Questions? Ally, Luis Jose P. Ferrer luis jose-p ferrer@ph.ey.com DISCUSSION OUTLINE New Tax Audit & Assessment Rules Due process requirements in the issuance of Preliminary Assessment Notics (PAN) and Final Assessment Notice (FAN) Periods to protest the PAN and FAN Reinvestigation vs. Reconsideration Deficiency Interest vs. Delinquency Interest Jurisdiction of the CTA Prescriptive Period for Claims for Refund Selected Cases Page Pree Lecue io Totton: Tanayers Rights ane Remedios scv.ASSESSMENT PROCESS — NATIONAL INTERNAL REVENUE TAXES Page Preartect sor: Yarpayes Rahs sb Remedios scv Basic Assessment Process in a Nutshell — Administrative Proceedings scape Poston Pare co dayton ocunais = a ceuse) (BiRissues) (ee i osves ) cree) (appeate na ( =) eats | (eit ( rm (cin (erate \ antory "fice teary) Poneaicatar) | Sete smigeiee | | eae? | nna) erBincea”) LJ z (Sass) Corotest_) 20 days toe Protest If there is a Request for Reinvestigation Pogo PregarteBasic Assessment Process in a Nutshell — Administrative Proceedings ‘Sdaystofte Poston Paper i a ™~ BIR issues: i \, [eirissues representa ( Sates | eum Aachinthent Protest aes Ee auer ot | *|Assocsment]” tice FAN! utter | \gineen_/ ice omen: | tater aye oe StOemand a 30 days oe Protest If there is a Request for Reconsideration Pages re Bar scree Tanah Tangayers igh ond Remade Assessment & Protest Flowchart of National Internal Revenue Taxes under Revenue Regulations No. 18-2013 “Texpayer Raceipt of Letier of Authoily BIR investigation /examinatica of rtums and books ‘of aocounts ‘GIR or authorized representative issues a PAN. “Taxpayer answers witin 15 days, “Taxpayer Ignores the PAN. BIR shall save te FANFLD Pages Pr Sa Lecture i Tavain: Taxpayer Rigs cad Remedies scvAssessment & Protest Flowchart Issuance of FLD/FAN ‘Taxpayer fs protest win 30 “Texpayer ignores the FLOVFAN; ays from receipt of FAN ‘Assessment becomes final oe 1 Tora mae] [SSE | Dorcas __| I _ ] ‘Commissioner files a cer eaaeen|) [hearse are ee Lscomiomec | eaaiesaneat mesos oy igor a Page PrvBar evn Tato Taye Rigs an Reads scv Assessment & Protest Flowchart Decision or Inaction on Protest to the FAN/FLD “Taxpayer files Protest ve FANIFLD “GIR authorized ‘GR authorized | [nection by CIR authorized representative cancels the | | ropresentative denies he | epresentatve ‘assossment Protest (FDA) ‘Awa the decision of, CIR or authorized representative thon Request fr appeal to CTAwitin ‘reconsideration to CIR, 30 days, within 30 days in roinvestigation, 20 days | from lapse of 80-day period {rom submission of docuer In reconsideration, 30 days ftom lapse of 180-day period ftom ling of protest rosa ecto Taxation Taxpayers igs and Remedies sevAssessment & Protest Flowchart Decision or Inaction on Administrative Appeal Request for Reconsideration (Appeal to CIR) because of FODA issued by CIR's authorized ropresentalive ‘GIR roverses decision ‘GIR denies appeal Inaction by CIR (apse rized — of 180 days fein dato of representative & fling of administrative caneissasosement_| sere) [Appeal to CTA within | Go SE day tom rep D> teacdoncrtapn ot tay pas 7 Wo weinvestigatin alowed in acminsratve appeal to CIR. ‘Await he decision of ‘Only issues raised in the decision of authorized CTs etle re representative entertained by CIR. ‘OCTA within 30 days: ttoceator | + Amotion for roconsideration on the C's denial of be app 22 nl ol he 30-c5y per Page rostarLe xyes ih nd Rewees scv New Tax Assessment Rules under RR 18-2013 Decision by the CIR Herself IN ALL CASES, if the Final Decision on Disputed Assessment (FDDA) is signed by the Commissioner herself, you have 30- days within which to appeal to the CTA. age 19 rear Lact" Taxation Yowaynrs igs and Remedios scvNew Tax Assessment Rules under RR 18-2013 Deleted the service of Notice of Informal Conference. Specified the contents of a valid Protest to the Formal Letter of Demand/ Final Assessment Notice (FLD/ FAN). Specified the procedure in cases of requests for reconsideration and requests for reinvestigations. Provided for an alternative remedy to the taxpayer in case the protest is denied by the CIR representative. Page ts Pinar Lectin Taurun-laroo/cr Right ane Remedies scV Issuance of PAN under RR 18-2013 If after review and evaluation by the CIR or his duly authorized representative, it is determined that there exists sufficient basis to assess the taxpayer for deficiency tax, a PAN will be issued to the taxpayer. In case of failure to respond within 15 days from receipt of PAN, the taxpayer shall be considered in default and a Formal Letter of Demand and Final Assessment (FLD/FAN) shall be issued. Page? PreBa Lectin Taxon aupajes Rahs and Remedies scvIssuance of PAN under RR 18-2013 Pago 1s PreBarectuei Tera: Tomar igs 2 If the taxpayer responds that he disagrees with the findings within 15 days from receipt of the PAN, the FLD/FAN shall be issued