TAX II | A Reviewer

ENUMERATIONS

CHAPTER XXV
ADMINISTRATIVE REMEDIES OF GOVERNMENT

Question of Fact Question of Law

When doubt or difference arises as to the truth or falsehood of the When doubt or difference arises as to what the law is on certain
alleged facts state of facts

Reply
Prescription of 15 days from the date of receipt of the PAN within
which to make his written reply thereto
Due to the shorter time given to the taxpayer to make the reply, a
TP is generally does not respond in an adequate manner to the
specific findings of the Revenue Officer
Most often than not, the TP himself normally handles the aspect of
the preliminary assessment process, hoping that he could still
convince the revenue officer of the correctness or reasonableness
of the TP’s position
Failure to reply to a PAN makes the TP in default and authorizes
the revenue official to issue the FAN. However, no liability for
additional or deficiency tax arises from such failure to file a reply.
The filing of a reply to a PAN is therefore directory on the part of
the TP.
Protest
He is given 30 days from the date of receipt within which to file
his protest against the FAN
The protest is usually sufficient and comprehensive to explain the
legal and factual bases why the assessment is incorrect, and certain
documentary evidence not presented during the preliminary
assessment phase and legal authorities and jurisprudence relevant
to the findings of the revenue officers are submitted or presented.
A TP is almost always represented by his tax agent or consultant.
Failure to file a timely protest to a FAN makes the FAN final and
executory, and the TP loses his right to contest the assessment, at
the administrative and judicial levels, even if such assessment is
weak or has no legal basis. In other words, the filing of a protest
against an assessment is mandatory and had to be made on a timely
manner.

Delinquency
Can be immediately collected administratively through the
issuance of the warrant of distrain and levy and/or by judicial
action
Filing of civil action for the collection of the delinquent tax is a
proper remedy
Subject to administrative penalties such as 25% surcharge, interest
and compromise penalty
Considered delinquent when: (1) the self-assessed tax per return
filed by the taxpayer on the prescribed date was not paid at all or
was only partially paid; or (2) the deficiency tax assessed by the
BIR became final and executory.
Deficiency
Can also be collected through administrative and/or judicial
remedies but has to go through the process of filing the protest
against the assessment by the taxpayer and denial of such protest
by the BIR
Filing of civil action at the ordinary court for the collection of a
deficiency tax during the pendency of a protest may be the subject
of a motion to dismiss
Generally not subject to the 25% surcharge although subject to
interest and compromise penalty
Considered deficient when: (1)the amount by which the tax as
determined by the CIR exceeds the amount shown as the tax by
the taxpayer upon his return; (2) no amount is shown as the tax by
the taxpayer upon his return or if no return is made by the taxpayer.
The amount by which the tax exceeds the amount previously
assessed as a deficiency

Distraint - remedy whereby the collection of delinquent tax is enforced on the personal property of whatever character of the
taxpayer.
Actual Distraint Constructive Distraint
Resorted when at the time required for payment, a person fails to Issued where no actual tax delinquency is necessary before the
pay his delinquent tax obligation. Distraint consists in the actual same is resorted to by the government. It shall be effected by
seizure and taking possession of personal property requiring taxpayer or any person having possession or control of
the personal property to sign a receipt covering the property
distrained and obligate himself to preserve the same intact and
unaltered and not to dispose of the same in any manner whatever
without the express authority of the CIR.

Compromise Compromise Penalty

Similarities

1. They both imply mutual agreement. A compromise penalty cannot be impose in the absence of a showing that the TP
consented thereto. If the Commissioner’s offer of compromise is rejected by the TP, the Commissioner cannot enforce
it but he may file a criminal action against the TP for the tax violation;

2. The Commissioner has no power to impose and collect the compromise penalties in the absent of a compromise
agreement validly entered into between the TP and the Commissioner. However, where in an appeal to the CTA, the
TP has expressed his willingness to pay compromise penalties, said amounts may be collected as part of the judgment;

3. The right to enter into an agreement , including the amount to be paid in settlement of a tax violation, is discretionary
 to the Commissioner or the TP.
Differences
Definition and Nature of Violation being Compromised
A compromise is an amount of money paid by the TP to settle his A compromise penalty is an amount of money paid by a TP to
civil liability for tax assessed by the government. compromise a tax violation that he has committed, which may be
the subject of criminal prosecution
Basis of the Amount Paid
The basis of the amount paid is the basic tax assessed The basis is the gross sales or receipts during the year or the tax
due
Minimum Amount Prescribed
The law sets a limit as to the amount that may be accepted by the The amount set depends on the nature of the tax violation and the
government, depending on the legal grounds used by the TP minimum amount is generally not less than P1000.

Compromise
When reasonable doubt as to the validity of the claim against
taxpayer exists or the financial position of the taxpayer
demonstrates a clear inability to pay the assessed tax
Either 10% or 40% of the basic tax assessed must be paid
Abatement
When tax or any portion thereof appears to be unjustly or
excessively assessed or when the administration and collection
costs involved do not justify the collection of the amount due
Entire tax liability is cancelled

CHAPTER XXIX
ASSESSMENT AND PROTEST

Request for Reconsideration Request for Reinvestigation

It is a plea for evaluation of the assessment on the basis of existing
records without the need of presentation of additional evidence.
It does not suspend the period to collect the deficiency tax.
The 180-day period within which the BIR shall act on the protest
starts from the filing of the request for reconsideration.
It a plea for re-evaluation of the assessment on the basis of
additional or newly discovered evidence which are to be
introduced for examination for the first time.
It suspends the running of the prescriptive period to collect.
The 180-day period within which the BIR shall act on the protest
starts only from the date of submission of the additional or newly
discovered evidence.

CHAPTER XXX
PRESCRIPTION

Extension of Prescriptive Period Interruption of Prescriptive Period

The TP and the Commissioner or his authorized representative
sign a written waiver extending the period within which the BIR
may assess or collect the tax.
The grounds for extension of the prescriptive period are provided
for in Section 222(b) to (e).
To validly extend the prescriptive period, the waiver must be
signed by the contracting parties before the expiration of the time
prescribed to assess or to collect.
The effect is to extend or prolong the period within which the
Commissioner may assess or collect the tax.
The contracting parties do not sign any written agreement
interrupting the period. Either the TP requested for a
reinvestigation which was granted by the Commissioner, or a
warrant of distraint or levy was issued by the Commissioner or his
duly authorized representative and no property of the TP could be
located.
The grounds for interruption of the prescriptive period are given
in Section 223.
The actions of the TP and the BIR are taken after the issuance,
release and mailing of assessment notice and letter of demand.
The period during which any of the enumerated condition exists is
deducted from the total period. The period to assess or collect
mentioned in the law is not extended,

CHAPTER XXXI
TAX CREDIT OR REFUND

Tax Credit Tax Deduction

It refers to an amount that is subtracted directly from one’s total
tax liability. It reduces the tax due, including the income tax that
is determined after applying the corresponding tax rates to taxable
income.
It is used only after the tax has been computed.
It is an amount allowed by law to reduce income prior to the
application of the tax rate to arrive at taxable income.
It is used only before the tax has been computed.