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IN GENERAL
2. Bureau of Customs
• Regional Directors
• The power to interpret the provisions of the NIRC and other tax laws shall be
under the exclusive and original jurisdiction of the Commissioner.
1. disputed assessments;
4. other matters arising under this Code or other laws or portions thereof
administered by the Bureau of Internal Revenue.
3. in determining the liability of any person for any internal revenue tax;
or
2. To obtain on a regular basis from any person other than the person
whose internal revenue tax liability is subject to audit or investigation,
or from any office or officer of the national and local governments,
government agencies and instrumentalities any information.
3. To summon the person liable for tax or required to file a return, or any
officer or employee of such persons, or any person having possession,
custody, or care of the books of accounts and other accounting
records, or any other person, to appear before the Commissioner or his
duly authorized representative.
• After the filing of the return, the Commissioner or his duly authorized
representative may authorize the examination of any taxpayer and the
assessment of the correct amount of tax.
• However, failure to file a return does not prevent the Commissioner from
authorizing the examination of the taxpayer.
• However, such may be modified, changed or amended within three (3) years
from the date of their filing provided no notice for audit or investigation for
such return, statement or declaration has been actually served upon the
taxpayer.
• Commissioner may, at any time during the taxable year, order inventory-
taking of goods of any taxpayer as a basis for determining his internal
revenue tax liabilities.
• Commissioner may also place the business operations of any person, natural
or juridical, under observation or surveillance if there is reason to believe that
such person is not declaring his correct income, sales or receipts for internal
revenue tax purposes.
• Commissioner may also prescribe presumptive gross sales and receipts in the
following instances:
1. When it is found that a person has failed to issue receipts and invoices
in violation of the NIRC; or
2. intending
• In such cases, the Commissioner may assess and collect the tax
immediately without the usual formalities. Among others, the Commissioner
shall:
1. declare the tax period of such taxpayer terminated any time; and
2. send the taxpayer a notice of such decision together with a request for
the immediate payment of the tax for the period so declared
terminated and the tax for the preceding year or quarter, or such
portion thereof as may be unpaid.
• Said taxes shall be due and payable immediately and shall be subject
to all the penalties prescribed by law, unless paid within the time fixed in the
demand made by the Commissioner.
• For purposes of computing any internal revenue tax, the value of the
property shall be, whichever is higher of:
2. any taxpayer who has filed an application for compromise of his tax
liability by reason of financial incapacity to pay his tax liability.
• Similarly, estoppel does not apply to deprive the government of its right to
raise defenses even if these defenses are being raised for the first time on
appeal. [Commissioner v. Procter and Gamble Co., G.R. No. 66838, April
15, 1988] However, this was reversed in a subsequent resolution issued by
the Supreme Court in the same case. [Commissioner v. Procter and
Gamble Co., G.R. No. 66838, December 2, 1991, Resolution)]
• While the principle of estoppel may not be invoked against the government,
this is not necessarily true in the case of the taxpayer.
• Those earning more than P150,000 quarterly shall have their books of
accounts audited and examined yearly by independent certified public
accountants.
• They have option to keep subsidiary books as the needs of their business
may require.
• All the books of accounts, including the subsidiary books and other
accounting records, shall be preserved for a period beginning from the last
entry in such book until the last day prescribed by Section 203 within which
the Commissioner is authorized to make an assessment.
• Said books and records may be examined only once in a taxable year, with
some exceptions.
Tax assessment
• An assessment is a finding by the taxing agency that the taxpayer has not
paid his current taxes. It is also a notice to the effect that the amount stated
therein is due as tax and is a demand for payment thereof.
Letter of authority
• This is the authority issued by the Revenue Regional Director and given to a
revenue officer assigned to perform assessment functions to examine
taxpayers within the jurisdiction of the district in order to collect the correct
amount of tax, or to recommend the assessment of any deficiency tax due in
the same manner that the said acts could have been performed by the
Revenue Regional Director himself.
