Basic Tax Finals Flashcards
Composition of the BIR
The BIR shall have a chief to be known as Commissioner of Internal Revenue hereinafter referred to as the Commissioner, and four assistant chiefs to be known as deputy commissioners.
The groups are as follows:
Operations Group
Legal Group
Information Systems Group
Resource Management
Powers of the Commissioner
Interpret tax laws and to decide tax cases (EO Jurisdiction)
Subject to review by the Sec. of Finance
Decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising in the NIRC.
Subject to exclusive appellate jurisdiction of the CTA (Section 4)
( Section 5) Obtain information and to summon, examine and take testimony of persons
In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized:
to EXAMINE any book, paper, record, or other data which may be relevant or material to such inquiry
to OBTAIN on a regular basis from any person other than the person whose internal revenue tax liability is subject to investigation or audit
To SUMMON the person liable for tax or required to file a return, or any officer or employee of such person, or any person having custody, possession or care of the books of accounts and other accounting records containing entries relating to the business of other person liable for tax or any other person to appear before the Comm. or his duly authorised rep.
To TAKE such testimony of the person concerned, under oath, as may be relevant and material to such inquiry
to CAUSE revenue officers and employees to make a canvas from time to time of any revenue district or region and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax and all persons wning or having the care, management or possession of any object with respect to which a tax is imposed.
Who are agents of the Commissioner
The following are hereby constituted agents of the Commissioner:
Comm. of Customs and his subordinates with respect to the collection of national internal revenue taxes on imported goods
The head of the appropriate government office and his subordinates with respect to the collection of the energy tax ;
Banks duly accredited by the commissioner with respect to receipt of payments internal revenue taxes authorized to be made through banks
Any officer or employee of an authorized agent bank assigned to receive internal revenue tax returns or documents to the Bureau of Internal Revenue shall be subject to the same sanctions and penalties under Secs. 269 and 270.
Powers and duties of the BIR
Section 3
The BIR shall be under the supervision and control of the DOF.
Its powers and duties shall comprehend the:
- assessment and collection of all national internal revenue taxes, fees, and charges
- enforcement of all forfeitures, penalties and fines connected therewith;
- execution of judgment in all cases decided by the CTA and ordinary courts in its favor ;
- The BIR shall give effect to and administer the supervisory and police powers conferred to it by the BIR
Prescriptive period for criminal action
All violations of any provision of the NIRC
shall prescribe after 5 years:
o from the day of the commission of
the violation, or
o if not known at the time, from the
discovery thereof and the
institution of judicial proceedings
for its investigation and punishment
(Section. 281, NIRC).
When prescription is interrupted
➢ When proceedings are instituted against
the guilty persons and the period shall run
again if the proceedings are dismissed for
reasons not constituting jeopardy; or
➢ When the offender is absent from the
Philippines.
Is Assessment necessary before filing a criminal
charge for tax evasion
An assessment is not necessary before a
criminal charge can be filed. The criminal
charge need only be proved by a prima
facie showing of a willful attempt to file
taxes, such as failure to file a required tax
return. [CIR v. Pascor, G.R. No. 128315
(1999)]
Fundamental Principles of taxation of real property
- RP shall be appraised at its current and FMV
- RP shall be classified for assessment purposes on the basis of its actual use
- RP shall be assessed on the basis of a uniform classification within each local political subd.
- The appraisal, assessment and levy of RP for tax and the collection thereof shall NOT be let to any private person
- ppraisal and assessment of real property shall be equitable
Actual Use Doctrine
Actual use refers to the principal and predominant utilization of the property by the person in possession thereof. Hence, even if the user of the property is not the owner, government property being leased to private persons may still be subject to RPT
Exemptions of RPT
- RP owned by the Republic of the PH or any of its political subdivisions, except when the beneficial use thereof has been granted, for consideration or otherwise to a taxable person
- Charitable institutions, churches, parsonages or convents and all lands, buildings and improvements ADE used for RCE purposes
- All machineries and equipments that are ADE used by local water districts and GOCC engaged in the distribution of water or electricity
- All property owned by duly registered cooperatives
- Machinery and equipment used in pollution control and environmental protection
Remedies available for LGC’s to enforce collection of taxes, fees and charges
- Extrajudicial remedy of levy
- Judicil Action
- Enforcement of civil action in any court with competent jurisdiction
Prescriptive Period for collection of RPT
5 years from the date they become due.
