Topic 290

COLLECTION PROCEDURES & TAX REMEDIES

General Course for Revenue Officers

TMD

TB 290 Slide 1

COLLECTION PROCEDURES & TAX REMEDIES

1. Statutory Basis 2. Prescriptive Rules Governing Assessment & Collection 3. Exception as to Period of Limitation of Assessment & Collection 4. Accounts Receivable Management 5. Mode of Payment 6. Abatement / Cancellation of Tax Liability 7. Administrative Remedies Available to Government 8. Administrative Remedies Available to Taxpayers
General Course for Revenue Officers

TMD

TB 290 Slide 2

OBJECTIVES
1. Enumerate the powers of the Commissioner of Internal Revenue as to assessment and collection of taxes; 2. Know the prescriptive rules governing assessment and collection; 3. Know the exceptions as to the period of limitation on assessment and collection; 4. Become familiar with accounts receivable; and 5. Identify the administrative remedies available to government and taxpayers.

General Course for Revenue Officers

TMD

TB 290 Slide 3

Prescriptive Rule
STATUTORY BASIS : PRESCRIPTIVE RULE:
TITLE 1, VII & X , National Internal Revenue Code, as amended Taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period. In case a return is filed beyond the period prescribed by law, the three year period shall be counted from the day the return was filed. A return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day.
General Course for Revenue Officers

TMD

TB 290 Slide 4

EXCEPTION TO THE PERIOD OF LIMITATION

1. Assessment of false or fraudulent return shall be assessed at any time within ten (10) years after the discovery of the falsity, fraud or omission. 2. The period agreed upon by both the CIR and the taxpayer may be extended by subsequent written agreement made before the expiration of the period previously agreed upon. Any internal revenue tax which has been assessed within the period of limitation may be collected by distraint or levy or by proceeding in court within five (5) years following the assessment of tax.

3.

4. Any internal revenue tax, as provided in No. (2) may be collected by distraint or levy or by proceeding in court within the period agreed upon in writing before the expiration of the five (5) year period. The period so agreed upon may be extended by subsequent written agreements made before the expiration of the period previously agreed upon. 5. Nothing in the immediate paragraph shall be construed to authorize the examination and investigation or inquiry into any tax return filed in accordance with the provision of any tax amnesty law or decree.

General Course for Revenue Officers

TMD

TB 290 Slide 5

ACCOUNTS RECEIVABLES

It is any tax deficiency not settled within thirty (30) days from the date of assessment. Collection enforcement must be initiated by the Revenue Officer within five (5) year prescription period.

General Course for Revenue Officers

TMD

TB 290 Slide 6

COLLECTION FIELD FUNCTION TECHNIQUE If the taxpayer does not respond within the next ten (10) calendar days, enforce collection through administrative summary remedies with the issuance of the Warrant of Distraint and / or Levy.

General Course for Revenue Officers

TMD

TB 290 Slide 7

Assignment of Dockets for Collection

DOCKETS Assessment Division Administrative Division as listed in Form 40 shall:  microfilm record in the logbook index each docket in cards  furnish the Collection Division for monitoring purposes batch dockets of collectible accounts in a maximum of ten (10) dockets per batch

RDO

RDO  docket with memo of assignment for RDOs signature

Group Supervisor assigns dockets to the fieldmen prepare a memorandum of assignment to the fieldmen for verification and enforcement of summary remedies

Collection Unit Chief / Collection Supervisor  index each docket received from RDO enter each core in the General Control Ledger (GCL)-BIR Form No. 1253

Group Supervisor furnish a copy to the Collection Supervisor

Revenue Officer  sign the memorandum include the docket of the case in his inventory of tax cases

General Course for Revenue Officers

TMD

TB 290 Slide 8

MODE OF PAYMENT
The taxpayer can pay his tax liability using the following modes of payment: 1. Payment of the liability in full 2. Payment on installment basis 3. Payment by compromise settlement

General Course for Revenue Officers

TMD

TB 290 Slide 9

Requisites of a Request for Abatement

Tax Return and/or amended return with copy of a previous return filed as basis for comparison; Evidence of payment of first installment of tax due; and Latest Certified Financial Statement.

General Course for Revenue Officers

TMD

TB 290 Slide 10

DEFINITION OF TERMS
DISTRAINT - refers to the seizure by the government of personal property, tangible and intangible, to enforce the payment of taxes. LEVY - refers to the seizure by the government of real properties and interest in or rights to such properties in order to enforce the payment of taxes. TAX LIEN - refers to the validated legal claim or charge by the government on the property of the taxpayer either personal or real, as security for the payment of taxpayers tax liability filed by the RDO in the Register of Deed of City of Province where the property is located.

