Tax Assessment official action of an
officer authorized by law in ascertaining the
amount of tax due under the law from a
taxpayer.
It involves:
1. Computation of sum due
2. Giving notice to that effect to the
taxpayer
3. After giving notice of a demand upon him
for the payment of the tax deficiency
stated.
Tax audit- process of examining, going over,
or scrutinizing the book and records of the
taxpayer to ascertain correctness of tax
declared and paid by taxpayer.
Letter of Authority (LA) - official
document empowers Revenue officer to
examine scrutinize taxpayer books of
accounts and other acctg record. Issued
by Commissioner of Internal Revenue or
Regional Director.
It must be served to concerned taxpayer
within 30 days from its date of issuance
otherwise it shall be null and void.
Taxpayer has right to refuse service of LA
unless revalidated.
LA is revalidated through issuance of
new LA
Letter of Authority can be revalidated
- Only 1 for LA issued by Revenue
Regional Office or Revenue District
office
- Twice (2) In case LA is issued by
National Office.
Pre-assessment notice (PAN) a
written notice given to a taxpayer
informing him of the findings of BIR
officer relating to deficiency in his tax
return, indicating law and facts on w/c
assessment is made & requiring the
taxpayer to respond w/in a given period.
Requirements of LA and AUDIT:
ITR attach to LA
No erasure in LA
LA shall cover only 1 year
Audit must be completed w/in 120 days
unless revalidated for another 120 days
Only Revenue Officer stated in LA is
authorize to look in at books and
record.
Audit must be done in taxpayer place
of business.
DELIQUENCY state of person whom
personal obligation to pay the tax has
been fixed by lawful assessment and
thereafter fails to pay the tax w/in time
limited by law
KINDS OF ASSESSMENT
1. Self-Assessment- tax is assessed by
taxpayer
2. Deficiency Assessment- tax is
assessed by tax assessor.
3. Void Assessment- as assessment
wherein tax assessor has no power to
act at all
4. Erroneous Assessment- assessment
wherein assessor the power to assess
but commits an error in exercise.
DUE PROCESS REQ. IN ISSUANCE
DEFICIENCY TAX
PRELIMINARY ASSESSMENT NOTICE
(PAN)
- If after review and revaluation by
Commissioner or his authorize
representative, it is determined there
exists sufficient basis to assess the
taxpayer for any deficiency tax the
office will issue to taxpayer PAN.
The BIR shall issue a Formal Letter of
Demand and Final Assessment Notice
FLD/FAN calling for payment of deficiency
tax liability and penalties when:
1. The taxpayer fails to respond w/in 15
days from date of receipt of the PAN
2. He disagrees w/ the findings of
deficiency tax. FLD/FAN shall be issued
w/in 15 days from filing/submission on
taxpayer response.
 When PAN is not required? Thus Final Letter
of Demand or Final Assessment Notice
FLD/FLN shall be issued outright:
a. Deficiency of tax result of
mathematical error appearing in face
of tax return
b. Discrepancy has been determine
between tax withheld and amount
actually remitted by withholding
agent
c. Taxpayer opted to claim a refund or
tax credit of excess credible
withholding tax for table period.
d. Excise tax due
e. An article locally purchased or
imported by an exempt person such
as, but not limited to vehicles, capital
equipment, machineries and spare
parts has been sold, traded or
transferred.
FORMAL LETTER OF DEMAND AND FINAL
ASSESSMENT NOTICE (FLD/FAN)
The FLD/FAN calling for the payment of
the taxpayer deficiency tax shall state the
facts, law, rules and regulations, or
jurisprudence on w/c the assessment is
based otherwise shall be void.
It shall be issued by the Commissioner or
his duly authorize representative:
Revenue Regional Director
Assistant Commissioner-Large
Taxpayer service
Assistant Commissioner- Enforcement,
and
Advocacy Service
The taxpayer / representative/ tax agent
may protest against FLD/FLN within
30 days from date of receipt. If
taxpayer fails to file valid protest the
assessment shall become final, executory
and demandable.
Taxpayer may file written request for
reconsideration or reinvestigation:
Request for RECONSIDERATION
- plea of re-evaluation of an assessment
on the basis of existing records w/o
need of additional evidence. It may
involve both a question of fact or of law
or both
Request for REINVESTIGATION
- Plea of re-evaluation of an assessment
on the basis of newly discovered or
additional evidence taxpayer intends to
present in reinvestigation.
- Taxpayer shall submit all relevant
documents in support of his protest
w/in 60 days from date of filling
letter of protest. Otherwise the
assessment shall become final by
operation of law.
- After 60 days, the BIR shall deny the
request of reinvestigation through
issuance of Final Decision on
Disputed Assessment (FDDA).
- Relative document- those documents
necessary to support legal and factual
bases in disputing tax assessment. ( 60
days period of submission of relative
doc. shall not apply in reconsideration)
The Taxpayer SHALL STATE IN HIS
PROTEST:
a. Nature of protest whether
reconsideration or reinvestigation
specifying newly or additional evidence if
reinvestigation.
b. Date of Assessment Notice
c. Applicable law, rules and regulations or
jurisprudence on which protest is based
otherwise his protest shall be void w/o
force or effect.
SEVERAL ISSUES INVOLVED IN FLD/FAN
If there are several issues involved in
FLD/FAN but taxpayer only disputes or
protests against the validity of some of
the issues raise, the assessment
attributable to the undisputed issue
shall become final, executory and
demandable
If there are several issues involved in
FLD/FAN but taxpayer fails to state the
facts, the applicable law, rules and
regulations or jurisprudence in support
in support of his protest , the same shall
 be considered undisputed issue in which
the assessment attributable shall
become final, executory and
demandable.
PROTEST DENIED BY COMMISSIONER
If the protest is denied in whole or in part,
by the commissioners duly authorized
representative, the taxpayer may either:
a. Appeal to the Court of Tax Appeals (CTA)
within 30 days from receipt of said
decision.
b. File a request for reconsideration to the
Commissioner within 30 days from
receipt of said decision.
No request for reinvestigation shall be
allowed, only issues raised in the
decision of the commissioner duly
authorized representative shall be
entertained by commissioner.
PROTEST IS NOT ACTED UPON BY
COMMISSIONER DULY AUTHORIZED
REPRESENTATIVE
If protest is not acted upon by the
