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are needed to see this picture. laws or portions thereof administered bythe BIR subject to the exclusive appellate jurisdiction of the CTA B . Power to obtain information, summon,examine and take testimony of persons (Sec.5) 1) For the Commissioner to ascertain:(a) correctness of any return or in making areturn where none has been made(b) liability of any person for any internalrevenue tax or in correcting such liability(c) tax complianceThe Commissioner is authorized:2) to Examine any relevant Book, paper, recordor other data3) to Obtain any Information (costs, volume of production, receipts, sales, gross income,etc), on a regular basis from:(a) any person other than the person under investigation or (b) any office or officer of the national/localgovernment, government agencies andinstrumentalities ( Bangko Sentral ,GOCCs)4) To Summon (a) the person liable for tax or required to filea return or (b) any officer or employee of such personor (c) any person having in hispossession/custody/ care1. the books of accounts2. accounting records of entries relatingto the business of the person liablefor tax or any other person5) to Produce such books, papers, records andother data and to give testimony6) to take the Testimony of the personconcerned, under oath as may be relevant tothe inquiry7) To cause revenue officers and employees tomake a Canvass of any revenue district or region nothing in Section 5 shall be construed asgranting the Commissioner the authority toinquire into bank deposits other than as providedfor under Sec. 6 (F) of the Code (authority toinquire into bank deposits). C

. Power to make assessments, prescribe additional requirements for tax administration and enforcement (Sec. 6) 1) Examination of returns and determination of tax due -(a) After a return has been filedtheCommissioner or his representative mayauthorizei. the Examination of any taxpayer;andii. the Assessment of the correctamount of tax;(b) Failure to file a return shall not preventthe Commissioner fromauthorizing the examination of anytaxpayer; Any tax or deficiency tax so assessed shall be paid upon notice and demand from the Commissioner or his representative.Any return, statement or declaration filed in any authorized office shall not be withdrawn; but within THREE YEARS from date of filing, the same may be modified, changed or amended; provided that no notice for audit or investigation of such return, has in the meantime, been actually served upon the taxpayer. 2) Failure to submit required returns and other documentsIf a person(a) fails to file a required return or report atthe time prescribed or (b) Willfully or otherwise files a false or fraudulent return,The Commissioner shall Make or Amend thereturn from(a) his own knowledge or (b) from such information as he can obtainthrough testimony or otherwisewhich shall be prima facie correct and sufficientfor all legal purposes3) Inventory-taking, Surveillance, PresumptiveGross Sales(a) Commissioner may, at any time duringthe taxable year 1. order the Inventory taking of goodsof any taxpayer; or 2. may place the business operations of any person (natural/juridical) under Observation or Surveillanceif there is reason to believe that suchperson is not declaring his correctincome, sales or receipts for taxpurposes.The findings may be used as basis for assessing the taxes and shall be deemed prima facie correct.

Taxation Law Summer Reviewer A TENEO C ENTRAL B AR O PERATIONS 2007 Page 10 of 145 QuickTime and aTIFF (Uncompressed) decompressor are needed to see this picture. (b) Commissioner may prescribe a Minimumamount of gross receipts, sales andtaxable base (taking into account thesales and income of other personsengaged in similar business) :1. When a person has failed to issuereceipts as required by Sec. 113(Invoice requirements for VAT-registered persons) and Sec. 237(Issuance of Receipts or CommercialInvoices); or 2. When the books of accounts or records do not correctly reflect thedeclarations made or required to bemade in a return,such minimum amount shallbe prima facie

correct4) Terminate taxable period -Commissioner shall declare the tax period of a taxpayer terminated and send notice to thetaxpayer of such decision with a request for immediate payment of the tax, when it hascome to the knowledge of the Commissioner: (RIRHO) (a) that a taxpayer is R etiring from businesssubject to tax or (b) is I ntending to leave the Philippines or (c) to R emove his property therefrom or (d) to H ide or conceal his property or (e) is performing any act tending to O bstructthe proceedings for the collection of tax5) Prescribe Real Property Values -The Commissioner is authorized to:(a) divide the Philippines into different zonesor areas and(b) determine the fair market value of realproperties located in each zone or area For tax purposes, the value of the property shall be whichever is higher of: (a) Fair market value as determined by the Commissioner; or (b) Fair market value as shown in the schedule of values of the provincial and city assessors. 6) Authority to Inquire into Bank Deposit -Notwithstanding R.A. 1405 (Bank SecrecyLaw) the Commissioner is authorized toinquire into the Bank deposits of:(a) a decedent to determine his gross estate(b) a taxpayer who has filed an application tocompromisepayment of tax liability byreason of financial incapacity The taxpayers application for compromise shall not be considered unless he waives in writing his privilege under RA 1405 and other general or special laws. Such waiver shall authorize the Commissioner to inquire into his bank deposits. 7) Authority to Register tax agents -(a) The Commissioner shall Accredit andRegister, individuals and generalprofessional partnerships and their rep.who prepare and file tax returns andother papers or who appear before theBIR(b) The Commissioner shall create nationaland regional accreditation boards Those who are denied accreditation may appeal the same to the Sec. of Finance who shall rule on the appeal within 60 days from receipt of such appeal. Failure of the Sec. of Finance to rule on the appeal within the said period shall be deemed as approval for accreditation . 8) Authority to Prescribe AdditionalRequirements-The Commissioner may prescribe themanner of compliance with any documentaryor procedural requirement for the submissionor preparation of financial statementsaccompanying tax returns. D . Authority to delegate power (Sec. 7) The Commissioner may delegate the powers vestedin him to subordinate officials with rank equivalent toDivision Chief or higher, subject tolimitations/restrictions imposed under the rules andregulations EXCEPT, (the following powers shallNOT be delegated): (RIR CoA A) 1) power to R ecommend the promulgationof rules and regulations by the Sec. of Finance2) power to I ssue rulings of first impressionor to R