General Course for Revenue Officers

TMD

TB 290 Slide 11

DEFINITION OF TERMS
NOTICE OF LEVY - refers to the written notice by the CIR of the act of seizure of real property addressed to the Register of Deed of the City or Province where it is situated, for annotation at the back of the title, in order enforce collection of delinquent taxes due from a taxpayer. FORFEITURE - implies a divestiture of property without compensation, in consequence of a default or offense. GARNISHMENT - a proceeding in the nature of an attachment, by means of which credits, property, or effects of the debtor in the hands of a third person may be subjected to the payment of claims of the creditor of such debtor.
General Course for Revenue Officers

TMD

TB 290 Slide 12

DEFINITION OF TERMS

CONSTRUCTIVE DISTRAINT - the distraining officer does not take actual possession of the properties distrained, leaves them with the taxpayer who shall be obligated to preserve the same intact and unaltered and not to dispose the same in any manner whatsover without the express authority of the CIR. SEIZURE - the distraining offices seizes and takes actual possession of the property of the delinquent taxpayer.

General Course for Revenue Officers

TMD

TB 290 Slide 13

Real Property Warrant of Distraint and/or Levy

Under Section 207 of the NIRC: a. Authority is given to the CIR or his duly authorized representative if the amount involved is in excess of P1, 000, 000 b. Authority is given to the RDO if the amount is P1, 000,000 or less c. For computerized districts (ITS), the Warrants of Distraints and/or Levy will be generated automatically by the system

General Course for Revenue Officers

TMD

TB 290 Slide 14

REQUISITES OF A TAX LIEN

There must be a previous ascertainment of the sum due by means of an assessment; There must be a demand for payment of the tax liability, and There must be a failure to pay the tax.

General Course for Revenue Officers

TMD

TB 290 Slide 15

SERVICE OF THE NOTICE OF LEVY

The Notice of Levy shall be sent thru registered mail or personally served upon:
The Register of Deeds or Assessors Office of the province or City where the property is located

The Delinquent taxpayer or his agent or manager of the business in respect to which the liability arose

The occupant of the property in question, if the person is outside the Philippines, the facts of the Notice of Levy will be posted on the property levied upon and published in a newspaper once a week for three consecutive weeks.

General Course for Revenue Officers

TMD

TB 290 Slide 16

ADVERTISEMENT AND SALE

General Course for Revenue Officers

TMD

TB 290 Slide 17

CONTENTS OF THE NOTICE OF SALE

The amount of tax and penalty due; The time and place of sale; The name of the taxpayer against whom taxes are levied; Exact location and short description of the property to be sold; The terms of payment to include cash or managers check; and A Statement that reads The BIR may reject any or all bids.
General Course for Revenue Officers

TMD

TB 290 Slide 18

PUBLIC AUCTION / FORFEITURE

The sale shall be held either at the main entrance of the municipal building or city hall or on the premises of the property to be sold, as the officer conducting the proceedings shall determine and as the notice of sale shall specify.

General Course for Revenue Officers

TMD

TB 290 Slide 19

NEGOTIATED SALE
If there is an interested buyer on the real property absolutely forfeited by the government, the levying officer shall:

Require the buyer to make a written offer addressed to the CIR through the Regional Director /RDO.

Evaluate and analyze if the offer is to the best interest of the government

General Course for Revenue Officers

TMD

TB 290 Slide 20

CONSTRUCTIVE DISTRAINT OF THE PROPERTY OF A TAXPAYER

1. It is done when a person subject to tax, delinquent or not: is retiring from any business subject to tax; intends to leave the Philippines; removes his property therefrom; hides or conceals his property; and performs any act tending to obstruct the collection of tax. 2. Constructive Distraint is only a safeguard for and not a means of collection of the tax. There is no definite tax due in constructive distraint unlike in actual distraint.

General Course for Revenue Officers

TMD

TB 290 Slide 21

WARRANT OF GARNISHMENT

Bank Accounts or Salaries Property or Rights to Property Properties placed under Constructive Distraint

General Course for Revenue Officers

TMD

TB 290 Slide 22

SALE OF PROPERTY DISTRAINED & DISPOSITION OF PROCEEDS Sell the goods, chattels, etc., including stocks and other securities to the highest bidder for cash, or with the approval of the Commissioner, thru the duly licensed produce or stock exchanges at the time and place fixed in the notice. If there is a winning bid, the Revenue Officer executes a Certificate of Sale of personal property.

General Course for Revenue Officers

TMD

TB 290 Slide 23

PROCEDURES IN A NEGOTIATED SALE

The Distraining Officer shall: Require the buyer to make a written offer addressed to the CIR thru the Regional Director/RDO, indicating the amount offered and the mode of payment. Prepare a memorandum, stating the background of the case and the reasons for the negotiated sale to the RDO requesting approval of the offer. Prepare the Deed of Sale to be signed by the buyer, upon receipt of the approval of the CIR. The Deed of Sale and the entire docket will then be forwarded to the CIR.

General Course for Revenue Officers

TMD

TB 290 Slide 24

PROTEST ON THE ASSESSMENT

Procedures to be followed in cases of protest on assessments: The Revenue Officer shall: Stamp received on the letter of protest and attach the same to the docket. Determine if the letter of protest was filed by the taxpayer within the 30 day period from receipt of the assessment notice by the taxpayer (Sec. 228, NIRC). Require the taxpayer to accomplish and sign a Waiver of the Statute of Limitation not later than six months.

General Course for Revenue Officers

TMD

TB 290 Slide 25