Kinds of assessment
1. Self assessment
2. Deficiency assessment
4. Erroneous assessment
Self assessment
• The amount of tax is reflected in the tax return that is filed by him and the
tax assessed is paid at the time he files the return. This system of filing of
return and payment of tax is known as the “pay-as-you-file” system.
Deficiency assessment
• This is an assessment made by the tax assessor himself whereby the correct
amount of the tax is determined after an examination or investigation is
conducted.
1. The amount ascertained exceeds that which is shown as the tax by the
taxpayer in his return;
• This is an assessment wherein the tax assessor has no power to act at all.
Erroneous assessment
• This is an assessment wherein the assessor has the power to assess but errs
in the exercise of the power.
1. Assessments are prima facie presumed correct and made in good faith.
• The legal basis for the use of the net worth method is the authority of the
Commissioner to adopt an accounting method that clearly reflects the
income.
1. That the taxpayer’s books do not clearly reflect his income or the taxpayer
has no books, or if he has books, he refuses to produce them.
4. That the circumstances are such that the method does reflect the taxpayer’s
income with reasonable accuracy and certainty and proper and just additions
of personal expenses and other non-deductible expenditures were made and
correct, fair and equitable credit adjustments were given by way of
eliminating non-taxable items.
1. Post-reporting notice or notice for an informal conference after the tax audit.
3. The taxpayers shall be informed in writing of the law and the facts upon
which the assessment is made.
Pre-assessment notice
1. When the finding for any deficiency tax is the result of a mathematical error
in the computation of the tax as appearing on the face of the return;
2. When a discrepancy has been determined between the tax withheld and the
amount actually remitted by the withholding agent;
4. When the excise tax due on excisable articles has not been paid; or
Deficiency v. delinquency
• Deficiency is the amount by which the tax due exceeds the sum of the
amount of the tax shown on a taxpayer’s return plus amounts previously
assessed or collected as deficiency, less any credits, refunds, or other
payments due the taxpayer, i.e. the amount a taxpayer is deficient in his tax
payments.
ASSESSMENT
General Rule
• Assessment shall be made within three (3) years after the last day prescribed
by law for the filing of the return or from the day the return was filed in case
the return was filed beyond the period prescribed by law.
Exceptions
1. Assessment may be made within ten (10) years after the discovery of the
falsity, fraud or omission in the following cases:
• It is not the issue date of the demand and/or notice that is the reckoning
point in prescription but rather it is the date when the demand letter is
released, mailed or sent to the taxpayer that constitutes an actual
assessment.
• The Supreme Court held in a case that so long as the release thereof is
effected before prescription sets in, the assessment is deemed made on time
even though the same is actually received by the taxpayer after the
expiration of the prescription period. [Basilan Estates, Inc. v.
Commissioner, 21 SCRA 17] The law does not require that the demand or
notice be received within the prescriptive period.
3. Effect of the filing of a wrong return (as if no return filed, thus, 10-year
prescriptive period)
4. Period applicable when the law does not require the filing of a return (10-year
prescriptive period unless taxpayer files a return to enable him to avail of the
benefit of the three-year prescriptive period)
Amended return
• The Supreme Court held that where the amended return is substantially
different from the original return, the right of the Bureau of Internal Revenue
to assess the tax is counted from the filing of the amended return.
[Commisioner v. Phoenix Assurance Co., Ltd., L-19127, May 20, 1965]
• The fraud contemplated by law is actual and not constructive. It must amount
to intentional wrong doing with the sole object of avoiding the tax. It
necessarily follows that a mere mistake cannot be considered as fraudulent
intent. Thus, if both the petitioner and the respondent Commissioner
committed mistakes in making the entries in the returns and the assessment
respectively under the inventory method of determining tax liability, it would
be unfair to treat the mistakes of the petitioner as tainted with fraud and
those of the respondent’s tax deficiency for each year from 1946 to 1951,
inclusive. [Aznar v. Commissioner, L-20569, August 23, 1974]
Fraud
• Section 222(b) of the NIRC allows the taxpayer and the government to extend
by mutual agreement the prescriptive periods for the assessment and
collection of taxes.