In case of fraud or intent to evade payment, 10 years from discovery of such fraud or intent to evade payment
Question of Fact vs. Question of Law
F: When the doubt or difference arises as to the truth or falsehood of the alleged facts
L: When the doubt arises as to what the law is on a certain state of facts
Examination of book of accounts and other accounting records
In order to ascertain the correctness of any return OR in making a return when none has been made, the CIR or his authorized reps have the power to examine any Book, Paper, Record or other data which may be relevant to assess the correct tax liability
Best Evidence obtainable
When
1. a report required by law as basis for the assessment of any tax shall not be forthcoming within the time fixed by law or
- there is reason to believe that sycg report is false, incomplete or erroneous,
The CIR shall assess the proper tax on the best evidence obtainable
Process of PAN
After review and evaluation by the BIR, it is determined that theer exists sufficient basis to assess the taxpayer for any deficiency taxes the office shall
- Issue the PAN, at least be registered mail
- It must show the facts, law, R&R or jurisprudence on which it is based
- TP may file reply thereto within 15 days of issuance
- Failure of TP to file reply renders him in default - in which the FDL FLAN shall be issued
PAN shall not be required in the following instances
- When the finding for any deficiency tax is the result of mathematical error in the computation of tax as appearing on the face of the return
- When a discrepancy has been determd b/n tax withheld and amount actually remitted by withholding agent
- When a TP who opted to claim a refund/tax credit was determined to have carried over automatically applied the same amount claimed against the estimated tax liabilities
- When te excise tax due on excisable articles has not been paid
- When an article locally purchased or imported by an exempt person has been sold, traded or transferred to non-exempt persons
Process of FLD/FAN
- FLD/FAN must be issued by CIR or his duly authorized rep.
- It must state the facts, law, R&R or jurisprudence on which it is based
- It must be sent to the taxpayer or his authorized rep.
- It must be sent by registered mail or personal delivery ONLY
Requisites when FLD FAN sent by personal delivery
- Must be sent to TP or authorized rep.
- It must show the ff:
a. Name
b. Signature
c. Designation and Authority
d. Date of receipt
Effects of the issuance of FLD FAN
- It creates a tax liability of the TP whicch is being demanded
- If the TP files a timely protest against the FLD FAN, the assessment does not become final and executory. TP may file a supplemental protest within 60 days of filing the protest letter
- TP does not baveto pay deficiency tax assessment in filing the protest letter, nut the 20% interest per annumshall start to run from the date the tax is due up to its payment
- Business of the TP does not become illegal by reason of nonpayment of the assessed NATIONAL tax, unlike local tax which must be paid upon protest
Filing of admin protest by the TP against assessment
May file protest against FLD FAN wihtin 30 days from receipt thereof.
Reinvestigation vs. Reconsideration
As to nature:
Reconsideration - A plea of re-evaluation of an assessment on the basis of existing records without need of additional evidence. May be both Q of F/L
Reinvestigation - Plea of re-evaluation of an assessment on the basis of newly discovered evidence or additional evidence that a TP intends to present in reinvestigation. May be both a Q of F/L
As to prescriptive period:
Rec - It does not toll the running of the PP for collection
Rei- tolls the prescriptive period to collect if the request for reinvestigation is granted by BIR
As to evidence
Rec - limited to evidence at hand
Rei - entails reception and evaluation of additional evidence. Relevant docs must be filed within 60 days from filing request for reinvestigation
Remedy when the protest is denied in whole or in part, by the CIR’s duly authorized rep.
- Appeal to the CTA within 30 days from receipt of such decision
- elevate his protest through a request for reconsideration to the CIR within 30 days of receipt.
Note: No request for reinvestigation shall be allowed in admin appeals and only issues raised in the decision of the CIR’s rep shall be entertained by the CIR
Remedy of TP from final decision of the CIR
- If the protest or appeal is denied or not acted upon within 180 days from submission, the TP may:
a. appeal to CTA within 30 days of receipt of decision
b. appeal to CTA after lapse of 180 day period
c. Otherwise, decision is final and executory - If the protest or admin appeal is deined, the TP may:
a. appeal to the CTA within 30 days from date of recept of decision
b. An MR shall not toll the 30 day period to appeal - If
Zero rated transactions vs. Effectively zero rated transactions
ZRT - Immune from the imposition of VAT
- Sales of goods or properties is a taxable transaction but VAT rate is at 0%.
EZRT - Limited in its context because it does not cover export sales
- Refers to sale of local goods or supply of services by a VAT-registered person to persons who were granted exemption form direct andindrect taxes
When should VAT refunds be filed and paid?
VAT returns shall be filed and paid every quarter within 25 days following the close of each taxable quarter when the transaction transpired
What is a letter of authority
It is the authority given to the appropriate revenue officer assigned to perform assessment functions.
It enables the RO to examine the books of account and other accounting records of a tax payer
Effect pf tax assessment if it was conducted without a valid LOA
Assessment will be nullified for having been conducted who are not duly authorized.
Notice of Discrepancy
If a TP is found to be liable for deficiency tax in the course of investigation by an RO, the TP shall be noticed through a NOD
