TAX REMEDIES UNDER THE NIRC

Specific cases that MAY BE COMPROMISED:

Return filed was not false No return was filed or  Delinquent accounts
or fraudulent return was false or  Pending case under protest
fraudulent  Civil tax cases before the courts
COLLECTION WITH PRIOR ASSESSMENT  Collection cases filed in courts
Assessment should be made Assessment should be made
 Criminal violations other than those:
within 3 years from the: within 10 years from the
1. date of filing the discovery of the: a. already filed in court; or
return; or 1. failure to file b. involving tax fraud
2. last day required return; or
by law for filing 2. falsity or fraud in Cases that MAY NOT BE COMPROMISED:
(usually April 15) the return  Delinquent acct resulting from jeopardy assessment

(Sec. 203) (Sec. 222-A) Jeopardy Assessment

Collection should be made Collection should be made Those assessments that are assessed
within 3 years from the date within 5 years from the date without the benefit of a complete or partial
of assessment. Ether by: of assessment. Ether by: audit. The delay was due to the taxpayer’s
1. Summary Proceedings (Administrative) failure to comply with audit requirement.
a. Distraint of personal property
b. Levy on real property
2. Judicial Proceedings  The taxpayer failed to file an admin protest due to
a. Civil Action; and/ or/ failure to receive final assessment notice (FAN) and
b. Criminal Action there is reason to believe that assessment is lacking
COLLECTION WITHOUT PRIOR ASSESSMENT in legal and/or factual basis.
Collection should be made Collection should be made  The taxpayer failed to appeal to CTA and there is
within 3 years from the: within 10 years from the reason to believe that assessment is lacking in legal
1. Date of filing the discovery of the: and/or factual basis.
return; or 1. Failure to file the
2. Last day required return; or
by law for filing 2. Falsity or fraud in
(usually April 15) the return Section 204- B: When CIR may abate or cancel a tax
liability
(Sec. 203) (Sec. 222-A) 1. When it is unjustly or excessively assessed;
In both cases, the collection should be by Judicial
2. When the collection costs involved do not justify the
Proceedings only.
collection of the amount.

Section 204-A: Compromise

REMEDIES OF THE TAXPAYER
Authority of the CIR to compromise: 1. Protest or Dispute the assessment (Sec. 228)
 If there is any reasonable doubt as to the validity of 2. Refund of erroneously or illegally collected taxes
the tax assessed. (Sec 229)
 The financial position of the taxpayer demonstrates
the inability to pay. Section 228: Assessment Protest

Minimum compromise rate: Requisites of a valid assessment:

 10% if due to Financial Incapacity 1. It must be in writing; and
2. It must state the law and the facts on which it was
 40% if it is due to any reasonable doubt as to the
made.
validity of the tax assessed.
Where shall a protest be filed?
Who has the authority to approve the compromise settlement?
With the CIR
1. National Evaluation Board (NEB)
a. If the basic tax exceeds 1M; or
Administrative Remedy: When to File a Protest; Process
b. If the settlement offered is less than the
prescribed minimum rate
Within 30 days after receipt of the assessment
File EITHER:
2. Commissioner of Internal Revenue (CIR)
a. Request for consideration; or
If the basic tax is from Php 501,000 to Php
b. Request for reinvestigation.
1M
Within 60 days from filing of protest, all supporting
documents shall have been submitted.
3. Regional Evaluation Board (REB)
If the basic tax is Php 500,000 or less
Otherwise, the assessment shall become final.
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Victoria Notes
 The 2-year period is applicable to both the
Judicial Remedy: After the Administrative Remedy; Process Administrative remedy (file Refund with CIR) and
Judicial remedy (file Appeal to CTA within 30days
If within 180 days from submission of documents the protest from receipt of the Denial by the CIR).
is not acted upon, the taxpayer affected by the inaction may
appeal to the Court of Tax Appeals (CTA) within 30 days Example:
from the lapse of the 180- day period. Date tax is paid April 25, 2015
Date the refund is filed April 10, 2017
If the protest is denied, the taxpayer affected by the decision with CIR
may appeal to the CTA within 30 days from receipt of said
decision. When shall an appeal be filed?

Otherwise, the decision shall become final and executory in
both cases.
Jurisprudence
CIR vs Metro Superama (2010)
Section 228 requires that the taxpayer must first be informed
that he is liable for deficiency taxes through the Pre-
assessment Notice (PAN). The law imposes a
SUBSTANTIVE, not merely a formal requirement. The
sending of a PAN is part of the “due process requirement” in
the issuance of a deficiency tax assessment.
GR: PAN must be issued before issuing a FAN and demand
letter.
The filing of Refund (04-10-2017) with the CIR was
well within the 2-year period from the date of
payment (04-25-2015). However, since the 2-year
period will end on April 25, 2017, and the CIR
surely cannot act on his refund within that short
period of time from filing (April 10 to April 25,
2017), the taxpayer should file his Appeal to the
CTA on or before April 25, 2017.
The law says, “Within two (2) years from date of payment
of the tax, regardless of any supervening cause.”
Both the Administrative remedy (file claim for refund with
the CIR) and the Judicial remedy (appeal to CTA, if refund
is denied) must be filed within the 2-year period.

XPN: When PAN shall not be required

 Mathematical error in the computation of deficiency
tax;
 Discrepancy between the tax withheld and the
amount remitted by the withholding agent;
 When the excise tax due has not been paid;
 When an article purchased by an exempt person is
transferred to a non-exempt person;
 When a taxpayer who opted to claim a refund of
excess creditable WHT was determined to apply it
against his estimated tax liabilities.

Section 229: Refund

Requisite:
There must be written claim for a refund.

XPN:
The CIR may grant a refund without a written claim
for it where on the face of the return, such payment
appears to have been erroneously paid.

Where shall it be filed?

With the CIR

When may a refund be filed?

Within two (2) years from date of payment of the
tax, regardless of any supervening cause.

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Victoria Notes