EXERCISES 16 1 1.

. Income tax Less: Withholding tax Income tax due Add: Penalties Late filing and late pa ment !7,000 x "5#$ Inte%est !7,000 x "0# x 1&"'$ )otal *ue, 1st installment !15,000 x +$ Less: Withholding tax A,aila-le fo% .ithholding on "nd installment *ue, "nd installment !15,000 x 1&"$ Less: Withholding tax *ue, "nd installment Add: Penalt fo% late pa ment !7,000 x "5#$ Inte%est /f%om 0ul 15 !7,000 x "0# x 1&1"$ )ax pa a-le ". a. Income tax Add: Penalt fo% late filing&pa ment !15,000 x "5#$ Inte%est / '&11 to 5&15 !15,000 x "0# x 1&1"$ )ax pa a-le -. Income tax Less: Pa ment, Ap%il 15, "002 3alance, "nd installment Add: Penalt and inte%est Penalt fo% late pa ment !7,500 x "5#$ Inte%est / 7&15 to 8&1 !7,500 x "0# x 1&"'$ Pa a-le, "nd installment c. Income tax Add: Penalt and inte%est Penalt fo% late filing&pa ment !15,000 x 50#$ Inte%est / '&15 to 5&15 !5,000 x "0# x 1&1"$ Income tax (. Income tax Add: Penalties Late filing and late pa ment !(0,000 x 50#$ Inte%est !(0,000 x "0# x 1&1"$ Income tax due 15,000.00 8,000.00 7,000.00 1,750.00 58.(( 1,808.(( 8,808.(( 7,500 8,000 ! 500$ 7,500.00 500.00 7,000.00 1,750.00 111.17 1,811.87 8,811.17 P15,000 (,750 "50 ',000 12,000 15,000.0 0 7,500.00 7,500.00 1,875.00 1".50 1,2(7.50 2,'(7.50 15,000 7,500 "50 7,750 "",750 P(0,000 P15,000 (,000 18,000 '8,000

'. 4es, he is lia-le fo% the deficienc tax. 5o.e,e%, he ma -e excused fo% pa ing the 50# penalt fo% the falsified tax %etu%n. 6%aud in filing %etu%n cannot -e p%esumed -ut must -e clea%l esta-lished !7%aphic A%ts ,s. 8I9, 0ul 18, 128'$. EXERCISES 16 2 1. ANSWER: A In case of .illful neglect to file the %etu%n .ithin the pe%iod p%esc%i-ed - this code o% %ules and %egulations, o% in case a false o% f%audulent %etu%n is .illfull made, the penalt to -e imposed shall -e 50# of the tax. !:ec. "'8;3<, =I98$ 2. ANSWER: C :ee the discussion in =o.1 a-o,e. 3. ANSWER: D :ee the discussion in =o.1 a-o,e. 4. ANSWER: D 8i,il penalt includes the pa ment of inte%est, the imposition of "5# and 50# penalt and the pa ment of fine. Imp%isonment is conside%ed as c%iminal sanction fo% c%iminal offenses committed. 5. Answer: D Income tax due Less: Withholding tax Income tax due pa a-le as of Ap%il 15, "008 Add: Penalt and inte%est Penalt !P'5,000 x "5#$ Inte%est !P'5,000 x "0# x (&1"$ Income tax due as of 0ul 15, "008 6. Answer: C Income tax pa a-le as of Ap%il 15, "008 Add: Penalt and inte%est Penalt !P '5,000 x 50#$ Inte%est !P '5,000 x "0# x (&1"$ Income tax due as of 0ul 15, "001 7. Answer: B Pa a-le, "nd installment Add: Inte%est !5,000 x "0# x (&1"$ Penalt fo% late pa ment !5,000 x "5#$ Pa a-le as of >cto-e% 15, "008 P '5,000 P "",500 ","50 "',750 12,750 5,000 "50 1,"50 1,500 P 50,000 5,000 '5,000 11,"50 ","50 1(,500 58,500

8.

