a. Tax Deficiency vs. Tax Delinquency

Tax Delinquency vs. Tax Deficiency

Tax Delinquency

• Entails failure to pay tax due on any return required to be filed, or tax due for which no return is required;
• May be subject to a 25% surcharge when its statutory grounds are present, and to applicable interest. A compromise penalty may arise only through the taxpayer’s agreement, not automatically from delinquency;
• A disputed assessment may become final, executory and demandable if the taxpayer fails to timely appeal the denial of a protest; denial alone does not make it so;
• An assessment that has become final, executory and demandable; and
• Can be immediately collected through administrative action with the issuance of distraint and levy.

Tax Deficiency

• Refers to the amount by which the tax imposed exceeds the amount shown in the taxpayer’s return, with adjustments for amounts previously assessed or collected and rebates as provided by law. If no return was filed, the statutory no-return computation applies. Tax properly declared but left unpaid is generally delinquent tax, not a deficiency. (NIRC, Sec. 56(B))
• If the taxpayer disagrees with a deficiency assessment, he must timely file an administrative protest. He may then appeal to the CTA from the denial of the protest or, as allowed by law, from the Commissioner’s inaction. (NIRC, Sec. 228; RA 1125, as amended, Sec. 11)