within 15 days from filing of the response. The FLD/FAN calling for the payment of the taxpayer's deficiency taxes shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the assessment shail be void. Contents of a Valid Protest . The nature of protest whether reconsideration or reinvestigation, specifying newly discovered or additional evidence he intends to present if it is a request for reinvestigation; . Date of the assessment notice; and . The applicable law, rules and regulations, or jurisprudence on which his protest is based, otherwise his protest shall be considered void and without force and effect. PreBar Lectures Teton: Taxpnves Rights and Remedies SGVRequest for reconsideration vs. request for reinvestigation Request for reconsideration - a plea for a re-evaluation of an assessment on the basis of existing records without need of additional evidence; may involve both a question of fact or of law or both. Request for reinvestigation - a plea for re-evaluation of an assessment on the basis of newly-discovered or additional evidence that a taxpayer intends to present, may also involve a question of fact or law or both. Bank of the Philippine Islands vs. CIR,G.R. No. 139736, October 17, 2005; Commissioner of Internal Revenue vs. Philippine Global Communication, G.R. No. 167146, October 31, 2006; Royal Bank of Scotland Phil. Inc. vs. Commissioner of Internal Revenue, CTA EB Case No. 446, October 23, 2009) Page 15 cour Decisions & Common tau in BIR Aut and Assess January 29.2016 sev Request for reconsideration does not stop the prescriptive period to collect assessed tax 4) The main difference between these two types of protests lies in the records or evidence to be examined by internal revenue cfficers. Whether these are existing records or newly discovered or additional evidence. 2) Arequest for reconsideration does not toll the running of the prescriptive period for the collection of an assessed tax. (CIR vs. Philippine Global Communication Inc., G.R. No. 167146, October 31, 2006) NOTE: A Request for Reinvestigation will only toll the prescriptive period to COLLECT if the request for reinvestigation is granted by the BIR. Pie 18 Coat Decslons & Common issues h BI Ault and Assessment January 28,2094 scvReinvestigation vs. Reconsideration (under RR 18- 2013) If there are several issues in the FLD/FAN and the taxpayer disputes or protests only some of them, the assessment relating to the undisputed issue shall become final, executory, and demandable. For requests for reinvestigation, the taxpayer shall submit all relevant supporting documents in support of the protest within 60 days from the filing of the protest, otherwise, the assessment shall become final. The term “assessment shall become final” only means taxpayer is barred from disputing the correctness of the issued assessment by introducing new or additional evidence. It DOES NOT mean that the assessment shall become final, demandable and executory. agai? ra Lect Tanai Tanoayers igh and Remedies scv Determination of “relevant supporting documents” rests with taxpayer, not with BIR The term “relevant supporting documents” should be understood as those documents necessary to support the legal basis to dispute a tax assessment, as determined by the taxpayer, BIR cannot demand what type of supporting documents should be submitted. Otherwise, a taxpayer will be at the mercy of the BIR, which may require the production of documents that a taxpayer cannot submit. CIR vs. First Express Pawnshop Company, Inc. Supreme Court G.R. Nos. 172045-46, June 16, 2009 Pave !® out Dedeone 8 Common sues BIR Ait and Asssient aun 29,2044 scvile Taxpayer's remedies if protest to FAN is denied by CIR’s representative (with FDDA) Appeal or file a Petition for Review with the CTA within 30 days from the date of receipt or decision; OR 2. File a request for reconsideration with the CIR within 30 days from date of receipt of the said decision. No request for reinvestigation shall be allowed in the administrative appeal with the CIR. age 19 rear actin Toren Tarra Rahs and Remain scV Taxpayer’s Remedies if protest to FAN is not acted upon within 180 days by CIR’s representative (INACTION) 41. Appeal or file a Petition for Review with the CTA within 30 days from the expiration of the 180-day period; OR 2. Await the final decision of the CIR’s duly authorized representative on the disputed assessment and appeal to the CTA within 30 days from the receipt of the decision. NCTE: Under RR 18-2013, there is NO option to elevate the case to CIR in case of INACTION by CIR representative. Pace 20 Pre Bar ctr Texatn Taxes fighls nd Rermeias scvTaxpayer's Remedies if administrative appeal is denied by the CIR The taxpayer may appeal to the CTA within 30 days from the date of receipt of the said decision. Otherwise, the assessment shall become final, executory and