DEFINITIONS Flashcards
Process of determining the tax liability of a taxpayer
Assessment
Procedures of the government to enforce payment of unpaid taxes
Collection
Prescriptive period of assessment
Gen rule: 3 years from the date of actual filing of the return/deadline required by law whichever is later.
Exception to the 3 year prescription rule?
Fraudulent returns, willful neglect to file, waiver of the statutes of limitation by the taxpayer.
Temporary suspension of the prescriptive period for not less than 6 months (180 days) to give way to the reinvestigation
Waiver of the statutes of limitation
Who issues and approves LAs in Revenue District Office?
Regional Director
Who issues and approves LAs in Large Taxpayer Service Audit Divisions
Assistant Commissioner - LTS
Who issues and approved LAs in National Investigation Divisions and Special Investigation Divisions?
Commissioner of Internal Revenue
If taxpayer declined to give certain documents/information, the CIR will
Issue a subpoena
2 types of subpoena?
Subpoena duces tecum & Subpoena ad testificandum
Written communication issued by Regional Assessment Division informing the taxpayer of his obligation for deficiency tax based on audit findings of a revenue officer.
Preliminary Assessment Notice
Final declaration of deficiency tax issued to a taxpayer.
Formal Letter of Demand (FLD)/Final Assessment Notice (FAN)
Powers of the CIR relative to the correct determination of tax?
- prescribe presumptive gross sales and receipts
- examine and inspect the books of taxpayer
- conduct inventory surveillance
- obtain data and information from third parties
Primary remedies of the Govt?
Assessment & Collection
How many times a taxpayer shall be subject to examination?
Only once in every taxable year
Summon upon the taxpayer compelling them to produce, under penalty of neglect certain documents sought therein after his failure to comply with 2 consecutive requests to produce his books for examination
Subpoena duces tecum
Summon upon a person to appear and give oral testimony
Subpoena ad testificandum
Aside from demanding tax deficiency, the BIR will also impose increments as required by law:
- surcharge, interest, compromise penalty
Rate for surcharge?
Simple neglect to file: 25%
Willful neglect to file: 50%
Rate for interest?
12% per annum
A settlement for the government not to enforce criminal prosecution
Compromise penalty
The BIR may also identify taxpayers to be subjected to regular audit from the following
- tax compliance verification drive
- tax information
- pre audit of tax returns
- direct field observation by revenue officers
intended to locate and identify taxpayers who do not comply with basic requirements such as registration, bookkeeping, or invoicing
Tax Mapping
If taxpayer agrees with his deficiency tax, he will use BIR form
BIR form 0605
