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Tax Remedies Flashcards

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1
Q

What are tax remedies on the part of the government?

A

Courses of action provided by or allowed in the law to implement tax laws or enforce tax collection.

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2
Q

What are tax remedies on the part of the taxpayer?

A

Legal actions a taxpayer can avail of to seek relief from undue burden of tax laws or check excesses by revenue officers.

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3
Q

What does the Bureau of Internal Revenue (BIR) oversee?

A

Assessment and collection of all national internal revenue taxes, fees, and charges.

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4
Q

Who supervises the Bureau of Internal Revenue?

A

The Department of Finance.

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5
Q

What is the title of the chief official of the BIR?

A

Commissioner of Internal Revenue.

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6
Q

What power does the Commissioner hold regarding tax laws?

A

The power to interpret tax laws and decide tax cases.

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7
Q

What is required for the Commissioner to ascertain the correctness of a tax return?

A

The power to obtain information, summon, examine, and take testimony of persons.

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8
Q

What is the formal action of assessing tax due called?

A

Assessment.

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9
Q

What are the two kinds of tax assessment?

A
  • Self-Assessment/Taxpayer Assessment
  • Deficiency Assessment
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10
Q

What is the principle governing tax assessment?

A

It is presumed correct and must be based on actual facts.

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11
Q

What is the authority of the Commissioner to delegate powers?

A

The Commissioner may delegate powers to subordinate officials with rank equivalent to division chief or higher.

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12
Q

What are the powers of the Commissioner that cannot be delegated?

A
  • Recommend promulgation of rules
  • Issue rulings of first impression
  • Compromise or abate tax liability
  • Assign or reassign internal revenue officers
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13
Q

What does due process entail according to Article III, Section 1 of the 1987 Constitution?

A

No person shall be deprived of life, liberty, or property without due process of law.

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14
Q

What is a Letter of Authority (LOA)?

A

An official document empowering a Revenue Officer to examine a taxpayer’s records.

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15
Q

What happens if a tax assessment is issued without a LOA?

A

It is considered a violation of the taxpayer’s right to due process and is void.

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16
Q

How long must the period covered by a LOA generally be?

A

One taxable year at a time.

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17
Q

What is a Notice of Discrepancy (NOD)?

A

A notice informing the taxpayer of liability for deficiency tax during an investigation.

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18
Q

What must a taxpayer do upon receiving a Notice of Discrepancy?

A

Provide documents and explain their side within 30 days.

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19
Q

What is a Preliminary Assessment Notice (PAN)?

A

A communication informing a taxpayer of the findings from an audit.

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20
Q

What are the requisites for a valid PAN?

A
  • Must be in writing
  • Signed by the BIR
  • Documented and show detailed facts and law
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21
Q

What is the consequence of failing to respond to a PAN?

A

The taxpayer is considered in default and a Final Letter of Demand (FLD) will be issued.

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22
Q

What are exceptions to the issuance of a PAN?

A
  • Mathematical errors in tax computation
  • Discrepancy between tax withheld and remitted
  • Taxpayer claiming a refund or tax credit
  • Unpaid excise tax
  • Sale of exempt articles to non-exempt persons
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23
Q

What is a Subpoena Duces Tecum (SDT)?

A

A court order requiring a person to bring documents to a specified place and time.

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24
Q

What does the failure to submit documents to the BIR result in?

A

Issuance of Subpoena Duces Tecum and possible criminal prosecution.