demandable. A Motion for Reconsideration of the CIR’s denial of the protest or administrative appeal will not toll the 30-day period to appeal to the CTA. ols Vana Taepayee seh ana Rerreies sov Taxpayer’s Remedies if administrative appeal not acted upon by the CIR 4. Appeal or file a Petition for Review with the CTA within 30 days from the expiration of the 180-day period; OR 2. Await the final decision of the CIR on the disputed assessment and appeal to the CTA within 30 days from the receipt of the decision. Page Pre-BarLecuroin axain Tawnayer Rights and Remedios scvTaxpayer options to appeal to CTA or await final decision of CIR are mutually exclusive Taxpayer options of either appealing to CTA or awaiting final decision of CIR are not alternative. These options are mutually exclusive, and resort to one bars the application of the other. Rizal Commercial Banking Corporation vs. CIR Supreme Court G.R. No. 168498, April 24, 2007 Pas823 cout Dedslon & Conmon seein BIR Aus and Assessment sua 29,2014 scy Issuance of the Final Deci: (FDDA) ion on, Disputed Assessment The FDDA (decision of the Commissioner or his duly authorized representative) shall siate the following: 4. The facts, the applicable law, rules and regulations or jurisprudence on which such decision is based, otherwise the decision shall be VOID; and 2. That the same is his final decision. Paget Pre-Bar Lectin Taxation: Toxins Rights ant Remedies scvDeficiency Interest vs. Delinquency Interest ———— Taxbase Haeakocna ~~" From the date Delinquency interest Basic tax plus deficiency | | interest & surcharge rom the due date | pointidate | prescribed for its appearing in the notice | payment until the full and demand of the CIR | | payment thereof | until the amount is fully i | | paid [Rate [ae ‘per annum 10% per annum Deficiency Interest vs. Delinquency Interest RR No. 18-2013 (Cont.) “Deficiency is defined as the amount still due and collectible from @ taxpayer upon audit or investigation; whereas delinquency is defined as the failure of the taxpayer to pay the tax due on the date fixed by law or indicated in the assessment notice of letter of demand. 20x 20% 20x Deficiency interest is imposed for the shortage of taxes paid, while delinquency interest is imposed for the delay in payment of taxes.” (Emphasis supplied) (Takenaka Corporation Philippine Branch vs. Commissioner of Internal Revenue CTA EB Case No. 745 September 4, 2012; First Lepanto Taisho Insurance Corporation vs. Commissioner of Internal Revenue, G.R. No. 197117 dated April 10, 2013.) Pages Tarpayors Rights & Homose SGVImposable Interests in case of Deficiency Assessments To illustrate: ‘Taxpayer was assessed for deficiency income tax for taxable year 2000. FAN was served on June 30, 2003, demanding payment on July 30, 2003 ‘Taxpayer protested the assessment which the CIR denied in 2005. The CTA denied the taxpayer's appeal in 2007, while the Supreme Court denied the same in 2010. The total assessment was fully paid in 2011. The interests applicable shall be reckoned as follows: 1% per annum on the basic tax computed DELINQUENCY INTEREST = 20% per annum on the fotal def iid on the deficiency interest oe 2001 sy 30,2008 2007 2010 ott “exos shoul, Date appearing Ctadenies ‘SC denies he Fullpaymento mmotsmped ——ondemana oppentot ‘ereayers dotdency tes Mee 46,2001 ‘=yment tarpaysr ‘opeal igi & Resins scv Prescriptive Periods for the BIR to assess and collect internal revenue taxes Assessment 3 years after the (a) last day from the deadline of the filing of the retum of (b) ihe actual date of the filing of the return (Section 203, Tax Code). In case of filing of a false or fraudulent return with intent to evade tax, of failure to file a return, 10 years after the discovery of the falsity, fraud, or omission (Section 222, Tax Code). Pago20 PrearLecwe Tames Rs ond Roma scVvPrescriptive Periods for the BIR to assess and collect internal revenue taxes Collection 5 years from the assessment of the Formal Assessment Notice (FAN) if unprotested, or Final Decision on Disputed Assessment (FDDA) if the taxpayer protests the FAN (Section 223, Tax Code). Pago28 Pie SorLectue Tense Tax re Rie ond Remedios scv Modes of Service of Assessment Notices Personal Service RR No. 18-2013 (Cont.) ~ personal service — by delivering personally a copy thereof to the party at his registered or known address or wherever he may be found. Aknown address shall mean a place other than the registered address where business activities of the party are conducted or his place of residence. In case personal service is not practicable, the notice shall be served by substituted service or by mail. Page 30 Taxpayers ighs & Roradies sevModes of Service of Assessment Notices Substituted Service RR No. 18-2013 (Cont) Substituted service — can be resorted when the party is not present at the registered or known