Download Remedies of Govt Nirc PDF

TitleRemedies of Govt Nirc
TagsWithholding Tax Taxpayer Certiorari Government Finances Taxes
File Size260.0 KB
Total Pages5
Document Text Contents
Page 1


It must first be understood that the Code provides the Government with

two remedies, namely: 1) ASSESSMENT; and 2) COLLECTION.

Further, there are two kinds of assessment and collection: (a) the normal

or ordinary assessment and collection – under Section 203; and (b) the

abnormal or extraordinary assessment and collection – under Section 222.


Government if there was a return filed by the taxpayer and such return is not

false or fraudulent. The Government may only make the assessment under

this Section within three (3) years after the last day prescribed by law for the

filing of the return – not from the time of payment. However, when the return

is filed beyond the period of filing prescribed by law, the three-year period

shall be counted from the day of the filing of the return.

For collection, the Code does not provide for a prescriptive period.

However, under the Old Code, the prescriptive period provided for both

normal and abnormal is three (3) years. Under the new Code, the

prescriptive period for abnormal is five (5) years, hence, it can be concluded

that the prescriptive period for normal is also five (5) years. It will create an

absurd situation where there is no prescriptive period under the normal but

there is a prescriptive period for abnormal.


by the Government in cases where: (a) the taxpayer omits or fails to file his

return; or (b) the taxpayer filed a return but the return was fraudulent; or (c)

the return filed by the taxpayer was false. There are two remedies or options

under abnormal assessment and collection: (1) assess and collect; or (2)

collection without assessment.

For assessment and collection, the prescriptive period for assessment is

ten (10) years from the discovery of the non-filing of the return or the

fraudulent or false return (Section 222 [a]); while the period for collection

prescribes after five (5) years from the date of final assessment (Section 222


When the Government opts to collect without assessment, there would be

no prescriptive period for assessment. The prescriptive period for collection,

in this case, shall be ten (10) years from the discovery of the non-filing of the

return or the fraudulent or false return.


Supreme Court in the case of Fortune Tobacco where it was held that since the

return filed was fraudulent, the BIR can avail of the remedy of collection without

assessment. The BIR is allowed to exercise that option.

Page 2

PROCEDURE FOR ASSESSMENT (Section 228; RR No. 12-99)

Section 228 of the NIRC provides for two steps for assessment: (1) Pre-

Assessment Notice (PAN); and (2) Final Assessment Notice (FAN). On the other

hand, RR No. 12-99 provides for three (3) steps namely: (1) Notice of Informal

Conference; (2) Preliminary Notice of Assessment (PAN); and (3) Formal Letter of

Demand and Notice to Pay the Tax, which is equivalent to FAN.

The procedure for assessment can be better understood from the

following flow chart:

Notice of Informal Conference

File a Reply within 15 days from receipt of Notice

Failed to file a Reply

Send Notice again Preliminary Notice of Assessment (PAN)

File a Reply within 15 days upon receipf of PAN

Failed to file a Reply

Repeat PAN
Declare in Default, send Formal Letter of

Demand and Notice to Pay Tax (FAN)

File a Protest within 30 days from
receipt of FAN

Page 3

In case of Protest:


As a rule, a pre-assessment notice is issued to a taxpayer who fails to file a

return, or files a return but fails to pay the tax, or files a return, pays the tax but

such payment is insufficient.

Two kinds of Protests:

1. Motion for reconsideration - 60 day period not applicable

2. Motion for reinvestigation - 60 days from filing of protest

Submit the complete sets of documents

The BIR is given 180 days to decide from receipt thereof

Protest denied or lapsed of 180-days, appeal to the CTA in
Division within 30 days from receipt thereof

Petition denied, file M/R within 15 days from receipt of denial

M/R denied, appeal to the CTA En Banc within 15 days from
receipt thereof

Petition denied, file M/R within 15 days from receipt thereof

Petition denied by CTA En Banc, appeal to the Supreme Court

Page 4

Section 228 enumerates the instances where PAN is not necessary, to wit:

a) When the finding for deficiency tax is the result of mathematical error in

the computation of the tax appearing on the face of the return;

b) When a discrepancy has been determined between the tax withheld and

the amount actually remitted by the withholding agent;

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 quarter or quarters of

the succeeding taxable year;

d) When the excise tax due on excisable articles has not been paid;

e) 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.

In the foregoing instances, the taxpayer shall receive a final assessment

notice without the benefit of a pre-assessment notice.


Referring to the foregoing flowchart, a final assessment notice is issued


1) The taxpayer, having received a pre-assessment notice, fails to

respondent within the period provided for by the rules and regulations

(Section 228, last paragraph); and

2) Under the five instances enumerated under Section 228 where the pre-

assessment is not necessary.


After receipt of the FAN, the taxpayer cannot immediately appeal to the

Court of Tax Appeals. The Code mandates that before such appeal can be

made, a protest must first be filed by the taxpayer.

After the filing of the protest, the BIR is given a period of 180 days within

which to decide on the matter. The 180-days period is to be committed on the

day the protest has been filed if it is a motion for reconsideration. If it is a motion

for reinvestigation, the 180-day period shall be reckoned on the day the

documents or receipts were filed with the 60-day period of time. Upon denial of

the protest or the lapse of the 180-day period within the BIR acting upon the

protest, the taxpayer may appeal to the CTA within 30 days from receipt of the

denial or lapse of the period, otherwise, the decision shall become final,

executor and demandable.

Appeal to the CTA

If the protest is denied, in whole or in part, or the 180-day period has

already lapsed without the BIR acting upon the protest, the taxpayer may

appeal the denial to the CTA within 30 days from receipt of the denial or the

lapse of the period.

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