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Flashcards in Chapter 1&2 Deck (36):
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1. Inherent powers of the state and its nature.

Police Power – the power to protect citizens and provide for safety and welfare
Eminent Domain Power – the power to take private property for public use
Taxation Power – the power to enforce contributions to support the government

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3. Examples of inherent powers

Police power, Eminent Domain power, Taxation Power

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4. Some limitations provided by the constitution in the power to tax

a. Due process of law
b. Equal protection of law
c. Rule of uniformity and equity
d. Non-impairment of contacts
e. President’s power to veto separate items in revenue or tariff bills
f. Exemption from property taxation of religious, charitable or educational entities
g. No public money shall be appropriated for religious purposes
h. Majority of all members of the congress required in granting tax exemption
i. No imprisonment for nonpayment of poll tax

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8. Inherent limitations on the power to tax

a. Taxes may be levied only for Public purposes
b. Government entities are generally Exempt
c. Being inherently legislative, taxation may Not be delegated
d. Tax power is limited to Territorial jurisdiction of the State
e. Taxation is subject to International comity

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9. Substantive vs. procedural

Substantive – the law should be reasonable and not oppressive
Procedural – requires opportunity to be heard in proper court of litigation before judgment is rendered affecting one’s person or property

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10. Theories of taxation

a. PROSPECTIVITY OF TAX LAWS
b. IMPRESCRIPTIBILITY OF TAXES
c. DOUBLE TAXATION
d. ESCAPE FROM TAXATION
e. EXEMPTION FROM TAXATION
f. EQUITABLE RECOUPMENT
g. SET-OFF TAXES
h. TAXPAYER SUIT
i. COMPROMISES
j. POWER TO DESTROY

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11. Purposes of taxation

a. REVENUE PURPOSES
b. REGULATORY PURPOSE
c. COMPENSATORY PURPOSE

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12. Regressive vs Progressive system of taxation

Regressive - Regressive taxation is used in reference to fixed taxes, where every individual is taxed an equal amount of money, irrespective of his level of income. For example, federal and state taxation of cigarettes is considered as regressive

Progressive - the rate of the tax increases as the tax base or bracket increases

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13. Types of veto power

A. ITEM VETO - THE POWER TO VETO ITEMS IN APPROPRIATION BILLS WITHOUT AFFECTING ANY OTHER PROVISIONS OF SUCH BILLS, AND
B. POCKET VETO - THE POWER TO DISAPPROVE LEGISLATIVE ACT BY THE PRESIDENT WITH THE RESULT THAT BILLS SHALL FAIL TO BECOME LAWS.

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15. To be granted tax exemption, how many members of the congress do you need?

NO LAW GRANTING ANY TAX EXEMPTION SHALL BE PASSED WITHOUT THE CONCURENCE OF A MAJORITY OF ALL THE MEMBERS OF THE CONGRESS. (142)

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16. What are the objectives of taxation

a. REVENUE PURPOSES
b. REGULATORY PURPOSE
c. COMPENSATORY PURPOSE

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17. What are the scope of taxation

a. IT REACHES EVERY TRADE OR OCCUPATION
b. EVERY OBJECT OF INDUSTRY, AND
c. EVERY SPECIES OF POSSESSION.

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18. Tax avoidance vs evasion

a. “TAX AVOIDANCE” - THIS IS THE REDUCING OR TOTALLY ESCAPING PAYMENT OF TAXES THROUGH LEGALLY PERMISSIBLE MEANS.
b. “TAX EVASION” - UNDER THIS METHOD, THE TAX PAYER USES UNLAWFUL MEANS TO EVADE OR LESSEN THE PAYMENT OF TAX. THIS FORM OF TAX DODGING IS PROHIBITED AND THEREFORE SUBJECT TO CIVIL AND/ OR CRIMINAL PENALTIES.

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19. Are tax exemptions construed and interpreted in favor of the government or taxpayer?