• The waiver must be executed by the parties before the lapse of the three-
year prescriptive period. A waiver is ineffectual if it is executed beyond the
original prescriptive period.
• The extended period may again be extended provided the new period be
agreed upon before the lapse of the extended period.
3. The Commissioner or his duly authorized agent must sign the waiver
indicating the BIR’s acceptance of the waiver
COLLECTION
General Rule
• Collection may be instituted within five (5) years following the assessment of
the tax. [Section 222©]
Exception
• The period of limitation to collect is counted from the assessment of the tax.
When is the tax deemed collected for purposes of the prescriptive period?
• The running of the Statute of Limitations provided in Sections 203 and 222 on
the making of assessment and the beginning of distraint or levy or a
proceeding in court for collection, in respect of any deficiency, shall be
suspended under any of the following circumstances:
4. 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; and
1. The filing of a petition for review in the Court of Tax Appeals from the
decision of the Commissioner on a protested assessment interrupts the
running of the prescriptive period for collection. [Republic v. Ker & Co.,
Ltd., 18 SCRA 207]
2. When the Court of Tax Appeals enjoins the collection of the tax under Section
11 of RA 1125.
IN GENERAL
Remedies of taxpayer
PROTEST OF ASSESSMENT
Procedure
• Within sixty (60) days from the filing of the protest, taxpayer shall submit all
relevant supporting documents, otherwise the assessment becomes final.
• If the protest is denied in whole or in part, or is not acted upon within one
hundred eighty (180) days from submission of documents, the taxpayer
adversely affected by the decision or inaction may appeal to the Court of Tax
Appeals within thirty (30) days from receipt of the decision or from the lapse
of the one hundred eighty (180)-day period; otherwise, the decision shall
become final, executory and demandable. [Section 228, NIRC]
• Decision of the Court of Tax Appeals may be appealed to the Court of Appeals
through a verified petition for review within fifteen (15) days from receipt of
decision of the CTA. This may be extended for another fifteen (15) days upon
proper motion and the payment of the full amount of the docket fee before
the expiration of the reglementary period. No further extension shall be
granted except for the most compelling reason and in no case to exceed 15
days. [Section 4, Rule 43, Rules of Court]
Disputed assessment
• This is an assessment which has been protested by the taxpayer. Its effect is
to suspend the prescriptive period to collect the tax due.
• It should be noted that the Regional Director may also render decisions on
protests.
Refund v. credit
• Both are modes of recovering taxes which are either erroneously or illegally
paid to the government.
• Tax refund takes place when there is actually a reimbursement of the tax. In
tax credit, the government applies the amount determined to be
reimbursable, after proper verification, against any sum that may be due and
collectible from the taxpayer.
• Taxes are illegally collected when payments are made under duress.
1. A written claim for refund or credit must first be filed with the Commissioner;
3. It must be filed within two years from the date of payment of the tax or
penalty regardless of any supervening cause that may arise after payment.
Note: Payment under protest is not required. Section 229 of the NIRC provides that
a suit or proceeding for refund or credit may be maintained whether or not
such tax, penalty, or sum has been paid under protest or duress.
2. To notify the government that the taxes sought to be refunded are under
question and that, therefore, such notice should be borne in mind in
estimating the revenue available for expenditure.
1. There was an actual collection and receipt by the government of the tax
sought to be recovered. This requires factual proof.
3. Both the written claim and the appeal to the Court of Tax Appeals must be
filed within the two-year prescriptive period.
• In the case of taxes withheld under the withholding tax system, the two-year
prescriptive period for refunds is counted not from the date the tax is
withheld and remitted to the Bureau of Internal Revenue but from the end
of the taxable year.
