Collection Procedures and Tax Remedies P2 Flashcards
Cases which May be Compromised
Delinquent accounts
Cases under administrative protest after issuance of the Final Assessment Notice (FAN) and the cases are still pending in the regional offices, revenue district offices, Legal Service, Large Taxpayer Service (LTS) and Collection Service
Civil tax cases being disputed before the courts
Collection cases filed in courts
Criminal violations, other than those already filed
in court or those involving criminal fraud
(Section 2, RR 30 - 2002)
Withholding tax cases, unless applicant invokes provisions of Law that cast doubt on the taxpayer’s obligation to withhold
Delinquent accounts with duly approved schedule of
installment payment
Criminal tax fraud cases confirmed as such by the CIR or
his duly authorized representative
Criminal violations already filed in court
Cases where final reports of reinvestigation or reconsideration have been submitted resulting to the reduction of the original assessment and the taxpayer is agreeable to such findings
Cases which become final and executory after final judgment of a court, where compromise is requested on the ground of doubtful validity
Estate tax cases where compromise is requested on the ground of financial incapacity (Section 2, RR 30 - 2002)
Basis for Acceptance of Compromise Settlement
A. DOUBTFUL VALIDITY - 40% of Basic Tax (minimum)
B. FINANCIAL INCAPACITY - 10% of basic tax (minimum)
A. DOUBTFUL VALIDITY - 40% of Basic Tax (minimum):
Delinquent account is one resulting from jeopardy assessment (Assessment is made without the benefit of complete audit).
Assessment seems to be arbitrary in nature, appearing to be based on presumptions and there is reason to believe that it is lacking in legal and factual basis.
The taxpayer failed to file an administrative protest on
account of alleged failure to receive assessment notice.
The taxpayer failed to file a request for reinvestigation/reconsideration within thirty (30) days from the receipt of Final Assessment Notice.
The Taxpayer failed to elevate to the CTA an adverse decision of the Commissioner or his authorized representative.
Assessments were issued on and after January 1, 1998 where demand notice failed to comply with the formalities prescribed under Section 228, NIRC.
Assessments are based on “Best Evidence Obtainable” rule and there are reasons to believe that the assessment can be disputed by sufficient evidence.
The assessment was issued within the period for assessment as extended by virtue of the taxpayer execution of waiver of the statute of limitations wherein the validity or authenticity thereof is being questioned. (Section 3.1, RR 30- 2002)
B. FINANCIAL INCAPACITY - 10% of basic tax (minimum):
Taxpayer had ceased operation or already dissolved.
Taxpayer is suffering from surplus or earnings deficit resulting to impairment in the original capital by at least 50%.
Taxpayer is suffering from net worth deficit (total liabilities exceed total assets).
Taxpayer is purely compensation income earner with no
other sources of income.
Taxpayer has been declared by competent authority as bankrupt or insolvent (Section 3.2, RR 30-2002).
Policies on Compromise Settlement
(RR 30-2002 and RMO 22-2001)
No compromise for reason of financial incapacity shall be considered
unless taxpayers waives in writing his right to secrecy of bank deposits.
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Policies on Compromise Settlement
(RR 30-2002 and RMO 22-2001)
The taxpayer is required to submit the Affidavit of No Tax Credit Certificate (TCC) claim.
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Policies on Compromise Settlement
(RR 30-2002 and RMO 22-2001)
No compromise for reason of doubtful validity shall be considered when the assessed basic tax has been adjusted as a result of reinvestigation/reconsideration and the taxpayer agrees to the said adjustment.
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Policies on Compromise Settlement
(RR 30-2002 and RMO 22-2001)
Assessment confirmed by the lower court but appealed to a higher court
cannot be compromised on the ground of doubtful validity.
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Policies on Compromise Settlement
(RR 30-2002 and RMO 22-2001)
Offer of compromise shall meet all the conditions and requirements prescribed by law and regulations.
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Policies on Compromise Settlement
(RR 30-2002 and RMO 22-2001)
Assessments subject for compromise shall be covered by Preliminary Assessment Notice (PAN) or Final Assessment Notice (FAN) issued by the Assessment Division.
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______ shall refer to those issued without the benefit of a complete or partial audit by an authorized revenue officer who has reason to believe that the assessment and collection of the deficiency tax will be jeopardized by delay because of the taxpayer’s failure to present his books of accounts and records.
Jeopardy assessment
________ shall refer to those which have discontinued operation permanently
Non-operating companies
Policies on Compromise Settlement
(RR 30-2002 and RMO 22-2001)
Assessments which consist solely of increments can be settled through compromise. For this purpose, the increments due shall be considered as the basic tax due.
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Policies on Compromise Settlement
(RR 30-2002 and RMO 22-2001)
Evaluation of offers of compromise shall, in all cases, be conducted by Technical Working Groups (TWGs) in the national and regional levels.
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The taxpayer is required to pay the amount offered (compromise) before the application for compromise maybe evaluated by the _____ or the _____________.
National Evaluation Board (NEB)
Regional Evaluation Board (REB)