Commissioners duly authorized
representative within 180 days
counted from;
o Date of Filing protest in case of
request reconsideration
o Date of submission by the taxpayer
of the required documents within 60
days from date of filing of the
protest in case of request for
reinvestigation.
Taxpayer may either:
a. Appeal to CTA within 30 days after
expiration of 180 day period.
b. Await final decision of the
commissioner duly authorized
representative on disputed
assessment.
PROTEST IS NOT ACTED UPON BY
COMMISSIONER
If protest is not acted upon by the
Commissioners within 180 days
counted from the date filing of the
protest.
The taxpayer may either:
a. Appeal to CTA within 30 days after
expiration of 180 day period.
b. Await final decision of the
commissioner on disputed
assessment and appeal such
decision to CTA within 30 days after
receipt of copy of such decision.
FINAL DECISION ON DISPUTED
ASSESSMENT (FDDA)
Decision of commissioner or duly authorize
representative must state the ff:
1. The facts, the applicable law, rules
and regulations or jurisprudence on
which protest is based otherwise his
protest shall be void and
2. That the same is his final decision
CLAIM FOR REFUND
Grounds on filing claims for tax refund
or tax credit:
1. Tax is collected erroneously or illegally
2. Penalty is collected without authority
3. Sum collected is excessive
Requisite for Tax refund or Credit:
1. Claim must be in writing (even without
written claim, BIR Comm may refund
or credit any tax if on the face of
return which payment is made, it
appears clearly to have erroneously
paid)
2. It must be filed with the commissioner
within 2 years after the payment of
tax or penalty.
 3. Show of proof of payment.
2-year period applies only to suits or
proceeding for the recovery of taxes or
penalties erroneously, excessively or
illegally collected.
File claim for refund with the
Commissioner of the tax paid within 2
years from date of payment
Appeal to Court of Tax Appeal-
within 30 days from CIR decision and
within 2 years from date of final
payment.
Appeal to Supreme Court- within 15
days from receipt of decision of Court
of Tax Appeals
PRESCRIPTIVE PERIODS FOR
ASSESSMENT AND COLLECTION
The right of the government to assess
and later on to collect tax is subject to
prescription.
ASSESSMENT OF TAX LIABILITY
Three (3) years
After last day of filing- if return was
filed before last day
From date of filing- if the return was
filed late.
Filing of the amended return- if the
return was amended substantially.
Ten (10) years when
1. No return is filed
2. The return is false or fraudulent with
intent to invade tax.
The prescriptive period commences
from date of discovery.
COLLECTION OF TAX
Five (5) years- From assessment
Ten (10) years without assessment
and in case of fraudulent returns with
intent to evade the tax
Criminal Liability
5 years- from commission or discovery of the
violation whichever is later.
SUSPENSION OF PRESCRIPTIVE PERIOD
Agreement in writing between the
Commissioner and the taxpayer to suspend
the running of prescriptive period. The
waiver must be executed within 3 year
period prescribed.
It is suspended:
1. When the commissioner is prohibited
from making the assessment
2. When taxpayer request for a
reinvestigation or reconsideration which
is granted by commissioner
3. When taxpayer request for a
reinvestigation or reconsideration
4. When taxpayer cannot be located in
address given by him in return
5. When warrant of distraint and levy is
duly served but no property could be
located
6. Taxpayer is out the Philippines
REMEDIES OF GOVERNMENT
Tax Remedies- procedure or actions
available both to the government to collect
taxes and to taxpayer to avoid abuses in
payment of taxes.
1) ADMINISTRATIVE REMEDIES- refer to
government remedies at the
 administration level through Bureau of
Internal Revenue.
a. DISTRAINT OF PERSONAL PROPERTY
Seizure by the government of personal
property (tangible or intangible) to
enforce the payment of taxes, followed
by its public sale if taxes accruing
thereto are not voluntarily paid.
The property may be offered to public
sale if after seizure the taxes are not
voluntarily paid.
Kinds of Distraint
a. Constructive Distraint - The
government prohibits the taxpayer
from disposing his personal property to
enforce collection of taxes.
b. Actual Distraint It consists of the
seizure of the personal property and
sells the same through public auction
to settle latters unpaid tax liabilities.
B. LEVY OF REAL PROPERTIES
Refers to the seizure of real properties
and interest in or rights to such
properties for the satisfaction of taxes
due from delinquent tax payer.
The property may be offered to public
sale if after seizure the taxes are not
voluntarily paid. It can be made
before, simultaneously or after
distraint of personal property.
Levy shall be effected in writing upon
a certificate prepared by the
commissioner or his duly authorized
representative.
C. ENFORCEMENT OF FORFEITURE
is the divestiture of property without
compensation in consequence of a
default or offense.
The forfeiture of chattels and removal
of fixtures of any sort shall be enforced
by the seizure and sale or destruction
of the specific forfeited property.
Forfeiture of real property shall be
enforced by judgment of condemnation
and sale in a legal action or
proceeding, civil or criminal as the case
may be.
D. ENFORCEMENT OF TAX LIEN
Tax lien is legal claim or charge on
property, whether real or personal
established by law as a source of
security for payment of tax obligations
It is more extensive in scope and is
superior to all other claims or
preferences.
E. COMPROMISE- a contract whereby
parties by reciprocal concessions, avoid
litigations or to put an end to one already
commenced. It involves reduction of
taxpayers liability.
Abatement- is authorized when the tax
appears to be unjust or excessive.
Cases which may be compromise:
1. Delinquent Accounts
2. Cases under administrative protest after
issuance of final assessment notice to
taxpayer which are still pending
3. Civil tax cases being disputed before the
courts
4. Collection of cases filed in courts
5. Criminal violations other than those
already filed in court or those involving
criminal frauds.
6. Cases covered by pre-assessment
notices but taxpayer is not agreeable to
findings.
Minimum amounts of Compromise
Settlement
For cases of financial incapacity- a
minimum compromise rate is 10% of
basic assessed tax.
For other cases a minimum
compromise rate equivalent to 40% of
basic assessed tax.
F. CIVIL PENALTIES

