Tax remedies.pdf - REMEDIES ASSESSMENT AND COLLECTION OF...

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1 REMEDIES ASSESSMENT AND COLLECTION OF INTERNAL REVENUE TAXES 1. TAX AUDIT PROCESS / ASSESSMENT PROCESS In a gist, the assessment process flows, as follows: The BIR issue a Letter of Authority (LOA) The authorized representative(s) named under the LOA will have 120 days to conduct the audit After which, a Notice of Informal Conference will be given to the taxpayer indicating the initial findings of the BIR representative The taxpayer will have 15 days to respond The BIR then issues a Preliminary Assessment Notice (PAN) (unless the same is excused) The taxpayer will have 15 days from receipt to reply to the PAN The BIR issues a Final Assessment Notice (FAN)/Formal Letter of Demand (FLD) The taxpayer will have 30 days from receipt of the FAN to file a protest The protest can either be: o A request (protest) for reinvestigation – in which case the taxpayer is given an additional 60 days to submit relevant supporting documents; or o A request (protest) for reconsideration – no additional period is given since there is no submission of additional documents. The Commissioner will have 180 days to decide on such protest and may either: o Grant the protest – in which case the assessment may be reduced or cancelled; o Deny the protest – in which case the taxpayer will have 30 days to file a petition for review before the CTA division from receipt of the Final Decision on Disputed Assessment (FDDA); o Not act on the protest – in which case the taxpayer may either: § File a petition for review with the CTA division – 30 days from the expiration of the 180-day period for the BIR to decide on the protest § Await the decision of the Commissioner – which will give the taxpayer 30 days from receipt of the decision to elevate the matter to the CTA division. a. OVERVIEW An assessment "refers to the determination of amounts due from a person obligated to make payments." "In the context of national internal revenue collection, it refers to the determination of the taxes due from a taxpayer under the National Internal Revenue Code of 1997." The assessment process starts with the filing of tax return and payment of tax by the taxpayer. The initial assessment evidenced by the tax return is a self-assessment of the taxpayer. The tax is primarily computed and voluntarily paid by the taxpayer without need of any demand from government. If tax obligations are properly paid, the Bureau of Internal Revenue may dispense with its own assessment. After filing a return, the Commissioner or his or her representative may allow the examination of any taxpayer for assessment of proper tax liability. The failure of a taxpayer to file his or her return will not hinder the Commissioner from permitting the taxpayer's examination. The Commissioner can examine records or other data relevant to his or her inquiry in order to verify the correctness of any return, or to make a return in case of noncompliance, as well as to determine and collect tax liability.

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