued to ´all internal revenue
officialsµ by the Commissioner.
m The power to tax is considered the strongest of all
powers of the government. It is described as unlimited,
plenary, comprehensive & supreme, in the absence of
constitutional restrictions, the principal check on its
abuse resting in the responsibility of the Congress to
their constituents. Because taxes are the lifeblood of
the nation & their prompt collection is an imperious
need, the BIR has been given the powers to assess and
collect national internal revenue taxes.
m Assess ² to impose tax; to declare a tax to be
payable; to apportion a tax to be paid or contributed, to
fix a rate; to fix or settle a sum to be paid by way of
tax; to set, fix or charge a certain sum to taxpayer; to
settle determine or fix the amount of tax to be paid.
m Presumption of Correctness ² the assessment made
by the Commissioner & his authorized agents are
presumed correct. The burden of proof to show the
incorrectness of such assessment lies on the taxpayer.
m Factual Basis ² there is question of fact when doubt or
difference arises as to the truth or falsehood of the alleged facts.
example: representation expenses are not
substantiated by receipts
m Legal Basis ² there is question of law when the doubt or
difference arises as to what the law is on a certain state of
facts.
example: gross income for purposes of computing the minimum
corporate income tax does not include miscellaneous
or incidental income
m Assessment process starts with the self-assessment
by the taxpayer of his tax liability, the filing of the
tax return, & the payment of the entire tax due.

m Role of the Government in the Assessment Process:

. Examination of books of accounts & other
accounting records of taxpayers by revenue
officers to determine correct tax liability.
m(
   

  ² When a
report required by law shall not be forthcoming within the time
fixed by laws or rules & regulations, or when there is reason to
believe that any such report is false, incomplete or erroneous,
the Commissioner shall assess the proper tax on the best
evidence obtainable. In case a person fails to file a required
return or other document at the time prescribed by law, or
willfully or otherwise files a false or fraudulent return or other
document, the Commissioner shall make or amend the return
from his knowledge & from such information as he can obtain
through the testimony or otherwise, which shall be prima facie
correct & sufficient for all legal purposes (Sec 6[B], NIRC).
2. Preparation of tentative findings & holding of informal
conferences ² the revenue officer will render a written report,
stating therein whether or not the factual & legal basis of his
findings & whether or not the taxpayer agrees with his findings.
Taxpayer not amenable informed in writing by the
Revenue (istrict Officer or the Chief of (ivision for informal
conference taxpayer may respond within 5 days from
receipt of notice if he failed to respond, he shall be
considered in default Revenue (istrict Officer or the
Chief of the (ivision shall endorse the case to the Assessment
(ivision of the Revenue Regional Office or his duly authorized
representative issuance of deficiency tax assessment.

 
  ² The error made by a tax official
in the assessment of his tax liabilities does not have the
effect of relieving the taxpayer from the obligation to pay the
full amount of his tax liability, for taxes are fixed by law &
the government is never estopped to collect the legitimate
taxes because of the errors committed by its agents. Any
mistakes committed by the agents of the sovereign, namely:
government officials & employees, are their own & cannot bind
the government, which cannot be placed in estoppel on
account of the mistakes of its agents.
3. Issuance of Preliminary Assessment Process (PAN) ² sent to
the taxpayer by registered mail showing in the facts of the
law, rules & regulations, or jurisprudence on which the
proposed assessment is based. If the taxpayer fails to respond
within 5 days from the date of receipt of the PAN, he shall
be considered in default, in which case a formal letter of
demand & assessment notice shall be caused to be issued by
said office, calling for payment of the taxpayer·s deficiency
tax liability, inclusive of the applicable penalties.
4. Reply ² He is given 5 days from the date of the receipt of the
PAN to make his reply. Failure to make a reply to a PAN makes
the taxpayer in default & authorizes the revenue official to issue
the FAN. Filing of a reply to PAN is directory on the part of the
taxpayer.
Protest ² taxpayer is given 30 days from the date of the
receipt to file his protest against the FAN. It is usually sufficient
& comprehensive to explain the legal basis why the assessment is
incorrect. Failure to file a timely protest makes the formal
assessment notice final & executory, & the taxpayer loses his right
to contest the assessment, at the administrative & judicial levels,
even if such assessment is weak or has no legal basis. Filing of
protest against an assessment is mandatory.