• The period for claiming claims for refund is suspended provided two
conditions are present:
• A tax credit certificate which shall remain unutilized after five (5) years from
the date of issue shall, unless revalidated, be considered invalid.
Equitable recoupment
• It is a principle which allows a taxpayer whose claim for refund has been
barred due to prescription to recover said tax by setting off the prescribed
refund against a tax that may be due and collectible from him.
• The Supreme Court ruled that a withholding agent should be allowed to claim
the tax refund because, under the law, it is the one who is held liable for any
violation of the withholding tax law should such a violation occur.
[Commissioner v. Wander Phils., Inc., G.R. No. 68378, April 15, 1988]
• The rule on this matter is that the government cannot be required to pay
interest on taxes refunded to the taxpayer. [Sweeney v. Commissioner, L-
12178, August 21, 1959]
• Exceptions
2. To prevent delay in the disposition of tax cases in view of the backlog of civil
and criminal cases in the regular courts. [Ursal v. Court of Tax Appeals,
101 Phil 209]
• The CTA is composed of a Presiding Judge and two Associate Judges, each of
whom is appointed by the President from a list of nominees prepared by the
Judicial and Bar Council. Such appointments need no confirmation.
• Any two judges of the CTA shall constitute a quorum and the concurrence of
two judges shall be necessary to promulgate any decision thereof. [Sections 1
and 2, RA 1125]
• Cases brought before the CTA shall be decided within thirty (30) days after
the submission thereof for decision, which shall be in writing, stating clearly
and distinctly the facts and the law on which they are based, and signed by
the judges who concurred therewith. [Section 12, RA 1125]. This
requirement, however, is merely directory.
• In a case, the Supreme Court held that the word “decision” in Section 7 of RA
1125 means decisions of the Commissioner on the protest of the taxpayer
against the assessments. Definitely, the word does not signify the
assessment itself. [Commissioner v. Villa, L-23988, January 20, 1968]
• In much the same way that mere assessments are not appealable, rulings of
the Commissioner are not likewise appealable to the CTA.
• When it constitutes the final action taken by him or his authorized deputies
with respect to the taxpayer’s liability.
• The appealable decision is that letter of denial where the Commissioner not
only demanded payment of the amount assessed but wherein he also gave
the warning that in the even the taxpayer failed to pay the same, the
Commissioner would be constrained to enforce the collection thereof by
means of the remedies prescribed by law. [Surigao Electric Co. v. Court of
Tax Appeals, 57 SCRA 523]
• However, the filing of a judicial action for collection, i.e. criminal and civil
action during the pendency of an administrative protest, constitutes a denial
of the protest. [Commissioner v. Union Shipping] In such a situation, the
taxpayer may file an appeal with the Court of Tax Appeals.
• There is a court ruling to the effect that the decisions of Regional Directors
may be appealed to the CTA. [Fortalez, Jr. v. Collector, Resolution, CTA
Case No. 1527, December 22, 1964]
Collection case in RTC while appeal pending in the Court of Tax Appeals
• If the Bureau of Internal Revenue, during the pendency of the appeal in the
Court of Tax Appeals, files a civil action in the RTC for collection of the tax
liability, the taxpayer may file a motion in the RTC for the dismissal of the
case on the ground that there is no basis for collecting the tax due where the
assessment thereof is still under dispute in the Court of Tax Appeals.
• An appeal to the CTA from a decision of the Commissioner shall not suspend
the payment or collection of the tax liability of the taxpayer unless a motion
to that effect shall have been presented to the CTA and granted by it on the
ground that such collection jeopardizes the interest of the government and/or
the taxpayer.
• Exception: CTA may suspend or restrain the collection of the tax when, in its
opinion, the collection of the tax may jeopardize the interest of the
government and/or the taxpayer. [Section 11, RA 1125]
1. That the collection of the tax may jeopardize the interest of the government
and/or the taxpayer.
2. That the taxpayer is willing to deposit the amount equal to the taxes
assessed or to file a bond amounting to not more than twice the value of the
tax being assessed.