In case of doubt, it should be in favor of the government and against the taxpayer.

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20. Are tax impositions construed and interpreted in favor of the government or taxpayer?

In case of doubt, it should be in favor of the taxpayer and against the government.

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21. Effectivity of RA 8424

This Act shall take effect on January 1, 1998.

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23. Tax bills emanate from where?

a. CONSTITUTION OF THE PHILIPPINES;
b. STATUTES
c. EXECUTIVE ORDERS;
d. TAX TREATIES AND CONVENTION WITH FOREIGN COUNTRIES;
e. REVENUE REGULATIONS BY THE DEPARTMENT OF FINANCE;
f. BIR REVENUE MEMORANDUM CIRCULARS & BUREAU OF CUSTOMS MEMORANDUM ORDERS;
g. BIR RULINGS;
h. JUDICIAL DECISIONS;

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24. What department supervises the BIR?

Department of Finance

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25. Current CIR

Kim Hinares

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26. Who has exclusive appellate jurisdiction on tax cases

Court Tax Appeals

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27. Examples of local tax

TAX ON OCCUPATIONS, FLOOD TAX

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33. Subpoena testificandum vs subpoena duces tecum

ubpoena testificandum – subpoena to testify
b. Subpoena duces tecum – subpoena to show supporting documents

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34. What are revenue regulations

THESE ARE RULES OR ORDERS HAVING FORCE OF LAW ISSUED BY EXECUTIVE AUTHORITYOF THE GOVERNEMENT TO ENSURE UNIFORM APPLICATION OF TAX LAWS.

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35. Example of indirect tax

EXAMPLES: BUSINESS TAXES, CUSTOMS DUTIES

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36. Example of privilege tax

EXAMPLES: INCOME TAX, VALUE -ADDED TAX , PERCENTAGE TAX

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1. What are items covered by the tax law?

a. PERSONS, WHETHER NATURAL OR JURIDICAL PERSONS;
b. PROPERTIES, WHETHER REAL, PERSONAL, TANGIBLE OR INTANGIBLE PROPERTIES;
c. EXCISE OBJECT, SUCH AS TRANSACTIONS, PRIVILEGE, RIGHT AND INTEREST.

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2. Self-assessing tax

TAXES ARE SELF ASSESSING. WHEN THE TAXPAYER EARNS INCOME, HE HAS THE RESPONSIBILITY TO COMPUTE, FILE AND PAY HIS TAX TO BIR.

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3. Examples of tax administration functions

a. TAX ASSESSMENT
b. COLLECTION OF TAXES

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4. Principle of a sound tax system

FISCAL ADEQUACY
EQUALITY OR THEORETICAL JUSTICE
ADMINISTRATIVE FEASIBILITY

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6. One or two powers of CIR

a. INTERPRET TAX LAWS;
b. DECIDE TAX CASES;
c. SUMMON AND OBTAIN INFORMATION OR TESTIMONY OF PERSONS;
d. MAKE ASSESSMENTS AND PRESCRIBE ADDITIONAL TAX REQUIREMENTS; &
e. DELEGATE POWERS

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7. What is jeopardy assessment

If the taxpayer intends to leave the country or close business

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8. Under what conditions can the CIR inquire about the bank account of a taxpayer

a. A DECEDENT TO DETERMINE THE GROSS ESTATE OF SUCH DECEDENT; &
b. ANY TAX PAYER WHO HAS FILED AN APPLICATION FOR COMPROMISE OF HIS TAX LIABILITY UNDER SECTION 204(A) OF THE TAX CODE BY REASON OF FINANCIAL INCAPABILITY TO PAY HIS TAX LIABILITY.

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12. What is the surcharge for simple neglect?

25%

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13. What is the surcharge for willful neglect?

50%

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14. What is the interest for paying late?

20%

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15. What form of BIR is used when filing ITR

1700 and 1701 – Individual taxpayer
1702 – Corporations and partnerships