Tax Assessment - Taxpayer's Remedies
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Transcript of Tax Assessment - Taxpayer's Remedies
Presented by:AMEGO & ASSOCIATES LAW OFFICE
Ground Floor CIT Bldg., Lacson-Luzuriaga Sts.Bacolod City
TAXPAYER’S REMEDIESin
Tax Assessment
A. DETERMINING/ ENFORCING TAX LIABILITY
Audit Process/Tax AssessmentOplan Kandado – suspension or temporary closure of business operations of a VAT- registered/ registrable taxpayer for * failure to issue receipts or invoices* failure to file a VAT return* understatement of taxable sales or
receipts by 30% or more of the correct amount thereof or
* failure to register. Establishment surveillanceRATE program/Criminal Action- to investigate, prosecute and convict tax evaders and other criminal violators of the 1997 NIRC
A. ADMINISTRATIVEBefore Payment Protest – tax assessment contestCompromise – reduction of tax liabilityAbatement - cancellation of the entire tax liability
After Payment Tax Refund- restitution of the money paid as tax
Tax Credit- money so paid be applied to existing tax liability
B. JUDICIALCivil Action•Appeal to the Court of Tax Appeals - tax assessment contest
Taxpayer Remedies Govt. RemediesVS
B. COLLECTION OF TAXES
Compromise Abatement Distraint - seizure by the govt. of tangible/ intangible personal property followed by the public sale of such property
Levy - seizure of real property, and interest in or rights to such property
Tax Lien - the tax, together with interests, penalties, and costs that may accrue in addition thereto is a lien upon all property and rights to property belonging to the taxpayer
Civil action for collection of taxes
B. JUDICIALCivil Action (cont.)Action to contest forfeiture of chattel, at any time before the sale or destruction thereof, to recover the same, and upon giving proper bond, enjoin the sale; or after the sale and within 6 months, an action to recover the net proceeds realized at the sale
Action for damages against a revenue officer by reason of any act done in the performance of official duty
Criminal Action Filing of criminal complaint against erring BIR officials and employees.
Injunction – when the CTA in its opinion, the collection by the BIR may jeopardize taxpayer.
Taxpayer Remedies Govt. RemediesVS
Tax Assessment
Pre-Assessment Notice (PAN)
Final Assessment Notice (FAN)
Protest
Appeal to CTA Division
MR to CTA Division
Appeal to CTA En Banc
Petition for Review to SC
15 days
30 days
30 days
30 days
15 days
15 days
Letter of Authority
Letter of Authority/ Letter NoticeA tax investigation starts with the issuance by the BIR of a written authorization which is usually a
Letter of Authority – for tax audits or Letter Notice – for the Relief/SLSP program
Preliminary Assessment Notice (PAN)
Time for taxpayer to reply: 15 days from date of receipt of PANEffect of failure to reply:-Taxpayer shall be considered in default-a formal letter of demand and assessment notice shall be issued calling for the payment of the taxpayer’s deficiency tax liability, inclusive of all the applicable penalties.
− Notifies the taxpayer of the findings made by the examiner and the deficiency taxes assessed− shows in detail, the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based.
Issuance of FAN is sufficient w/o need of Notice of Informal Conference & PAN:
1. Deficiency tax is the result of mathematical error in the tax computation appearing on the face of the tax return filed by the taxpayer;
2. Discrepancy between the tax withheld and the amount actually remitted by the withholding agent;
3. A taxpayer who opted to claim a refund or tax credit also carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable quarter/s of the succeeding taxable year;
4. Excise tax due on excisable articles not paid;5. Article purchased locally or imported by an
exempt person, such as, but not limited to, vehicles, capital equipment, machineries & spare parts, has been sold, traded or transferred to non-exempt persons.
SAMPLE PAN
PAN
Taxpayer submits a
reply within 15 days?
NO
YES
Issuance of FAN
&LETTER of DEMAND
Commissioner accepts the
explanations.
Commissioner does not accept
the explanations.
Assessment ends.
Final Assessment Notice (FAN) FAN and letter of demand should always go together. The letter of demand explains to the taxpayer how the deficiency assessment was
arrived at, including the reasons and legal bases for the assessment.Sent to the taxpayer only by registered mail or by personal delivery. If sent by personal delivery, acknowledge receipt thereof in the duplicate copy of
the letter of demand by showing the following: (a) his name; (b) signature; (c) designation and authority to act for and in behalf of the taxpayer, if received by a person other than the taxpayer himself; and (d) date of receipt thereof.
2 Types of Administrative Protest Against the FAN:Request for reconsideration –a plea of reevaluation of the assessment on the basis of existing records without need of additional evidence. Request for reinvestigation – a plea of reevaluation of an assessment on the basis of newly discovered or additional evidence that a taxpayer intends to present in the reinvestigation.The Protest may involve a question of fact or law, or both.
Remedy of the taxpayer against the FAN : File Administrative PROTEST
Time for taxpayer to submit Protest: 30 days from date of receipt of FAN
Effect of failure to Protest:-Payment by the TP of the amount due
SAMPLE FAN
FAN &
LETTER of DEMAND
Taxpayer submits a PROTEST within 30
days?
NO
YES
Administrative ProtestMOTION for
RECONSIDERATION or MOTION for
REINVESTIGATION
Assessment ends.Assessment becomes final, executory, and demandable.The government may exercise it remedies for collection.The case may not be appealed to the CTA.
Complete submission of documentary evidence within 60 days from the filing of the protest
Non-submission of documents
Complete submission of
documentsCommissioner’s
action:
Resolution of the assessment based on the documents:- Cancellation of entire assessment/- Issuance of a Revised Assessment
Inaction on the protest w/in 180 days from the time of receipt of the relevant documents
Denial of the administrative protest within 180 days from the receipt of the relevant supporting documents
File a MR to the Commissioner
orAppeal to the CTA Division
PETITION FOR REVIEW to the SC
Taxpayer FAILS to appeal.
ASSESSMENT ENDS.
Motion for Recon to the
CTA Division
Appeal to the CTA EN BANC
Unfavorable Action of the Commissioner
Appeal to the CTA Division
PETITION FOR REVIEW to the SC
Motion for Recon to the
CTA Division
Appeal to the CTA EN BANC
Denial : w/in 30 days from receipt of notice of the denial or
Inaction: w/in 30 days from the lapse of the 180 days from date of submission by the taxpayer of the required documents in support of his protest
DENIAL
INACTION
15 days
15 days
15 days
CTA appeal from the decision of the CIR :SHALL NOT SUSPEND the payment, levy, distraint, and/or sale of any property of the taxpayer for the satisfaction of his tax liability.
If in the opinion of the Court the collection by BIR may jeopardize the interest of the Government and/or the taxpayer:the Court any stage of the proceeding may suspend the collection and require the taxpayer either −to deposit the amount claimed or −to file a surety bond for not more than double the amount
with the Court
30 days
or
Notice of Informal Conference
Pre-Assessment Notice (PAN)
Final Assessment Notice (FAN)
Protest
Appeal to CTA Division
MR to CTA Division
Appeal to CTA En Banc
Petition for Review to SC
15 days
15 days
30 days
30 days
30 days
15 days
15 days
Thank you.
- THE END -
Presented by:AMEGO & ASSOCIATES LAW OFFICE
Ground Floor CIT Bldg., Lacson-Luzuriaga Sts.Bacolod City