5. Issuance of Formal Assessment Notice (FAN) & Letter
of (emand ² issued by the Commissioner or his duly
authorized representative. The letter of demand shall
state the facts, the law, rules & regulations, or
jurisprudence on which he assessment is based;
otherwise they are void. The FAN & letter of demand
are sent together to the taxpayer by registered mail or
personal delivery. It is through a detailed appraisal of
its basis that the taxpayer may be able to dispute the
imposition or agrees with it.
m (elinquency tax ² a taxpayer is considered
delinquent when (a) the self-assessed tax per
return filed by the tax payer on the prescribed
date was not paid at all or was only partially
paid or; (b) the deficiency tax assessed by the
BIR became final & executory.
m (eficiency tax ² means () the amount by which
the tax imposed by law as determined by the
Commissioner or his authorized representative
exceeds the amount shown as the tax by the
taxpayer upon his return or; (2) if no amount is
shown as the tax by the taxpayer upon his return,
or if no return is made by the taxpayer, then the
amount by which the tax is determined by the
Commissioner or his authorized representative
exceeds the amount previously assessed (or collected
without assessment) as a deficiency.
. Issuance of the warrant of distraint & levy, and/or
judicial action ² for immediate collection.
2. Filing of civil action for the collection of delinquent
tax in the ordinary court.
3. Imposition of 25 surcharge, interest, & compromise
penalty.
. Administrative and/or judicial remedies & the process of
filing the protest & denial of such protest.
2. Filing of civil action at the ordinary court for the
collection of deficiency tax during the pendency of the
protest may be the subject of a motion to dismiss.
3. Petition for review filed by the taxpayer with the CTA
within the 30-day period prescribed by R.A. 25 as
amended to toll the running of prescriptive period.
4. Interest & compromise penalty.
m known as the ´30-day periodµ.
m Taxpayer shall state the facts, applicable law,
rules on regulations, or jurisprudence on which
his protest is based; otherwise, his protest shall
be considered void & without force & effect.
m åndisputed issue/s ² refers to several issues
involved in the disputed assessment & the
taxpayer fails to state the facts, applicable law,
rules & regulations, or jurisprudence in support
of his protest against some of the several issues
on which the assessment is based.
m Taxpayer is required to pay the deficiency tax
or taxes attributable to the undisputed issues
(Sec. 3..5, Rev. Regs. No. 2-99).
m No action shall be taken on the disputed issue
until the taxpayer has paid the deficiency tax
inclusive of the surcharge & or interest/s.
m Taxpayer is required to pay the deficiency tax or taxes
attributable to the undisputed issues.
m No action shall be taken on the disputed issue until
the taxpayer has paid the deficiency tax inclusive of the
surcharge & or interest/s.
m If the taxpayer fails to file a valid protest against the
formal letter of demand & assessment notice within 30
days from the receipt thereof, the assessment shall
become final, executory & demandable.
m known as the ´60-day periodµ ² taxpayer shall submit
the required documents in support of his protest within
60 days from the date of filing of his letter of protest,
otherwise the assessment shall become final, executory &
demandable.
m If the protest is denied, in whole or in part, by the
Commissioner, the taxpayer may appeal to the Court of
Tax Appeals within 30 days from the receipt of the said
decision, otherwise, the assessment shall become final,
executory & demandable (Sec. 228, NIRC).
mCounting of the 80-day period will start to
run from the filing of the protest letter, & if the
respondent failed to render his decision within
80 days from the filing of his protest letter,
petitioner has 30 days therefrom to file an
appeal with the CTA.
m Commissioner or his authorized representative shall
state the facts, applicable law, rules & regulations, or
jurisprudence on which decision is based; otherwise the
decision shall be void. This is the final decision of the
Commissioner.
m Taxpayer may appeal to the Court of Tax Appeals
within 30 days from date of receipt of said decision,
otherwise, the decision shall become final, executory &
demandable.
m If the taxpayer elevates his protest to the
Commissioner within 30 days from date of
receipt of the final decision of the Commissioner
or his duly authorized representative, the latter·s
decision shall not be considered final, executory
& demandable, in which case, the protest shall
be decided by the Commissioner.
m If the Commissioner or his duly authorized
representative fails to act on the taxpayer·s protest
within 80 days from the date of submission, the
taxpayer may appeal to the CTA within 30 days
from the lapse of 80-day period, otherwise, the
assessment shall become final, executory &
demandable (Sec. 228, NIRC).