Answer: A Income tax Add: Penalt and inte%est Penalt !1"0,000 x "5#$ Inte%est !1"0,000 x "0# ".5&1"$ Income tax due as of 0une (0, "008 Answer: C Income tax Add: Penalt and inte%est Penalt !P1"0,000 x 50#$ Inte%est !P1"0,000 x "0# x ".5&1"$ Income tax due as of 0une (0, "008

1"0,000 (0,000 5,000 (5,000 155,000

9.

1"0,000 10,000 5,000 15,000 185,000 1"0,000 (0,000 150,000 1"0,000 (0,000

10 Answer: B Income tax Add: Penalt !P1"0,000 x "5#$ )otal amount due Less: Amount al%ead paid Amount still due 11 Answer: C Amount due pe% audit Less: Amount paid *eficienc tax Add: Inte%est !50,000 x "0# x 15&1"$ Amount still due 1"

"00,000 150,000 50,000 1",500 1",500

Answer: D )he%e is tax delin?uenc on the dela in the pa ment of the tax on Ap%il "5, "008 instead of Ap%il 15, "008. )he%e is tax deficienc -ecause the amount paid is P1(0,000 onl instead of P1(5,000.

EXERCISES 17 1
1. @pon failu%e of the pe%son o.ing an delin?uent tax to pa the same at the time %e?ui%ed, the 3I9 can exe%cise the dist%aint of the pe%sonal p%ope%t o% le, of %eal p%ope%t , o% -oth, on the p%ope%ties o.ned - him. ". )he %ule is .hene,e% a tax %etu%n is filed on o% -efo%e Ap%il 15 of an ea%, the counting of the th%eeA ea% pe%iod fo% assessment of taxes shall sta%t on Ap%il 11, the da follo.ing the deadline fo% filing the %etu%n.

5o.e,e%, .hen the %etu%n is filed afte% the deadline, the counting of the th%eeA ea% pe%iod shall commence to %un on the date of filing. :ince the %etu%n .as filed on Ap%il 1(, "007, the (A ea% pe%iod shall expi%e on Ap%il 15, "010. 8onse?uentl , the assessment made on Ap%il 1', "010 .as made on time. 5o.e,e%, the assessment on Ap%il 17, "010 is not ,alid -ecause the same is made -e ond the p%esc%ipti,e pe%iod. (. a. If it is found out that the o,e%statement of expenses %epo%ted in the tax %etu%n %esulted to mo%e than (0# of the actual deductions, it shall constitute a p%ima facie e,idence of a f%audulent %etu%n. In this case, the 3I9 is gi,en a 10A ea% p%esc%ipti,e pe%iod to assess the %etu%n. In cases of f%audulent %etu%ns, the pe%iod shall commence to %un f%om the disco,e% of the f%aud. )he%efo%e, the last da fo% the 3I9 to maBe a ,alid assessment is on the 10th ea% afte% the disco,e% of the f%aud in the tax %etu%n filed - 3o-- . 5o.e,e%, if the o,e%statement of expenses does not constitute f%aud, the last da fo% the 3I9 to issue an assessment is Ap%il 15, "007. -. )he 3I9 is gi,en fi,e !5$ ea%s follo.ing the issuance of assessment to execute .a%%ant of dist%aint. :ince the assessment is made Ca%ch 1", "010, it shall ha,e until Ca%ch 1", "015 to execute a .a%%ant. c. =o, -ecause the 5A ea% pe%iod fo% dist%aint had al%ead lapsed. '. a. )he taxpa e% is gi,en (0 da s f%om %eceipt of assessment to file a p%otest o% %e?uest fo% %econside%ation .ith the 3u%eau of Inte%nal 9e,enue. 9oselle %ecei,ed the assessment on Ap%il "5, "007, the%efo%e, she has until Ca "5, "007 to act on the assessment. 8onside%ing that the %e?uest fo% %econside%ation .as filed on Ca ", "007, the %e?uest .as filed on time.

