Professional Documents
Culture Documents
I. Taxpayers Remedies
A. Administrative Protest Taxpayers Remedy Before Payment
1. Assessment of Internal Revenue Taxes
NIRC, 228. Protesting of Assessment. - When the Commissioner or his duly authorized representative finds that proper taxes should be
assessed, he shall first notify the taxpayer of his findings: provided, however, That a preassessment notice shall not be required in the
following cases:
(a) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the
return; or
(b) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was determined to
have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable qua rter or
quarters of the succeeding taxable year; or
(d) When the excise tax due on exciseable articles has not been paid; or
(e) When the 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 to non-exempt persons.
The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be
void.
Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the
taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings.
Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days
from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days
from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the
taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said
decision, or from the lapse of one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable.
RR 12-99. Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment of National
Internal Revenue Taxes, Civil Penalties and Interest and the Extra-judicial Settlement of a Taxpayer's Criminal Violation of the Code Through
Payment of a Suggested Compromise Penalty
Sec. 1. Scope. Pursuant to the provisions of Section 244 , in relation to Section 245 of the National Internal Revenue Code of 1997, these
Regulations are hereby promulgated to implement the provisions of Sections 6 , 7 , 204 , 228 , 247 , 248 and 249 on assessment of national
internal revenue taxes, fees and charges and to provide the rules governing the extra-judicial settlement of a taxpayer's criminal violation of
the said Code or any of its implementing Regulations through payment of a suggested compromise penalty.
Sec. 2. General Principles.
2.1. The surcharge and/or interest herein prescribed shall apply to all taxes, fees and charges imposed under the Code which shall be
collected at the same time, in the same manner, and as part of the tax.
2.2. In case the tax due from the taxpayer is paid on a partial or installment basis, the interest on the deficiency tax or on the delinquency
tax liability of the taxpayer shall be imposed from due date of the tax until full payment thereof. The interest shall be computed based on
the diminishing balance of the tax, inclusive of interests.
Sec. 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment.
3.1. Mode of procedures in the issuance of a deficiency tax assessment:
3.1.1. Notice for informal conference. The Revenue Officer who audited the taxpayer's records shall, among others, state in his
report whether or not the taxpayer agrees with his findings that the taxpayer is liable for deficiency tax or taxes. If the taxpayer is not
amenable, based on the said Officer's submitted report of investigation, the taxpayer shall be informed, in writing, by the Revenue
District Office or by the Special Investigation Division, as the case may be (in the case Revenue Regional Offices) or by the Chief of
Division concerned (in the case of the BIR National Office) of the discrepancy or discrepancies in the taxpayer's payment of his internal
revenue taxes, for the purpose of "Informal Conference," in order to afford the taxpayer with an opportunity to present his side of the
case. If the taxpayer fails to respond within fifteen (15) days from date of receipt of the notice for informal conference, he shall be
considered in default, in which case, the Revenue District Officer or the Chief of the Special Investigation Division of the Revenue
Regional Office, or the Chief of Division in the National Office, as the case may be, shall endorse the case with the least possible delay to
the Assessment Division of the Revenue Regional Office or to the Commissioner or his duly authorized representative, as the case may
be, for appropriate review and issuance of a deficiency tax assessment, if warranted.
3.1.2. Preliminary Assessment Notice (PAN). If after review and evaluation by the Assessment Division or by the Commissioner
or his duly authorized representative, as the case may be, it is determined that there exists sufficient basis to assess the taxpayer for
any deficiency tax or taxes, the said Office shall issue to the taxpayer, at least by registered mail, a Preliminary Assessment Notice
(PAN) for the proposed assessment, showing in detail, the facts and the law, rules and regulations, or jurisprudence on which the
proposed assessment is based (see illustration in ANNEX A hereof). If the taxpayer fails to respond within fifteen (15) days from date
of receipt of the PAN, he shall be considered in default, in which case, a formal letter of demand and assessment notice shall be caused
to be issued by the said Office, calling for payment of the taxpayer's deficiency tax liability, inclusive of the applicable penalties.
3.1.3. Exceptions to Prior Notice of the Assessment. The notice for informal conference and the preliminary assessment notice
shall not be required in any of the following cases, in which case, issuance of the formal assessment notice for the payment of the
taxpayer's deficiency tax liability shall be sufficient:
(i) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax appearing on the face
of the tax return filed by the taxpayer; or
(ii) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding
agent; or
(iii) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was
determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for
the taxable quarter or quarters of the succeeding taxable year; or
(iv) When the excise tax due on excisable articles has not been paid; or
(v) When 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 to non-exempt persons.
3.1.4. Formal Letter of Demand and Assessment Notice. The formal letter of demand and assessment notice shall be issued by the
Commissioner or his duly authorized representative. The letter of demand calling for payment of the taxpayer's deficiency tax or taxes
shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the formal letter of
demand and assessment notice shall be void (see illustration in ANNEX B hereof). The same shall be sent to the taxpayer only by
registered mail or by personal delivery. If sent by personal delivery, the taxpayer or his duly authorized representative shall
acknowledge receipt thereof in the duplicate copy of the letter of demand, showing the following: (a) His name; (b) signature; (c)
designation and authority to act for and in behalf of the taxpayer, if acknowledged received by a person other than the taxpayer
himself; and (d) date of receipt thereof.
3.1.5. Disputed Assessment. The taxpayer or his duly authorized representative may protest administratively against the aforesaid
formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof. If there are several issues involved
in the formal letter of demand and assessment notice but the taxpayer only disputes or protests against the validity of some of the
issues raised, the taxpayer shall be required to pay the deficiency tax or taxes attributable to the undisputed issues, in which case, a
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(c) Any individual or corporation employing a person subject to professional tax shall require payment by that person of the tax on his
profession before employment and annually thereafter.