A. Administrative Remedies B. Judicial Remedies
. Tax Lien . Civil Action
2. (istraint of personal property, or 2. Criminal Action
levy of real property, or
garnishment of bank deposits
3. Sale of property
4. Forfeiture
5. Compromise & abatement
6. Penalties & fines
7. Suspension of business operation
m It is legal claim or charge on the property, either real
or personal, as security for the payment of some debt
or obligation.
m When a taxpayer neglects or refuses to pay his
internal revenue tax liability after demand, the amount
demanded shall be a lien in favor of the government
from the time assessment was made by the
Commissioner until paid with interest, penalties, & costs
that may accrue in addition thereto upon all property
& rights to property belonging to the taxpayer.
m The claim of the government predicated on tax lien
is superior to the claim of a private litigant predicated
on a judgment.
m The power of the court in execution of judgments
extend only to properties unquestionably belonging to
the judgment debtor.
m Lien shall not be valid against any mortgage,
purchaser or judgment creditor until notice of such lien
shall be filed by the Commissioner in the office of the
Register of (eeds of the province or city where the
property of the taxpayer is situated.
m Sheriff is not authorized to attach or levy on
property not belonging to the judgment debtor.
m It is a remedy whereby the collection of delinquent taxes is
enforced on the goods, chattels or effects & other personal
property of whatever character of the taxpayer, including
stocks & other securities, debts, credits, bank accounts &
interests in & rights to personal property (Sec. 205[a], NIRC).
m Actual (istraint ² is resorted to when at the time required
for payment, a person fails to pay his delinquent tax
obligation (Sec. 207[A], NIRC). It consists in the actual seizure
& taking of personal property of the taxpayer.
m Constructive (istraint ² is used when no actual tax delinquency of
the taxpayer is necessary before the same is resorted to by the
government. It may be availed when the taxpayer is retiring from any
business subject to tax; he intends to leave the Philippines; he removes
his property therefrom; or he performs any act tending to obstruct the
proceedings for collecting the tax due or which may be due for him. It
shall be effected by requiring the taxpayer or a person having
possession or control of the personal property to sign a receipt
covering the property distrained & obligate himself to preserve the
same intact & unaltered & not to dispose of the same in any manner
whatever, without the express authority of the Commissioner (Sec. 206,
NIRC).
m It is a remedy whereby a collection of delinquent taxes is
enforced on the real property belonging to the delinquent taxpayer.
m It is effected by writing upon an authenticated certificate
showing the name of the taxpayer & the amounts of the tax &
penalty due, a description of the property upon which the levy is
made.
m Written notice of the levy shall be mailed to or served upon the
Register of (eeds of the province or city where the property is
located & upon the delinquent taxpayer, or if he be absent from
the Philippines, to his agent or the manager of the business in
respect to which the liability arose, or if there be none, to the
occupant of the property in question (Sec. 207, NIRC).
m Revenue (istrict Officer or his duly authorized
representative shall, upon recommendation of the Commissioner,
forthwith cause a notification to be exhibited in not less two
public places in the municipality or city where the distraint
is made, specifying the time & place of the sale & the articles
distrained.
m The time of the sale shall not be less than 20 days after
notice to the owner or possessor of the property & the
publication or posting of such notice.
m At the time & place fixed in such notice, the revenue officer
shall sell the goods, chattels, or effects, or other personal property,
including stocks & other securities so distrained, at public auction
to the highest bidder for cash, or with the approval of the
Commissioner, through duly licensed commodity or stock exchanges.
m Any residue over & above what is required to pay the entire
claim, including expenses, shall be returned to the owner of the
property sold. The expenses chargeable upon each seizure &
preservation of the property pending the sale, & no charge shall
be imposed for the services of the local internal revenue officer
or his deputy (Sec. 209, NIRC).
m Within 20 days after the levy, the officer conducting the
proceedings shall proceed to advertise the property or a
usable portion thereof as may be necessary to satisfy the
claim & cost of sale; such advertisement shall cover a period
of at least 30 days (Sec 23, NIRC).
