Commercial and Taxation Laws › Taxation Law › Tax Remedies › Taxpayer Remedies
e. Recovery of Tax Erroneously or Illegally Collected
Tax Refund as Distinguished from Tax Credit
| TAX REFUND | TAX CREDIT |
| Tax refund takes place when there is actually a reimbursement of tax. A tax refund is the reimbursement of taxes erroneously or illegally collected. The taxpayer seeks it by filing a claim for refund. | The government issues a Tax Credit Certificate covering the amount determined to be reimbursable, which is applied after proper verification against an internal revenue tax liability due from the taxpayer to the government.May be applied against any internal revenue tax, except withholding taxes. Original copy is surrendered to the revenue officer. No tax refund will be given resulting from availment of incentives granted by law where no actual payment was made (NIRC, Sec 204[C])1 |
The following must be established: 1. That there was an actual collection and receipt of the government of the tax to be recovered and this requires actual proof; and 2. That there is a legal basis for granting the refund or credit including the verification of compliance with the statutory requirements relative to the filing of the claims within the reglementary two-year period. |
|
Forfeiture of cash refund/tax credit: 1. Forfeiture of refund in favor of the government when a refund check or warrant remains unclaimed or uncashed within 5 years from date of mailing or delivery 2. Forfeiture of Tax Credit – a tax credit certificate which remains unutilized after 5 years from date of issue, shall be invalid, unless revalidated. (NIRC, Sec. 230)2 |
Authorities
- NIRC, Sec. 204
- NIRC, Sec. 230