-. 9oselle is gi,en (0 da s f%om %eceipt of the decision of the 3I9 den ing he% %e?uest to appeal to the 8ou%t of tax Appeals. )he decision .as %ecei,ed on >cto-e% "0, "007, the%efo%e, she has until =o,. 12, "007 to appeal the decision of the 8ommissione% to the 8ou%t of )ax Appeals.

EXERCISES 17-2
1. ". (. '. 5. 1. 7. 8. 2. 10. * A 8 3 * A 8 * A Ap%il 15, "011 3 * A Ap%il 10, "011

11. 1". 1(. 1'. 15. 11. 17. 18.

* 8 8 8 3 8 8 Ans.e%: 8 *eficienc income tax Add: Inte%est !"0,000 x "0#$ Amount pa a-le pe% assessment notice P "0,000 ',000 "',000

12. "0.

8 Ans.e%: D >cto-e%, "008 =o,em-e%, "008 *ecem-e%, "008 0anua% , "002 6e-%ua% , "002 M r!"# 2$$9 %& s' ( ) '* !' *n '"e (*!+,en's)otal !expi%ation date$ Ca%ch, "002 A.r/&# 2$$9 %& s' ( ) '* ..e & '* C0A)otal !expi%ation date$ (1 (0 (1 (1 "8 29 180 " 28 (0

EXERCISE 17-3:

>n the fi%st ?uestion: =>, the .ai,e% .as not ,alidl executed fo% the follo.ing %easons: 1. It .as not p%o,en that %espondent .as fu%nished a cop of the 3I9Aaccepted .ai,e%. ". )he .ai,e% .as signed onl - a %e,enue dist%ict office%, .hen it should ha,e -een signed the 8ommissione% as mandated - the =I98 and 9C> =o. "0A20, conside%ing that the case in,ol,es an amount of mo%e than P1 million, and the pe%iod to assess is not et a-out to p%esc%i-e. (. It did not contain the date of acceptance - the 8ommissione%, a %e?uisite necessa% to dete%mine .hethe% the .ai,e% .as ,alidl accepted -efo%e the expi%ation of the o%iginal (A ea% pe%iod.

3ea% in mind that the .ai,e% in ?uestion is a -ilate%al ag%eement, thus necessitating the ,e% signatu%es of -oth the 8ommissione% and the taxpa e% to gi,e -i%th to a ,alid ag%eement.

>n the second ?uestion: 4es. =I98 taxes must -e assessed .ithin ( ea%s counted f%om the pe%iod fixed - la. fo% the filing of the tax %etu%n o% the actual date of filing, .hiche,e% is late%. )his mandate go,e%ns the ?uestion of p%esc%iption of the go,e%nmentEs %ight to assess inte%nal %e,enue taxes p%ima%il to safegua%d the inte%ests of taxpa e%s f%om un%easona-le in,estigation. )he go,e%nment must assess inte%nal %e,enue taxes on time so as not to extend indefinitel the pe%iod of assessment and dep%i,e the taxpa e% of the assu%ance that it .ill no longe% -e su-Fected to fu%the% in,estigation fo% taxes afte% the expi%ation of %easona-le pe%iod of time.
EXERCISE 17-4:

:ection 71 offe%s t.o options: !1$ filing fo% tax %efund and !"$ a,ailing of tax c%edit. )he t.o options a%e alte%nati,e and the choice of one p%ecludes the othe%. 5o.e,e%, the failu%e to indicate a choice .ill not -a% a ,alid %e?uest fo% a %efund, should this option -e chosen - the taxpa e% late% on. )he %e?ui%ement is onl fo% the pu%pose of easing tax administ%ation pa%ticula%l the selfAassessment and collection aspect. In this case, PD96 did not ma%B the %efund -ox in its 1227 6A9. =eithe% did it pe%fo%m an act indicating that chosen tax c%edit. In fact, in its 1228 I)9, PD96 left -lanB the po%tion GLess: )ax 8%edit& Pa ments.H )hat action coupled .ith the filing of a claim fo% %efund indicates that PD96 option to claim a %efund. @nde% these ci%cumstances, PD96 is entitled to a %efund of its 1227 excess tax c%edits in the amount of P1,"80,50'.
EXERCISE 17-5:

)he p%ope% pa%t to ?uestion, o% seeB a %efund of an indi%ect tax is the statuto% taxpa e%, the pe%son on .hom the tax is imposed - la. and .ho paid the same e,en if he shifts the -u%den the%eof to anothe%. D,en if Pet%on passed on to :iBai% the -u%den of the tax, the additional amount -illed to :ilBai% fo% Fet fuel is not a tax -ut pa%t of the p%ice .hich :ilBai% had to pa as a pu%chase%. An excise tax is an indi%ect tax .he%e the tax -u%den can -e shifted to the custome% -ut the tax lia-ilit %emains .ith the manufactu%e% o% p%oduce%. )he excise taxes a%e collected f%om manufactu%e%s o% p%oduce%s -efo%e %emo,al of the domestic p%oducts f%om the place of p%oduction. Although excise taxes can -e conside%ed as taxes on p%oduction, the a%e %eall taxes on p%ope%t as the a%e imposed on ce%tain specified goods. When Pet%on %emo,es its pet%oleum p%oducts f%om its %efine% in Lima , 3ataan, it pa s the excise taxes due on the pet%oleum p%oducts thus %emo,ed. Pet%on, as manufactu%e% o% p%oduce%, is the pe%son lia-le fo% the pa ment of the excise tax as sho.n in the Dxcise )ax 9etu%ns filed .ith the 3I9. :tated othe%.ise, Pet%on is the taxpa e% that is p%ima%il , di%ectl

and legall lia-le fo% the pa ment of the excise taxes. 5o.e,e%, since an excise tax is an indi%ect tax, Pet%on can t%ansfe% to its custome%s the amount of the excise tax paid - t%eating it as pa%t of the cost of the goods and tacBing it on to the selling p%ice. :ilBai% as the pu%chase% and end consume%, ultimatel -ea%s the tax -u%den, -ut this does not t%ansfo%m petitione%Es status into a statuto% taxpa e%. In the %efund of indi%ect taxes, the statuto% taxpa e% is the p%ope% pa%t .ho can claim the %efund. Petitione% should in,oBe its tax exemption to Pet%on -efo%e -u ing the a,iation Fet fuel. Pet%on, ho.e,e%, %emains the statuto% taxpa e% on those excise taxes.
EXERCISE 17-6
In the instant case, petitioner timely filed a protest after receiving the PAN. In response thereto, the BIR issued a Formal Letter of Demand ith Assessment Notices. Pursuant to !ection ""# of the NIR$, the proper recourse of petitioner as to dispute the assessments %y filing an administrative protest ithin &' days from receipt thereof. Petitioner, ho ever, did not protest the final assessment notices. Instead, it filed a Petition for Revie ith the $(A. (hus, if e strictly apply the rules, the dismissal of the Petition for Revie %y the $(A as proper. )o ever, a careful reading of the Formal Letter of Demand ith Assessment Notices leads us to agree ith petitioner that the instant case is an e*ception to the rule on e*haustion of administrative remedies, i.e., estoppel on the part of the administrative agency concerned. In this case, e find the $IR estopped from claiming that the filing of the Petition for Revie as premature %ecause petitioner failed to e*haust all administrative remedies. +e cannot ignore the fact that in the Formal Letter of Demand ith Assessment Notices, respondent used the ord ,appeal- instead of ,protest-, ,reinvestigation-, or ,reconsideration-. Although there as no direct reference for petitioner to %ring the matter directly to the $(A, it cannot %e denied that the ord ,appeal- under prevailing ta* la s refers to the filing of a Petition for Revie ith the $(A. As aptly pointed out %y petitioner, under !ection ""# of the NIR$, the terms ,protest-, ,reinvestigation- and ,reconsideration- refer to the administrative remedies a ta*payer may ta.e %efore the $IR, hile the term ,appeal- refers to the remedy availa%le to the ta*payer %efore the $(A. !ection / of RA /"#", amending !ection 00 of RA 00"1, li.e ise uses the term ,appeal- hen referring to the action a ta*payer must ta.e hen adversely affected %y a decision, ruling, or inaction of the $IR. As e see it then, petitioner in appealing the Formal Letter of Demand ith Assessment Notices to the $(A merely too. the cue from respondent. Besides, any dou%t in the interpretation or use of the ord ,appeal- in the Formal Letter of Demand ith Assessment Notices should %e resolved in favor of petitioner, and not the respondent ho caused the confusion. (o %e clear, e are not disregarding the rules of procedure under !ection ""# of the NIR$, as implemented %y !ection & of BIR Revenue Regulations No. 0"2//. It is the Formal Letter of Demand and Assessment Notice that must %e administratively protested or disputed ithin &' days, and not the PAN. +hat e are saying in this particular case is that, the Formal Letter of Demand ith Assessment Notices hich as not administratively protested %y the petitioner can %e considered a final decision of the $IR appeala%le to the $(A %ecause the ords used, specifically the ords ,final decision- and ,appeal-, ta.en together led petitioner to %elieve that the Formal Letter of Demand ith Assessment Notices as in fact the final decision of the $IR on the letter2protest it filed and that the availa%le remedy as to appeal the same to the $(A.