m It shall be effectuated by posting a notice at the main
entrance of the municipal building or city hall & in a public
& conspicuous place in the barrio or district in which the
real estate lies & by publication once a week in a newspaper
of general circulation in the municipality or city where the
property is located Sec 23, NIRC).
m At any time before the day fixed for the sale, the
taxpayer may discontinue all proceedings by paying the
taxes, penalties, & interest. If he does not do so, the sale
shall proceed & shall be held either at the main
entrance of the municipal building or city hall, or on
the premises to be sold, as the officer conducting the
proceedings shall determine & as the notice of sale
shall specify(Sec 23, NIRC).
m In case there is no bidder for the real property in the public
sale or if the amount of the highest bid is insufficient to pay the
taxes, penalties & costs, the property shall be declared forfeited to
the Government. The Register of (eeds concerned, shall, upon
registration of the declaration for the forfeiture, transfer the title
of the property to the Government without the necessity of an
order from a competent court.
m Within  year from the date of such forfeiture, the taxpayer or
anyone for him, may redeem said property by paying the full
amount of taxes, penalties, interests & costs of sale, but if the
property is not thus redeemed, the forfeiture shall become absolute
(NIRC, 25).
m The Commissioner may compromise any national internal
revenue tax when (a) a reasonable doubt as to the validity of the
claim against the taxpayer exists, or (2) the financial position of
the taxpayer demonstrates a clear inability to pay the assessed
tax.
m Compromise settlement of any tax liability shall be subject to
the following minimum amounts:
. For cases of financial incapacity, a minimum compromise rate
equivalent to 0 of the basic tax assessed; and
2. For other cases, a minimum compromise rate equivalent to
40 of the basic tax assessed.
m Where the basic tax involved P,000,000.00 or where the
settlement offered is less than the prescribed minimum rates, the
compromise shall be subject to the approval of the Evaluation
Board which shall be composed of the Commissioner & the (eputy
Commissioners.
m All criminal violations may be compromised, except (a) those
already filed in the court, or (b) those involving fraud (Sec. 204
[A], NIRC).
m The taxpayer·s offer to compromise shall not be considered
unless & until he waives in writing his privilege under RA 405
or under other general or special laws, & such waiver shall
constitute the authority of the Commissioner to inquire into his
bank deposits (Sec. 6[F], NIRC).
m When the tax or any portion appears to be unjustly or
excessively assessed, or when the administration & collection costs
involved do not justify the collection of the amount due, the tax
may be abated; i.e., the entire tax liability of the tax payer is
cancelled (Sec. 204[B], 997 Tax Code).
m The power to compromise or abate shall be delegated by the
Commissioner, except in the following cases:
(a) assessment issued by regional offices involving basic
taxes of P500,000.00 or less; and
(b) minor criminal violations.
These cases may be compromised by a regional evaluation board
(Sec.7, NIRC).
m Compromise ² an amount of money paid by the taxpayer
to settle his civil liability for tax assessed by the
government.
basis of amount paid: basic tax assessed
minimum amount prescribed: the law set a limit as to
the amount that may be accepted by the government,
depending on the legal grounds used by the taxpayer
m If the Commissioner·s offer is rejected by the taxpayer, the
Commissioner cannot enforce it but he may file a criminal
action against the taxpayer for the tax violation.
m Compromise penalty ² an amount of money paid by a
taxpayer to compromise a tax violation that he has
committed, which may be subject of criminal prosecution.
basis of amount paid: gross sales or receipts during the
year or the tax due
minimum amount prescribed: depends on the nature of
the tax violation & the minimum amount is generally
not less than P,000.00.
m The Commissioner has no power to impose & collect the
compromise penalties in the absence of compromise agreement
between the taxpayer & the Commissioner.
m The main function of the BIR is to raise revenue for the
operations of government. To effect collection of delinquent
taxes, the BIR may resort to judicial actions under the Tax
Code. Civil & criminal actions & proceedings instituted in
behalf of the Government under the authority of this Code or
other laws enforced by the BIR shall be brought in the name
of the Government of the Philippines & shall be conducted by
the legal officers of the BIR, but no civil & criminal actions
for recovery of taxes or the enforcement of any fine, penalty,
forfeiture under this Code shall be filed in the court without
approval of the Commissioner (Sec. 220, NIRC).
m No court shall have the authority to grant an
injunction to restrain the collection of any national
internal revenue tax, fee or charge imposed by the Tax
Code (Sec. 28, NIRC). However, the Court of Tax Appeals
is given the power to restrain the collection of national
internal revenue taxes, subject to certain conditions
(Sec. 7, RA 25).
m Two Ways to Enforce Tax Liability:
. Filing of a civil case for the collection of a sum of
money with the proper regular court, i.e., Municipal
Court or Regional Trial Court ² it is the Republic of
the Philippines that is the party plaintiff, not the
Commissioner.