3. That the CTA may issue an injunction only in the exercise of its appellate
jurisdiction.
• The thirty-day prescriptive period starts to run from the date the taxpayer
receives the appealable decision of the Commissioner.
• The 30-day period is jurisdictional. The failure of the taxpayer to appeal from
a decision of the Commissioner on time renders the assessment final,
executory and demandable.
• Requests or motions filed by the taxpayer with the BIR for the reconsideration
of the Commissioner’s decision operate to suspend the running of the
prescriptive period of appeal to the CTA.
• Where the assessment of a disputed tax has become final and executory on
account of the failure of the taxpayer to appeal within the reglementary 30-
day period, the assessment may no longer be disputed through the simple
expedient of paying the protested tax and then by subsequently claiming it
as a refund within the period of two years from date of payment.
Interlocutory orders
• One motion for reconsideration may be allowed for decisions of the CTA.
• Decisions of the CTA are appealed to the Court of Appeals through a verified
petition for review. [Sections 1 and 5, Rule 43, Rules of Court]
• Appeals period is fifteen (15) days from receipt of the decision or judgment.
The Court of Appeals may grant an additional period of fifteen (15) days only
within which to the file the petition for review. No further extension shall be
granted except for the most compelling reasons and in no case to exceed
fifteen (15) days. [Section 4, Rule 43, Rules of Court]
IN GENERAL
1. Tax lien
2. Compromise
3. Distraint
4. Levy
5. Civil action
6. Criminal action
7. Forfeiture
TAX LIEN
Tax lien
• When a taxpayer neglects or refuses to pay his internal revenue tax liability
after demand, the amount so demanded shall be a lien in favor of the
government from the time the assessment was made by the Commissioner
until paid with interest, penalties, and costs that may accrue in addition
thereto, upon all property and rights to property belonging to the taxpayer.
[Section 219, NIRC]
COMPROMISE
Compromise v. abatement
1. A reasonable doubt as to the validity of the claim against the taxpayer exists;
or
2. When the administration and collection costs involved do not justify the
collection of the amount due.
Limitations on compromise
• For other cases, a minimum compromise rate equivalent to 40% of the basic
assessed tax.
• Where the basic tax exceeds one million pesos (P1,000,000) 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 and the four Deputy Commissioners.
• The taxpayer is not given the right of redemption with respect to distrained
personal property, while such right is granted in case of real property levied
upon and sold, or forfeited, to the government.
• Actual distraint is resorted to when delinquency in the payment sets in, that
is, when at the time required for payment, a person fails to pay his tax
obligation. It consists of actual seizure and distraint of personal property of
the taxpayer.
• If the taxpayer or any other person refuses or fails to sign the receipt, the
revenue officer effecting the constructive distraint shall proceed to prepare a
list of such property and, in the presence of two witnesses, leave a copy
thereof in the premises where the property distrained is located, after which
the said property shall be deemed to have been placed under constructive
distraint.
A copy shall be left either with the owner or person from whose
possession such goods, chattels, or effects or other personal property were
taken, or at the dwelling of business of such person and with someone of
suitable age and discretion.
Debts and credits shall be distrained by leaving with the person owing
the debts or having in his possession or under his control such credits, or with
his agent, a copy of the warrant of distraint.
4. Bank accounts
Upon receipt of the warrant of garnishment, the bank shall turn over to
the Commissioner so much of the bank accounts as may be sufficient to
satisfy the claim of the Government.
1. the amount bid for the property under distraint is not equal to the
amount of the tax; or
2. the amount is very much less than the actual market value of the
articles offered for sale.
3. Public sale of the property under levy or forfeiture of the property to the
government for want of bidder
• Such certificate shall operate with the force of a legal execution throughout
the Philippines.
Advertisement of sale
• Delinquent taxpayer have the right to redeem the real property sold by him
or any one for him within one (1) year from the date of sale.