EXERCISE 17 7
()3 first motion should %e granted hile the second motion should %e denied. !ection 00 of Repu%lic Act /"#" states that the Petition for Revie shall %e filed ith the $(A follo ing the procedure analogous to Rule 4" of the Revised Rules of $ivil Procedure hich also states that the Petition for Revie of an adverse 5udgment or final order of the R($ must %e filed ith the $ourt of Appeals ithin6 708 the original 012day period from receipt of the 5udgment or final order to %e appealed9 7"8 an e*tended period of 01 days from the lapse of the original period9 and 7&8 only for the most compelling reasons, another e*tended period not to e*ceed 01 days from the lapse of the first e*tended period. Follo ing %y analogy !ection 0, Rule 4" of the Revised Rules of $ivil Procedure, the &'2day original period for filing a Petition for Revie ith the $(A under !ection 00 of Repu%lic Act No. /"#", as implemented %y !ection &7a8, Rule # of the Revised Rules of the $(A, may %e e*tended for a period of 01 days. No further e*tension shall %e allo ed thereafter, e*cept only for the most compelling reasons, in hich case the e*tended period shall not e*ceed 01 days. 3ven the $(A en %anc, in its decision dated :anuary 0#, "''#, recogni;es that the &'2day period ithin hich to file the Petition for Revie ith the $(A may, indeed, %e e*tended. EXERCISE 17-8 (he advice of ta* deficiency, given %y the $IR to an employee of 3nron, as ell as the preliminary letter ere not valid su%stitutes for the mandatory notice in riting of the legal and factual %ases of the assessment. (hese steps ere mere perfunctory discharges of the $IR<s duties in correctly assessing a ta*payer. (he re=uirement for issuing a preliminary or final notice, as the case may %e, informing a ta*payer of the e*istence of a deficiency ta* assessment is mar.edly different from the re=uirement of hat notice must contain. :ust %ecause the $IR issued an advice, a preliminary letter during the pre2assessment stage and a final notice, in the order re=uired %y la , does not necessarily mean that 3nron as informed of the la and facts on hich the deficiency ta* assessment as made. (he legal and factual %ases of the assessment must %e stated in the formal letter of demand and assessment notice. (hus, such cannot %e presumed. >ther ise, the e*press provisions of Article ""# of the NIR$ and RR 0"2// ould %e rendered nugatory. (he alleged ,factual %ases- in the advice, preliminary letter and ,audit or.ing papers- did not suffice. (here as no going around the mandate of the la that the legal and factual %ases of the assessment %e stated in riting in the formal letter of demand accompanying the assessment notice. !uch re=uirement is in .eeping ith the constitutional principle that no person shall %e deprived of property ithout due process. In vie of the a%sence of a fair opportunity for 3nron to %e informed of the legal and factual %ases of the assessment against it, the assessment in =uestion as void. ?erily, ta*es are the life%lood of the government and so should %e collected ithout unnecessary hindrance. )o ever, such collection should %e made in accordance ith la as any ar%itrariness ill negate the very reason for the government itself. EXERCISE 17-9. N>. It cannot %e said that F3P$I failed to su%mit relevant supporting documents that ould render the assessment final %ecause hen F3P$I su%mitted its protest, F3P$I