2. Filing an answer to the petition for review filed by the
taxpayer with CTA ² the respondent is the Commissioner,
not the Republic of the Philippines.
m Civil action is available to & initiated by the
government only when a tax liability becomes
delinquent & collectible. Effective April 2004,
jurisdiction over civil actions for the collection of
delinquent taxes amounting to over P million shall be
filed with the CTA. The RTC retains jurisdiction over
amounts up to P million.
. Self-assessed tax shown in the return was not paid
within date prescribed by law
Internal revenue taxes are self-assessing & no further
assessment by the government is required to create the
tax liability, where the tax payer merely files his tax
return showing an amount tax due, without paying the
same or paying only a portion thereof. In such a case, the
tax payer is considered as delinquent with respect to the
unpaid amount of tax.
2. Final assessment is not protested administratively within
30 days from date of receipt
The assessment may be protested administratively by filing a
request of reconsideration or reinvestigation within 30 days
from receipt of the assessment in such form & manner as
may be prescribed by implementing rules & regulations.
Otherwise, the assessment shall become final (Sec. 229, NIRC).
The filing of the protest within 30 day period is mandatory
& is not extendible, & if BIR imposes certain conditions for
the approval of such protest, said conditions must be satisfied
with by the taxpayer.
3. Non-compliance with the conditions laid in the approval
of protest
The protest filed by the taxpayer or his authorized agent,
provided it is not considered pro forma (for the sake of
form), is generally approved by the Commissioner. In some
instances, the Commissioner imposes certain conditions or
requires the filing of position paper in granting the request
for reinvestigation or reconsideration, in order to adequately
evaluate the validity of the arguments & documents
mentioned in the protest letter. Thus, the failure to comply
with such conditions within the time granted him is
construed as if no protest was filed by him.
4. Failure to file a timely appeal to the CTA on the final
decision of the Commissioner or his authorized
representative on the disputed assessment
Where the taxpayer failed to comply with the condition laid
down by the Commissioner for the reinvestigation of the case
& its failure to appeal to the CTA made the assessment final
& executory (Mambulao Lumber Co. vs. Republic, 32 SCRA ).
A civil action to collect an assessment that has become final
& executory is now required to be filed with the CTA under
RA 9282, where the basic tax assessed is P million or more.
4. Failure to file a timely appeal to the CTA on the
final decision of the Commissioner or his authorized
representative on the disputed assessment
The fact that no civil action to collect the taxpayer·s
liability was filed by the Government (in the RTC) is no
ground for claiming that the right of the Government to
collect said liability had already prescribed. When action
for collection is filed in the regular courts, prescription is
tolled (removed).
m Civil Penalties ² is a generic term used to refer to
surcharge, deficiency & delinquency interests, & compromise
penalties for violations of certain provisions of the Tax Code.
A. Surcharges ² imposed in addition to the tax required to be
paid, a penalty equivalent to 25 of the amount due in the
following cases:
. Failure to file any return & pay the tax due thereon as
required under the provisions of this Code or rules &
regulations of the date prescribed; or
A. Surcharges
2. ånless otherwise authorized by the Commissioner, filing a
return with an internal revenue officer other than those
with whom the return is filed; or
3. Failure to pay the deficiency tax within the time
prescribed for its payment in the notice of assessment; or
4. Failure to pay the full or part of the amount of tax shown on
any return required to be filed under the provision of this
Code or rules & regulations, or the full amount of tax due for
which no return is required to be filed, on or before the date
prescribed for its payment.
 In case a willfull neglect to file a return within the period
prescribed by this Code or by the rules & regulations, or in
case a false or fraudulent return is willfully made, the penalty
to be imposed shall be 50 of the tax or of the deficiency
tax, in case any payment has been made on the basis of such
return before the discovery of the falsity or fraud.
