D. Tax Remedies

3. Tax Remedies

a. General Concepts i. Tax Deficiency vs. Tax Delinquency ii. Tax Evasion b. Civil Penalties i. Deficiency Interest and Delinquency Interest ii. Surcharge iii. Compromise Penalty c. Assessment Process

i. Letter of Authority ii. Submission of Supporting Documents by taxpayer iii. Notice of Discrepancy iv. Issuance of Preliminary Assessment Notice v. Issuance of Formal letter of Demand/Final Assessment Notice (a) Prescriptive Period for Assessment (1) False Returns vs. Fraudulent Returns vs. Non- Filing Returns (b) Suspension of the Running of Statute of Limitations

d. Collection Process i. Requisites ii. Prescriptive Periods e. Taxpayers Remedies i. Protesting an Assessment (a) Period to File Protest (b) Effect of Failure to File Protest ii. Submission of Supporting Documents by Taxpayer iii. Decision of the Commissioner on the Protest (a) Period to Act Upon or Decide on Protest Filed (b) Remedies of the Taxpayer in case the CIR Denies the Protest or Fails to Act on the Protest (c) Effect of Failure to Appeal iv. Compromise and Abatement of Taxes v. Recovery of Tax Erroneously or Illegally Collected (a) Grounds, Requisites, and Period for Filing a Claim for Refund or Issuance of a Tax Credit Certificate (b) Proper Party to File Claim for Refund or Tax Credit f. Government Remedies i. Administrative Remedies (a) Tax Lien (b) Distraint and Levy (c) Forfeiture of Real Property (d) Suspension of Business Operation ii. Judicial Remedies (a) Civil Action (b) Criminal Action (c) Non-Availability of Injunction on Collection

Summary of Tax Remedies for Taxpayers and the Government

• Remedies of the Taxpayer

Before Payment of Taxes

• Administrative Remedies
• Protest against assessment
• Compromise
• Redemption of property after sale at public auction
• Judicial Remedies
• Filing of petition before the CTA

After Payment of Taxes

(1) Administrative Remedies

(1) Claim for refund or tax credit

(2) Judicial Remedies

(1) Filing of Petition before the CTA

• Remedies of the Government

1) Administrative Remedies

• To make deficiency assessments within 3 or 10 years
• To enforce deficiency assessments and collect taxes: generally, within 5 years from assessment under NIRC, Sec. 222(c); in cases under Sec. 222(a), by distraint, levy, or court proceeding within 5 years following assessment, or within 10 years after discovery if collection proceeds without assessment, subject to the rules on suspension and extension under Sec. 223
• To effect distraint of personal property
• To effect levy on real property
• To compromise, abate, or cancel taxes
• To enforce tax liens
• To enforce statutory penal provisions
• To enforce forfeiture of property

2) Judicial Remedies

• Civil
• Criminal
• To pursue judicial proceedings to collect taxes under NIRC, Sec. 205(b)