(BDB Laws Tax Law For Business appears in the opinion section of BusinessMirror every

Thursday. BDB Law is an affiliate of Punongbayan & Araullo (P&A).

Handling BIR tax-assessment notices

The year 2007 has ended and a new one has just been ushered in. For most
businesses, this means a fresh start and a new shot at profitable business operations.
The closing of a companys books and the preparation of financial reports are normal
activities at the start of the new year. Businessmen normally devise new methods to
improve their business operations and to lessen, if not to correct, erroneous business
decisions in the past year.
For tax authorities, the end of 2007 means a new taxable year during which taxpayers
books can be examined and tax assessments can be made. New revenue targets will be
imposed upon our revenue-generating agencies in order to collect the much-needed
funds to defray government expenses.
Indeed, we can expect a lot of things to happen during the year and this definitely would
include the resumption of pending tax investigations and the issuance of new letters of
authority to look into our 2007 records vis--vis the 2007 financial reports to be
submitted on or before the statutory April 15 deadline. Revenue officers will be coming in
and business records will be required for presentation. Tax-assessment notices will be
prepared and issued to taxpayers. This may be an unwelcome fact for most of us, but
our tax authorities and their agents are mandated by law to do this particular job.
So what are we to do upon receipt of a formal assessment notice from the tax
authorities? We normally deal with assessment notices by resorting to our statutoryprovided remedy of filing protests to assessments. Section 228 of the 1997 Tax Code
specifically provides the rules to be followed when protesting an assessment.

There are two types of protests against an assessment. These are the requests for a (1)
reconsideration and (2) reinvestigation. A request for reconsideration refers to a plea for
reevaluation of an assessment on the basis of existing records, without need for
additional evidence. A request for reinvestigation, on the other hand, refers to a plea for
re-evaluation of an assessment on the basis of newly discovered evidence or additional
evidence that a taxpayer intends to present in the investigation. Both may invoke either a
question of fact or of law or both (CIR v. Philippine Global Communications, Inc., GR No.
167146, October 31, 2006). Our tax court has ruled that for a protest filed to be valid, it
must indicate whether it is a request for reinvestigation or reconsideration. A protest
which does not specify any of these would not bar the finality of the Final Assessment
Notice, or as if there was no protest filed.
The taxpayer or his duly authorized representative must administratively protest a formal
assessment notice within 30 days from its receipt. Failure to file a valid protest against
the assessment within this 30-day period shall render the assessment final, executory
and demandable. If there are several issues involved in the formal letter of demand and
assessment notice, and the taxpayer only disputes and protests against the validity of
some of the issues raised, the taxpayer shall be required to pay the deficiency taxes on
the undisputed issues. A collection letter calling for payment of the deficiency taxes on
the undisputed issues, inclusive of the applicable surcharge and/or interests, shall be
issued to the taxpayer. The prescriptive period for assessment or collection of the tax or
taxes attributable to the disputed issues shall be suspended.
The taxpayer should state the facts, the applicable law, rules and regulations or
jurisprudence on which the protest is based; otherwise, the protest may be considered
void and without force and effect. Within 60 days from the filing of the protest, all
relevant supporting documents shall be submitted; otherwise, the assessment shall
become final.
If the protest is denied in whole or in part by the commissioner or his duly authorized
representative, the taxpayer may appeal to the Court of Tax Appeals (CTA) within 30
days from receipt of the decision; otherwise, the assessment shall become final and
executory. However, if the denial of the protest was made by a revenue officer with a
rank lower than the commissioner, the taxpayer may elevate his protest to the
commissioner himself within 30 days from the date of receipt of the decision by such
revenue officer.
The commissioner or his duly authorized representative has to act on the taxpayers
protest within 180 days from the date of submission of the required documents in
support of such protest. Inaction on the part of the commissioner within the 180-day
period shall be construed as a denial of the protest. The taxpayer has the option to either
(a) file an appeal with the CTA within the 30-day period after the lapse of the 180-day
period, or (b) wait for the final decision of the commissioner on the disputed assessment
and file an appeal with the CTA within 30 days after receipt of such decision (Lascona
Land Co. v. Commissioner, CTA Case No, 5777, January 4, 2000).

Although we can never really tell what will happen during the year, one thing remains
certain: we can always hope for a happy new year ahead of us.