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25
What is the role of the Revenue Officer in the discussion of discrepancy?
To inform the taxpayer of discrepancies in tax payments for discussion.
26
What happens if the taxpayer is still found liable after the discussion of discrepancy?
The case is endorsed for issuance of a PAN.
27
Is a protest against a PAN mandatory?
No, it is optional.
28
What is the effect of failing to respond to a PAN?
It does not bar the taxpayer from protesting a Final Assessment Notice (FAN).
29
What does FLD/FAN stand for?
Formal Letter of Demand / Final Assessment Notice
30
Who issues the FLD/FAN?
Commissioner of Internal Revenue (CIR) or his duly authorized representative
31
What are the conditions for issuing a FLD/FAN?
Issued when: * Taxpayer is in default or did not respond to PAN * CIR disagrees with PAN reply * No need to issue PAN (5 exceptions)
32
What are the requisites for a valid FAN/FLD?
Must be: * In writing * Contain law and facts on which assessment is based * Contain demand for payment * Served and received by the taxpayer
33
What is the significance of a final assessment?
It is a notice stating the amount due as tax and demanding payment within a specific period.
34
What happens if the FLD/FAN is not delivered to the taxpayer?
It cannot be considered final, executory, and demandable.
35
What is the remedy for a taxpayer after receiving a FAN?
File a protest to the CIR or duly representative within 30 days.
36
What are the two types of protest?
* Request for reconsideration * Request for reinvestigation
37
What are the nine requisites of a protest?
Must include: * In writing * Addressed to CIR * Applicable laws * Date of assessment * Taxpayer's name and address for 3 years * Nature of protest * Taxable period * Amount and kind of tax * Date of receipt of assessment
38
What is the effect of non-protest?
The assessment becomes final and demandable.
39
What does FDDA stand for?
Final Decision on a Disputed Assessment
40
How long does the CIR have to issue an FDDA?
Within 180 days from filing of protest or submission of additional documents.
41
What are the two ways a protest can be denied?
* Direct denial * Indirect denial
42
What is the remedy if the DAR denies a protest?
Appeal to the Court of Tax Appeal (CTA) within 30 days.
43
What is the time frame for appealing to the CTA after an indirect denial?
30 days from the lapse of the 180-day period.
44
What happens if the FDDA is void?
It does not render the assessment void; the assessment remains valid.
45
What are the general collection methods?
* Payment * Tax lien * Distraint * Levy * Garnishment * Judicial proceedings
46
What is a tax lien?
A legal claim on property as security for tax obligations.
47
What is distraint?
Seizure of taxpayer's personal property to enforce tax payment.
48
What is the difference between actual and constructive distraint?
Actual distraint involves physical seizure of property; constructive distraint requires the taxpayer to sign a receipt for property.
49
What is a levy?
Seizure of real properties to enforce tax payment.
50
What is the redemption period for property sold under levy?
One year from the date of sale.
51
What is the minimum compromise rate for financial incapacity cases?
10% of the basic assessment tax.
52
What grounds can a compromise be made on?
* Reasonable doubt about the validity of the claim * Taxpayer's financial incapacity
53
What are the grounds for abatement?
* Tax appears unjustly assessed * Collection costs do not justify the amount due
54
What suspends the running statute of limitations?
* Taxpayer requests for reinvestigation * Taxpayer cannot be located * No property can be located * Taxpayer is out of the Philippines
55
What civil penalties may be applied in addition to the basic tax?
* Surcharge * Interest
56
What is the surcharge for failure to file a return on time?
25% surcharge.
57
What surcharge is applied for willful neglect to file a return?
50% surcharge.
58
What is the consequence of failing to pay deficiency tax within the prescribed time?
Failure to pay deficiency tax results in penalties.
59
What percentage surcharge is applied for willful neglect to file a return on time?
50% surcharge.
60
What is the surcharge percentage for simple neglect when a taxpayer voluntarily files after the deadline?
25% surcharge.
61
What constitutes prima facie evidence of a false or fraudulent return?
Substantial overstatement or under declaration of deductions or income exceeding 30%.
62
What is the interest rate prior to the effectivity of the Train Law?
20% per annum.
63
What is the interest rate upon the effectivity of the Train Law?
12% per annum.
64
What types of interest are imposed on unpaid tax amounts?
Deficiency interest and delinquency interest.
65
What does deficiency interest apply to?
It applies to any deficiency tax due.
66
What is delinquency interest imposed on?
Failure to pay tax due on returns or deficiency tax by the due date.
67
Can deficiency and delinquency interest be imposed simultaneously under the Train Law?
No, they cannot be imposed simultaneously.
68
What is the difference between tax deficiency and tax delinquency?
Tax deficiency is the amount still due upon audit; tax delinquency is the failure to pay tax by the due date.
69
What tax concessions does EOPTA provide to Micro and Small taxpayers?
Reduced surcharge and interest rates, and reduced penalties for failure to file.
70
What is the reduced surcharge rate for civil penalties under EOPTA?
10% surcharge on civil penalties.
71
What is the reduced interest rate under EOPTA?
6% interest.
72
What are the gross sales thresholds for Micro, Small, Medium, and Large taxpayers?
* Micro: Less than P3,000,000 * Small: P3M to less than P20M * Medium: P20M to less than P1B * Large: P1B and above
73
What are the requisites for a taxpayer to claim a refund?
* Erroneous or illegal collection by the BIR * Written claim within 2 years from payment * Petition for refund within 30 days if denied
74
What is the timeframe for the CIR to decide on a refund claim?
180 days from submission of complete documents.
75
When should an application for refund of input VAT on zero-rated sales be filed?
Within 2 years after the close of the taxable quarter.
76
What is constructive distraint?
A requirement for the taxpayer to preserve distrained property without disposal.
77
In what cases can constructive distraint be availed?
* Taxpayer retiring from business * Intending to leave the Philippines * Removing property * Obstructing tax collection proceedings

Tax Remedies (1 decks)

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