Failure to report sales, receipts or income in an amount
exceeding 30 of that declared per return, & a claim of
deductions in an amount exceeding 30 of actual deductions,
shall render the taxpayer liable for substantial under-
declaration of sales, receipts or income or for overstatement of
deductions (Sec. 248, NIRC), shall constitute prima facie
evidence of a false or fraudulent return.
B. (eficiency Interest
There shall be assessed & collected on any unpaid amount of
tax, interest at the rate of 20 per annum, or such higher
rate as may be prescribed by the rules & regulations, from
the date prescribed for payment until the full payment is
fully paid (Sec. 249[A], NIRC).
In case of failure to pay: () the amount of the tax due on
any return required to be filed; or (2) the amount of the tax
due for which no return is required; or (3) a deficiency tax,
or any surcharge or interest thereon on the due date
appearing in the notice & demand of the Commissioner, there
shall be assessed & collected on the unpaid amount, interest
at the rate prescribed until the amount is fully paid, which
interest shall form part of the tax (Sec. 249[A], NIRC).
C. Compromise Penalties
It is a certain amount of money which the taxpayer pays to
compromise a tax violation that may be subject to criminal
prosecution. It implies mutual agreement.
It cannot be imposed in the absence of a showing that the
taxpayer consented thereto.
If the Commissioner·s offer of compromise is rejected by the
taxpayer, the Commissioner cannot enforce it but he may file
a criminal action against the taxpayer for the tax violation. A
penalty can be imposed only on a finding of criminal
liability (Commissioner vs. Fireman·s Fund Insurance Co.)
m GR: BIR can file a civil action for the collection of a tax
that has become delinquent or collectible within 5 years from
the date of the assessment. When the Commissioner did not
reply to the taxpayer·s request for reconsideration & instead
referred the case to the Solicitor General for judicial collection,
this was indicative of his decision against reinvestigation.
Failure on the part of the taxpayer to file the appeal to the
CTA makes the decision of the Commissioner final & executory
(Rep. vs. Liam Tan Teng Sons, 6 SCRA 584).
m (istraint & levy proceeding are validly commenced
by the issuance of the warrant & service thereof on
the taxpayer.
m It is not essential that the warrant be fully executed
so that it can suspend the running of the statute of
limitations on the collection of the tax (Sec. 223[c], Tax
Code). It is enough that the proceeding have validly
begun & that their execution has not been suspended
by reason of voluntary desistance of the CIR.
m No civil or criminal action for recovery of taxes or
enforcement of any fine, penalty or forfeiture under this Code
shall be filed in court without the approval of the
Commissioner (Sec. 220, NIRC). However, a Regional (irector
may also approve the filing of the civil actions for collection
of delinquent tax, if this power is expressly delegated to him
by the Commissioner under the appropriate revenue
memorandum [or administrative] order on the matter (Republic
vs. Hizon, 320 SCRA 574).
m Complaints in civil actions for the collection of delinquent
taxes are required to be approved by the Solicitor General
before they are filed. However, BIR legal officers deputized as
Special Attorneys & stationed outside Metro Manila may file
verified complaints without the approval of the Solicitor
General, provided that the Solicitor General is furnished a copy
of the complaint, & thereafter, the Solicitor General files a
notice of appearance in the court where the action is filed. If
the complaint is found to be improperly filed, a motion to
dismiss is filed with the court (Republic vs. (omecillo, C.A. ²
G.R. SP No. 7676, Feb. 9, 990).
m Two Crimes Punishable under Tax Code:
. Attempt to evade or defeat tax
Any person who wilfully attempts in any manner
to evade or defeat any tax imposed under the Tax
Code or the payment thereof, in addition to other
penalties provided by law, upon conviction thereof,
be punished. The conviction or acquittal obtained
under this Section shall not be a bar to the filing
of a civil suit for the collection of taxes (Sec. 254,
NIRC).