• Taxpayer must pay the amount of public taxes, penalties, and interest from
the date of delinquency to the date of sale, together with interest on said
purchase price at the rate of 15% per annum from the date of purchase to
the date of redemption.
• The owner shall not, however, be deprived of the possession of the said
property and shall be entitled to the rents and other income thereof until the
expiration of the time allowed for its redemption.
• Internal revenue officer conducting the sale of real property levied shall
declare the property forfeited to the Government in satisfaction of the claim
when:
2. the highest bid is for an amount insufficient to pay the taxes, penalties
and costs.
• The Commissioner shall have charge of any real estate obtained by the
Government in payment or satisfaction of taxes, penalties or costs arising
under the NIRC or in compromise or adjustment of any claim thereof.
• The Commissioner may, upon giving not less than 20 days notice, sell and
dispose of the said property at public auction or, with the prior approval of
the Secretary of Finance, dispose of the same at private sale.
FORFEITURE
Forfeiture
• The effect of forfeiture is to transfer the title to the specific thing from the
owner to the government.
• All chattels, machinery, and removable fixtures of any sort used in the
unlicensed production of articles subject to excise tax shall be forfeited.
• Dies and other equipment used for the printing or making of any internal
revenue stamp, label or tag which is in imitation of or purports to be a lawful
stamp, label or tag shall also be forfeited.
• Articles withdrawn from any such place or from customs custody or imported
into the country without the payment of the required tax shall likewise be
forfeited.
• In a fraud assessment which has become final and executory, the fact of
fraud shall be judicially taken cognizance of in the civil or criminal action for
the collection thereof.
Civil action
• A civil action may also be filed in order to collect the so-called self assessed
tax.
• No civil action for the recovery of taxes shall be filed without the approval of
the Commissioner.
• In Dayrit v. Cruz [L-39910, September 26, 1988], the Supreme Court ruled
that the request for reconsideration cannot be considered as a protest
against the assessment. According to the Supreme Court, the failure of the
heirs to substantiate their claim against the assessment due to the non-
submission of their position paper justified the Commissioner in collecting the
estate and inheritance taxes in the settlement proceedings.
• No. In Republic v. Liam Tian Teng Sons, Inc. [16 SCRA 584(1966)], the
Supreme Court held that nowhere in the Tax Code is the Commissioner
required to rule first on a taxpayer’s request for reinvestigation before he can
go to court for the purpose of collecting the tax assessed. According to the
Supreme Court, the legislative policy is to give the Commissioner much
latitude in the speedy and prompt collection of taxes because it is on taxation
that the government depends to obtain the means to carry out its operations.
Criminal action
1. No criminal action for the recovery of taxes or the enforcement of a fine shall
be filed in court without the approval of the Commissioner. [Section 220,
NIRC]
3. The acquittal of the taxpayer in a criminal action does not necessarily result
in the exoneration of said taxpayer from his civil liability to pay taxes.
4. In a criminal action that was instituted against the taxpayer for having filed a
false and fraudulent return and failure to pay taxes, the Supreme Court held
Payment of the tax due after apprehension shall not constitute a valid
defense in any prosecution for violation of any provision of the NIRC or in any
action for forfeiture of untaxed articles. [Section 253, NIRC]
Section 280 provides that: “If the person convicted for violation of any
provisions of this Code has no property with which to meet the fine imposed
upon him by the court, or is unable to pay such fine, he shall be subject to a
subsidiary personal liability.”
• In taxation, the civil liability to pay taxes arises not because of any felony but
upon the taxpayer’s failure to pay taxes. Criminal liability in taxation arises
as a result of one’s liability to pay his taxes. Consequently, the extinction of
one’s criminal liability does not necessarily result in the extinguishments of
his civil liability to pay taxes.
