Tax February 7, 2015 Group Activity CONSTRUCTIVE DISTRAINT (circumstances) Section 206 Delinquent taxpayer Can be resorted to if either delinquent or not delinquent How it is effected? Can be effected on the taxpayer and any person Sign receipt Obligate to preserve and not to dispose If there is a refusal, revenue officer will prepare a list, and in the presence of two witness, leave it in the principal place of business

LEVY real property; DISTRAINT personal property Assessment required for levy? YES because delinquency is a requirement Constructive Distraint, assessment? No, because delinquency is not a requirement Forfeiture in levy proceedings? YES Forfeiture applies to real property When no one is interested, government can forfeit Forfeiture in distraint proceedings? NO What happens instead is government will purchase the property

SUSPENSION OF BUSINESS OPERATION Should not be less than 5 days VAT cases

COMPROMISE AND ABATEMENT Grounds of compromise and abatement You can compromise 40% of the basic deficiency tax 10% of the basic deficiency tax if with financial incapacity Minimum can be lessened with the approval of the National Evaluation Board Other instance that approval is needed: when deficiency tax imposed is more than 1M pesos Allowed cases to be compromised: Delinquent account Administrative protest after the FAN has been issued and pending with the BIR Civil tax cases disputed before the court Criminal violations not yet filed before the court EXCEPT: criminal tax fraud cases Cases covered with PAN Prohibited cases, cannot be compromised Withholding tax cases this amount is supposed to be readily available Mere obligation is to remit it Criminal tax fraud cases and all those already filed in court Agreement with BIR and taxpayer Final and executory judgment why not allowed? To not make a judgment a joke Estate tax cases on the ground of financial incapacity there is always property to sell Delinquent accounts with duly approved schedule of installment payments Only 2 Grounds of Abatement Instances when abatement is allowed under the ground of unjust and excessive assessment (Revenue Regulation, Vitug and maybe Mamalateo has it) Filing of return or payment at the wrong venue Mistake in payment due to erroneous written advice of the revenue officer Failure to file return due to prolonged labor dispute, force majeure or legitimate business reverses Non-compliance due to difficult interpretation of law Failure is due to cause beyond taxpayers control Non-payment under meritorious cases and such other similar and analogous cases

JUDICIAL REMEDIES OF THE GOVERNMENT Filing of Civil and/or Criminal actions CIVIL ACTIONS: Filing a collection case before the courts Files an answer for a petition for review filed by a taxpayer (30 days after receipt of decision or lapse of 180 days) CRIMINAL ACTIONS: Preliminary assessment required? NO, according to ADAMSON VS. CA (latest case) but first decided in the UNGA CASE: criminal complaint may not be preceded by a final assessment, not a requirement FORTUNE TOBACCO CASE under the Unga case, failure of BIR to establish intent to evade SECTION 222, Preliminary assessment not required for COLLECTION Payment of assessed tax does not exonerate from criminal case of tax evasion Payment can only reduce your civil liability, not your criminal case What should the judgment of a criminal case include? Penalties of imprisonment Order of payment of taxes

STATUTE OF LIMITATIONS; ASSESSMENT GENERAL RULE: Assessment: 3 years after the last day prescribed by law for the filing of the return or; Example: Filed return in April 10, 2015, last day of filing assessment is April 15, 2018 If return is filed beyond the period prescribed by law, 3 years from the day the return is filed Example: Income tax return filed on April 20, 2015, last date of assessment is April 20, 2018 because the last day to file is April 15 EXCEPTIONS: SECTION 222 10 years from discovery: File a false return File a fraudulent return Fail to file a return No return is filed Amendment: last day issuance of assessment reckoned from date of filing of the amended return if amendment is substantial First filed on April 15, 2015, Amendment return on April 30, 2015, If substantial amendment (affects tax liability) Increase, decrease, losses claim more NOLCO Increase, decrease, sales Increase, decrease, expenses When do you say that there is an assessment made? Date of release, sending and mailing of the FAN

SUSPENSION OF PRESCRIPTIVE PERIOD FOR TAX ASSESSMENT: Reinvestigation and granted by Commissioner CIR is prohibited from making the assessment automatic? NO, 60 days thereafter Illustrate: issued a writ of levy on March 1, 2015, goons huddle, BIR never served writ of levy; March 1, 2016, writ was successfully served. Period should start to run 60 days after March 1, 2016 When you cannot be located but the moment BIR learns of the new address, statute begins to run RR 18-2013 New Procedure: Served either personal, registered mail or substituted service, or private courier Where? Registered addressed or in an UNKNOWN address Knowledge of BIR would suffice to restart the period Re-registration is not required When the taxpayer is outside the Philippines When the warrant of distraint or levy is duly served and no property is located

PRESCRIPTIVE PERIOD ON CRIMINAL CASES Judicial remedy: SECTION 281: 5 years from commission or discovery of the violation and the institution of judicial proceedings for its investigation and punishment (IOW it is imprescriptible, if you will never institute a judicial proceeding, it will never prescribe)

PRESCRIPTIVE PERIOD ON COLLECTION: GR: SECTION 203: 3 years from date of final assessment if there is a RETURN FILED EX: 5 years from date of assessment if there is a false or fraudulent return filed or if there is failure to file return or if there is no return at all 10 years from discovery of false or fraudulent returns with intent to evade the tax or failure to failure to file a return if there is NO ASSESSMENT MADE Ground for suspension: same ground with assessment, STILL SECTION 223

INJUNCTION FOR ASSESSMENT AND COLLECTION OF PAYMENT OF TAXES GR: NOT ALLOWED UNDER SECTION 218 In consonance also with Life blood theory EXCEPTION: CTA can grant injunction under the ground of serious prejudice on the part of the taxpayer and the government (under the new law expanding the powers of the CTA and jurisprudence)