everse, revoke, modify anyexisting rule of the BIR3) power to Co mpromise or A bate any taxliabilityEXCEPT, the regional evaluation boardmay compromise:(a) assessments issued by regionaloffices involving deficiency taxes of P500,000 or less; and(b) minor criminal violations as may be

Taxation Law Summer Reviewer A TENEO C ENTRAL B AR O PERATIONS 2007 Page 11 of 145 QuickTime and aTIFF (Uncompressed) decompressor are needed to see this picture. determined by the rules Regional Evaluation Board is composed of: i. Regional Director as Chairman ii. Asst. Regional Director iii. Heads of the Legal, Assessment and Collection Div.iv. Revenue District Officer having jurisdiction over the taxpayer 4) power to A ssign or reassign internalrevenue officers to establishments wherearticles subject to excise tax are kept E. Assignment of Internal Revenue Officers (Secs. 16 &17) The Commissioner may assign/ reassign internalrevenue officers:1) involved in excise tax functions as often as theexigencies of revenue service may require;provided that he shall in no case stay in hisassignment for more than 2 years (Sec. 16)2) without change in rank and salary, to other or special duties connected with the enforcementand administration of internal revenue laws asthe exigencies of the service may require;provided that officers assigned to performassessment or collection functions shall notremain in the same assignment for more than 3years; assignment of officers and employees tospecial duties shall not exceed 1 year (Sec. 17) F. Internal Revenue Districts (Sec. 9) The Commissioner, with approval of the Sec. of Finance, shall divide the Philippines into suchnumber of revenue districts for administrativepurposes. Each district shall be under the supervisionof a Revenue District Officer. Duties of the Commissioner:

(PASO) 1) To P rescribe, provide and distribute to the proper officials the requisite licenses, internal revenuestamps, labels, all other forms, certificates,bonds, records, invoices, books, receipts,instruments and appliances used in administeringlaws falling within the jurisdiction of BIR2) To A cknowledge payment of any tax under thisCode expressinga) the amount paid andb) the particular account for which paymentwas made (Sec. 8)3) To S ubmit reports to the appropriate committeeof Congress upon its request and in aid of legislation, which information or report shallinclude, but not be limited to:(a) industry audits(b) collection performance data(c) status reports in criminal actions initiatedagainst persons(d) taxpayers returnsprovided, any return or information which canbe associated with or identifies, directly or indirectly a particular taxpayer, shall befurnished to the appropriate committee of Congress only when sitting in ExecutiveSession, unless the taxpayer consents inwriting to such disclosure4) Submit reports to the O versight Committeethrough the Chairman of the Committee on Waysand Means of the Senate and House of Representatives, on the exercise of his powers of abatement and compromise of taxes (Sec. 204)every 6 months of each calendar year. (Sec. 20) NATIONAL INTERNAL REVENUE TAXES: (Sec.21) (I VEE DOO) 1) I ncome tax2) E state and Donors tax3) V alue-Added tax4) O ther percentage tax5) E xcise tax6) D ocumentary stamp tax7) Such O ther taxes as are or hereafter may beimposed and collected by the BIR TITLE II. TAX ON INCOMEDEFINITION OF TERMS 1) Person an individual, a trust, estate or corp.2) Corporation include partnerships (distinguishbetween ordinary and general professionalpartnership)3) General professional partnership partnerships formed for the sole purpose of exercising their common profession, no part of itsincome being derived from engaging in any tradeor business4) Shares of stock

 includes shares of stock of acorp., warrants & options to purchase shares of stock, as well as units of participation in apartnership (except gen. professionalpartnership), joint stock companies, jointaccounts, joint ventures taxable as corp.,associations & recreation or amusement clubs &mutual fund certificates