attached the @I! and Balance !heet. Further, $IR cannot insist on the su%mission of proof of D!( payment %ecause such document does not e*ist as respondent claims that it is not lia%le to pay, and has not paid, the D!( on the deposit on su%scription. (he term ,relevant supporting documents- should %e understood as those documents necessary to support the legal %asis in disputing a ta* assessment as determined %y the ta*payer. (he BIR can only inform the ta*payer to su%mit additional documents. (he BIR cannot demand hat type of supporting documents should %e su%mitted. >ther ise, a ta*payer ill %e at the mercy of the BIR, hich may re=uire the production of documents that a ta*payer cannot su%mit. F3P$I, having su%mitted its supporting documents on the same day the protest as filed, had until :uly &0, "''" to ait for petitioner reply to its protest. >n August "#, "''" or ithin &' days after the lapse of the 0#'2day period counted from the filing of the protest as the supporting documents ere simultaneously filed, F3P$I filed a petition %efore the $ourt of (a* Appeals. F3P$I has complied ith the re=uisites in disputing an assessment pursuant to !ec ""# of the (a* $ode. )ence, the ta* assessment cannot %e considered as final, e*ecutory and demanda%le.

EXERCISE 18 1 1. =o. )he appellant is gi,en onl (0 da s f%om %eceipt of the decision of the 8ommissione% of Inte%nal 9e,enue to file an appeal .ith the 8ou%t of )ax Appeals. 8onside%ing that it tooB Lani Pe%eI th%ee !($ ea%s to appeal .ith the appellate cou%t, she is al%ead estopped f%om filing said appeal. 6u%the%mo%e, the appeal .as filed .ith the 8ou%t of )ax Appeals afte% mo%e than t.o !"$ ea%s f%om pa ment. ". 5e should immediatel file a Petition fo% 9e,ie. .ith the 8ou%t of )ax Appeals, not.ithstanding the failu%e of the 8ommissione% of Inte%nal 9e,enue to %ende% a decision. >the%.ise, C%. :antosE %ight to seeB %ecou%se to cou%t action .ould p%esc%i-e as he has onl t.o !"$ ea%s f%om the pa ment of the tax .ithin .hich to file the petition. (. =o. A decision of the of the 8ommissione% of Inte%nal is appella-le to the 8ou%t of )ax Appeals and not to the 8ou%t of Appeals. )his Fu%isdiction is an exclusi,e appellate Fu%isdiction of the 8)A.. A motion fo% %econside%ation filed 0ul "0, "007 is ineffecti,e -ecause the %ight of Pa%eng 3udong to file said motion is al%ead -a%%ed - p%esc%iption. '. =o. A decision of a 8it 3oa%d of Assessment Appeals is appella-le to the 8ent%al 3oa%d of Assessment Appeals .hose decision is also appeala-le to the 8ou%t of )ax Appeals. 5ence, the appeal .as not p%ope%t made. 5. 4es. )he 8ou%t of )ax Appeals has exclusi,e appellate Fu%isdiction o,e% decisions of the 8ommissione% of 8ustoms in,ol,ing fo%feitu%es.

)he decision of the 8ou%t of )ax Appeals is not appeala-le to the 8ou%t of Appeals -ecause the a%e of the same le,el o% coAe?ual .ith each othe%. 1. 3oth Fustices should ag%ee on the issue -ecause an affi%mati,e ,ote of t.o mem-e%s of a decision is necessa% fo% the %endition of a decision.

EXERCISE 18 2
1. ". (. '. 5. 1. 7. 8. 2. 10. 8 * 8 8 8 8 8 8 8 A