• “With regard to the tax proper, the state correctly points out in its brief that
the acquittal in the criminal case could not operate to discharge the
petitioner from the duty to pay the tax since that duty is imposed by statute
prior to and independent of any attempts on the part of the taxpayer to
evade payment. The obligation to pay the tax is not a mere consequence of
the felonious acts charged in the information, nor is it a mere civil liability
derived from crime that would be wiped out by the judicial declaration that
the criminal acts charged did not exist.” [Castro v. Collector, 4 SCRA 1093]
• Quirico Ungab filed a motion to quash the criminal complaints against him in
view of his pending protest against the assessment made by the Bureau of
Internal Revenue. The Supreme Court ruled that his contention is without
merit. What is involved here is not the collection of taxes where the
assessment of the Commissioner may be reviewed by the Court of Tax
Appeals but a criminal prosecution for violation of the NIRC which is within
the cognizance of the Court of First Instance (now RTC).
• While there can be no civil action to enforce collection before the assessment
procedures in the NIRC have been followed, there is no requirement for the
precise computation of the tax before there can be criminal prosecution
under the NIRC.
• A crime is complete when the violator has knowingly and willfully filed a
fraudulent return with intent to evade and defeat the tax.
• The Supreme Court differentiated this case from Ungab v. Cusi by ruling
that, even though this is also a criminal prosecution, there must be a prima
facie showing of a willful attempt to evade taxes before one can proceed with
such prosecution. In Ungab, there was willful attempt to evade taxes while,
in the case at bar, there was none, as Fortune was even paying taxes
according to the BIR requirements. Thus, there is still need for a final
determination of the tax due before criminal prosecution can be commenced
against Fortune.
• Additions to the tax are increments to the basic tax incident to the taxpayer’s
non-compliance with certain legal requirements like the taxpayer’s refusal or
failure to pay taxes on time and/or violations of taxing provisions in the law.
2. Interest
• The civil penalty or surcharge may either be 25% or 50% of the tax
depending on the nature of the violation.
1. 25%
a. Failure to file any return and to pay the tax due thereon as required by
the NIRC or rules
b. Filing a return with an internal revenue officer other than those with
whom the return is required to be filed.
c. Failure to pay the deficiency tax within the time prescribed for its
payment in the notice of assessment.
d. Failure to pay the full or part of the amount of tax shown on any
return, 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.
2. 50%
a. In case of willful neglect to file the return within the period prescribed
by the NIRC or rules
Interest
Classes of interest
1. Deficiency interest
2. Delinquency interest
Deficiency interest
• Any deficiency in the tax due shall be subject to the interest of 20% per
annum which shall be assessed and collected from the date prescribed for its
payment until the full payment thereof.
• Rate is 20% per annum until the amount is fully paid which interest shall form
part of the tax.
• This is imposed when taxpayer has opted to pay by installment but he fails to
pay the tax or any installment on the prescribed date for payment.
• Payment of the tax due after apprehension shall not constitute a valid
defense in any prosecution for violation of any provision of the NIRC or in any
action for the forfeiture of untaxed articles.
• Any person who willfully aids or abets in the commission of a crime penalized
in the NIRC or who causes the commission of any such offense by another
shall be liable in the same manner as the principal.
2. Failure to file return, supply correct and accurate information, pay tax,
withhold and remit tax and refund excess taxes withheld on compensation
• All violations of any provision of the NIRC shall prescribe after five (5) years.
• Prescription shall begin to run from the day of the commission of the violation
of the law, and if the same be not known at the time, from the discovery
thereof and the institution of judicial proceedings for its investigation and
punishment.
• The term of prescription shall not run when the offender is absent from the
Philippines.
• Person voluntarily gives definite and sworn information, not yet in the
possession of the Bureau of Internal Revenue. Information should not refer to
a case already pending or previously investigated or examined by the
Commissioner or any of his agents.
• Information leads to the discovery of frauds upon the internal revenue laws or
violations of any of the provisions thereof.
• The same amount of reward shall be also given to an information where the
offender has offered to compromise the violation of law committed by him
and his offer has been accepted by the Commissioner and collected from the
offender.