2) JUDICIAL REMEDIES- remedies of

government that are enforce though judicial
action.

a. Ordinary civil action- collection without

imprisonment.

b. Criminal Action- collection with

imprisonment.
Bureau of Internal Revenue
Assess and collect all national internal
revenue taxes, fees and charges, and to
enforce all forfeitures, penalties and
fines connected therewith, including the
execution of judgements in all cases
Powers and Duties of the Bureau of
Internal Revenue
Assessment and collection of all
national internal revenue taxes, fees,
and charges
Enforcement of all forfeitures, penalties
and fines connected therewith including
the execution of judgements in all cases
decided by its favor by the Court of Tax
Appeals and the ordinary courts; and
Giving effect to and administering the
supervisory and police powers conferred
by the NIRC or other laws (Sec. 2, 1997
NIRC)
Powers of the Commissioner of Internal
Revenue
To interpret tax laws
To decide tax cases
To obtain information, and summon,
examine, and take testimony of persons
To make assessments and prescribe
additional requirements for tax
administration and enforcement
Authority of the CIR
To conduct inventory taking and
surveillance
To prescribe presumptive gross sales
and receipts
To determine/terminate taxable period
To prescribe real property values
To inquire into bank deposit accounts
To accredited and register tax agents
To prescribe additional procedural or
documentary requirements
To delegate his powers
Powers of the CIR that shall NOT be
delegated
The power to recommend the
promulgation of rules and regulations by
the Secretary of Finance
The power to issue first interpretation
regarding rulings, or on reverse, revoke
or modify any existing ruling of the
Bureau
The power to assign or re-assign internal
revenue officer to establishments where
articles subject to exercise tax are
produced or kept; and
The power to compromise or abate
Powers, Authorities and Duties of
Internal Revenue Officers, in general
Authority of officers to administer oaths
and take testimony
Authority to make arrests and seizures
and reports on violations of laws
Authority of a Revenue Officer
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
Cases which CANNOT be compromise
Withholding tax cases, unless the
applicant taxpayer invokes provisions of
law that cast doubt on the taxpayers
obligation to withhold;
Criminal tax fraud cases confirmed as
such by the Commissioner of Internal
Revenue or his duly authorized
representative
Criminal violation already filed in court
Delinquent accounts with duly approved
schedule of installment payments
Cases where final reports of
reinvestigation or reconsiderations have
been issued resulting to reduction in the
original assessment
Cases which become final and executory
after final judgement of a court
 Estate tax cases where compromise is
requested on the ground of financial
incapacity of the taxpayer