2. Failure to file return, supply correct & accurate information, pay
tax, withhold & remit tax & refund excess taxes withheld on
compensation
Any person required under the Tax Code or by rules & regulations
promulgated there under to pay tax, make a return, keep any
record, or supply correct & accurate information, who willfully
fails to pay tax, make such return, keep such record, or supply
such correct & accurate information, or withhold or remit taxes
withheld, or refund excess taxes withheld on compensation, at the
time or times required by law or rules & regulations shall, in
addition to other penalties provided by law, upon conviction
thereof, be punished (Sec 225, NIRC).
m Two Crimes Punishable under Tax Code:
2. Failure to file return, supply correct & accurate information,
pay tax, withhold & remit tax & refund excess taxes withheld
on compensation.
Any person who attempts to make it appear for any
reason that he or another has in fact filed a return
statement, or actually files a return or statement &
subsequently withdraws the same return or statement
after securing the official receiving the seal or stamp of
an internal revenue office where the same was actually
filed shall, upon conviction thereof, be punished (Sec. 225,
NIRC).
m Two Crimes Punishable under Tax Code:
2. Failure to file return, supply correct & accurate information,
pay tax, withhold & remit tax & refund excess taxes withheld
on compensation.
ånder Section 83 of the Tax Code, the law presumes that
the person filing the tax return has personal knowledge
regarding the extent & value of the decedent. A legal heir
who does not possess knowledge or information regarding
the total value of the estate of the decedent would not
dare execute a return under oath under pain of criminal
liability (People vs. Imelda Marcos, Crim. Case No. Q-9-
24-38283, Apr. 20, 2007).
m No criminal action for the recovery of taxes of the
enforcement of any fine, penalty or forfeiture shall be filed in
court without the approval of the Commissioner. The
Commissioner, through administrative issuances, has delegated
this power to file criminal actions against delinquent
taxpayers to his subordinate officials in the legal service.
m Criminal actions instituted on behalf of the Government
under the authority of the Tax Code or other laws, enforced by
the BIR, shall be brought in the name of the Government of
the Philippines & shall be conducted by the legal officers of
the BIR.
m The grant of motion to dismiss a criminal case must be
based upon the judge·s own personal conviction that there was
no case against the accused.
m The acquittal of the taxpayer in a criminal action under the
Tax Code does not necessarily result in exoneration of said
taxpayer from his civil liability to pay taxes. Article 00 of
the Revised Penal Code provides that every person criminally
liable for a felony is also civilly liable. Civil liability to pay
taxes arises not because of a felony but upon the taxpayer·s
failure to pay taxes. Criminal liability in taxation arises as a
result of one·s failure to pay his tax liabilities.
m ånder existing provision of law, the judgment in the [tax]
case shall not only impose the penalty but shall also order
payment of the taxes subject of the criminal case as final
decided by the Commissioner. ånder RA 9282, the filing of the
criminal case implies also the filing of the civil case. In fact,
no reservation for the filing of the civil case may be made
under this new law. Corporation who also participated in the
commission of the offense are included in the information,
although the corporation can only be held civilly liable.
m All violations of the [penal] provisions of the Tax Code shall
prescribe after 5 years. Prescription shall begin to run from
the day of the commission of the violation of the law, & if the
same be not known at the time, from the discovery thereof &
the institution of the judicial proceedings for its investigation
& punishment. The prescription shall be interrupted when
proceedings are instituted against the guilty persons & shall
begin to run again if the proceedings are dismissed for
reasons not constituting jeopardy. The term of the prescription
shall not run if the offender is absent from the Philippines.
m In a criminal action that was instituted against the
taxpayer for having filed a false & fraudulent return & for
failure to pay taxes, the subsequent satisfaction of the tax
liability by payment or prescription will not operate to
extinguish the taxpayer·s criminal liability. Whether under the
Tax Code or Revised Penal Code, the satisfaction of the civil
liability is not one of the grounds for extinction of criminal
action.
m For criminal prosecution to proceed before or during the
pendency of an assessment, there must be a prima facie
showing of a willfull attempt to evade taxes.
m If the BIR official accepts the payment of compromised
penalty offered by the taxpayer for violation of specific
provision of law imposing criminal liability, the criminal
liability of the taxpayer for such violation shall be
obliterated.
m Penalty shall be imposed on partner, president, general
manager, treasurer, or officer responsible for violation, in
case of violations committed by associations, partnerships or
corporations (Sec. 253[d], NIRC).
m Taxes are the lifeblood of government & every citizen is
duty bound to pay taxes & to pay taxes in the right amount.