(d) The professional tax shall be payable annually, on or before the thirty-first (31st) day of January. Any person first beginning to
practice a profession after the month of January must, however, pay the full tax before engaging therein. A line of profession does
not become exempt even if conducted with some other profession for which the tax has been paid. Professionals exclusively
employed in the government shall be exempt from the payment of this tax.
(e) Any person subject to the professional tax shall write in deeds, receipts, prescriptions, reports, books of account, plans and designs,
surveys and maps, as the case may be, the number of the official receipt issued to him.
(f) The professionals subject to tax herein imposed are only those who have passed the bar examinations, or any board or other
examinations conducted by the Professional Regulation Commission (PRC). For example, a lawyer who is also a Certified Public
Accountant (CPA) must pay the professional tax imposed on lawyers and that fixed for CPAs, if he is to practice both professions.
For the purpose of collecting the tax, the provincial treasurer or his duly authorized representative shall require from such
professionals their current annual registration cards issued by competent authority before accepting payment of their professional tax
for the current year. The PRC shall likewise require the professionals presentation of proof of payment before registration of proof of
payment before registration of professionals or renewal of their licenses.
(f) Amusement Tax
LGC, 140. Amusement Tax.
(a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert
halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%) of the gross receipts
from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid to
the provincial treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors of
the cinematographic films.
(c) The holding of operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary and
oratorical presentations, except pop, rock, or similar concerts shall be exempt from the payment of the tax hereon imposed.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for the payment of tax. In case of fraud or
failure to pay the tax, the sangguniang panlalawigan may impose such surcharges, interest and penalties as it may deem
appropriate.
(e) The proceeds from the amusement tax shall be shared equally by the province and the municipality where such amusement places
are located.
IRR, 229. Amusement Tax. (a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%) of
the gross receipts from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid to
the provincial treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors of
the cinematographic films.
(c) The holding of operas, concerts, dramas, recitals, paintings and art exhibitions, flower shows, musical programs, literary and
oratorical presentations except pop, rock or similar concerts shall be exempted from the payment of the amusement tax, subject to
the guidelines issued by DOF.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions, including the issuance by proprietor, lessee,
or operator of the theater or amusement place of admission tickets for the payment of tax. In case of fraud or failure to pay the tax
the sangguniang panlalawigan may impose such surcharges, interests, and penalties as it may deem appropriate.
(e) The proceeds from the amusement tax shall be shared equally by the province and the municipality where such amusement places
are located.
(g) Tax on delivery truck/van
LGC, 141. Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in, Certain
Products.
(a) The province may levy an annual fixed tax for every truck, van or any vehicle used by manufacturers, producers, wholesalers,
dealers or retailers in the delivery or distribution of distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other
products as may be determined by the sangguniang panlalawigan, to sales outlets, or consumers, whether directly or indirectly,
within the province in an amount not exceeding Five hundred pesos (P500.00).
(b) The manufacturers, producers, wholesalers, dealers and retailers referred to in the immediately foregoing paragraph shall be
exempt from the tax on peddlers prescribed elsewhere in this Code.
IRR, 230. Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers or Retailers in,
Certain Products. (a) The province may levy an annual fixed tax for every truck, van, or any motor vehicle used by manufacturers,
producers, wholesalers, dealers or retailers in the delivery or distribution of distilled spirits, fermented liquors, soft drinks, cigars and
cigarettes, and other products as may be determined by the sangguniang panlalawigan, to sales outlets, or consumers, whether directly
or indirectly, within the province in an amount not exceeding Five Hundred Pesos (P500.00).
(b)The manufacturers, producers, wholesalers, dealers, and retailers referred to in the immediately preceding paragraph (a) hereof shall
be exempt from the tax on peddlers prescribed in Article 233 (g) of this Rule.
2. Taxing powers of municipalities
LGC, 142. Scope of Taxing Powers. - Except as otherwise provided in this Code, municipalities may levy taxes, fees, and charges not otherwise
levied by provinces.
IRR, 231. Scope of Taxing and Other Revenue-Raising Powers of Municipalities. Unless provided in this Rule, municipalities may levy taxes,
fees, and charges not otherwise levied by the province.
(a) Tax on various types of businesses
LGC, 143.
IRR, 232.
(b) Ceiling on business tax imposable on municipalities within Metro Manila
LGC, 144. Rates of Tax within the Metropolitan Manila Area. - The municipalities within the Metropolitan Manila Area may levy taxes at
rates which shall not exceed by fifty percent (50%) the maximum rates prescribed in the preceding Section.
IRR, 236. Rates of Tax in Municipalities Within the Metropolitan Manila Area. (a) The municipalities within MMA may levy the taxes
on businesses enumerated in Article 233 of this Rule at rates which shall not exceed by fifty percent (50%) the maximum rates
prescribed for said businesses.
(b) The said municipalities within MMA, pursuant to Article 275 of this Rule, may levy and collect the taxes which may be imposed by the
province under Article 225, 226, 227, 228, 229, 230 and 231 of this Rule at rates not exceeding those prescribed therein
(c) Tax on Retirement of Business
LGC, 145. Retirement of Business. - A business subject to tax pursuant to the preceding sections shall, upon termination thereof, submit a
sworn statement of its gross sales or receipts for the current year. If the tax paid during the year be less than the tax due on said gross
sales or receipts of the current year, the difference shall be paid before the business is considered officially retired.
IRR, 241. Retirement of Business. (a) Any person natural or juridical, subject to the tax on businesses under Article 233 of this Rule
shall, upon termination of the business, submit a sworn statement of the gross sales or receipts for the calendar year.
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Taxation 2 Finals reviewer
Prof. O. Carag
2 Semester A.Y. 2011-2012
nd