address under the following circumstances: 4. Notice may be left at the party's registered address, with his clerk or with a person having charge thereof, 2. If known address is a place where business activities of the party ate conducted, the notice may be left with his clerk or with a person having charge thereof; 3. If known address is the place of residence, the notice may be left with a person of legal age residing therein; 4. {fno person is found in the party’s registered or known address, the revenue officers concerned shall bring a barangay official and 2 disinterested witnesses to the address so they may personally observe and attest to such absence Paga3t Taxpayers iris Rema SGV Modes of Service of Assessment Notices Substituted Service RR No. 18-2013 (Cont.) The notice shall be given to said barangay official. Such facts shall be contained in the bottom portion of the notice, as well as the names, official position and signatures of the witnesses. Should the party be found at his registered or known address or any other place but refuse to receive the notice, the revenue officers shall bring a barangay official and 2 disinterested witnesses in the presence of the party so that they may personally observe and attest to such act of refusal. Disinterested witnesses are persons of legal age other than employees of the BIR. Taxotyers Rohe Remedies SGVModes of Service of Assessment Notices Service by Mail RR No. 18-2013 (Cont.) Done by sending a copy of the notice by registered mailto the registered or known address of the party with instruction to the Postmaster to return the mail to the sender after 10 days, if undelivered. A copy of the notice may also be sent through a reputable professional courier service. If no registry or reputable professional courier service is available in the locality of the addressee, service may be done by ordinary mail 4 Ramadi scv Modes of Service of Assessment Notices Service by Mail RR No. 18-2013 (Cont) The server shall accomplish the bottom portion of the noticé. He shall also make a written report under oath before a Notary Public or any person authorized to administer oath under Section 14 of the NIRC, as amended, setting forth the manner, place and date of service, the name of the person/barangay official/professional courier service company who received the same and such other relevant information. The registry receipt issued by the post office or the official receipt issued by the professional courier company containing details of the transaction shall constitute sufficient proof of mailing and shall be attached to the case docket. Page 34 Teapayers Rights & Romedes scVvModes of Service of Assessment Notices Service to Tax Practitioner RR No. 18-2013 (Cont.) Service to the tax practitioner, who is appointed by the taxpayer under circumstances prescribed in the pertinent regulations on accreditation of tax agents, shall be deemed service to the taxpayer. Pages “Toonsyre Rigs 8 Rarecies scv Instances when the running of prescriptive period is suspended (Secs. 222 and 223, Tax Code) 1. Upon the execution of a valid waiver before the expiration of the prescriptive period to assess ‘When the Commissioner is prohibited from making the assessment or beginning distraint/levy or a proceeding in court When the taxpayer cannot be located in the address given in the return filed upon which a tax is being assessed or collected, unless the taxpayer has informed the BIR of any change in address When the warrant of distraintllevy is served upon the taxpayer, his, authorized representative, or a member of his household with sufficient discretion, and no property can be located When the taxpayer is out of the Philippines When the Commissioner grants the taxpayer's request for reinvestigation ages rear ecu Taxston: Taxpeyar Rigs and Reecles scvRequirements for a Valid Waiver 1. In the form prescribed under RDAO No. 05-01 2. Signed by taxpayer or his duly-authorized representative. For corporations, it must be signed by any of its responsible officials. 3. The CIR or authorized revenue official shall sign the waiver, indicating agreement to the waiver and date of acceptance 4. Date of execution & acceptance must be before expiration of the prescriptive period or lapse of the period previously agreed upon. 5. Executed in 3 copies (original attached to case docket, 2% copy for taxpayer, and 3” copy for BIR office accepting the waiver). 6. The taxpayer received a copy of the waiver accepted by the BIR. Revenue Delegated Authority Order No. (RDAO) 05-01 aga 37 reBar Lect in Taman: Taxpayer igs and Remade scv Waivers of Statute of Limitations Requirements of a Valid Waiver (RMC 06-05) Philippine Journalists, Inc. vs. Commissioner of Internal Revenue, G.R. No. 162852, promulgated on December 16, 2004, to wit: ‘The waiver must specify a definite agreed date between the BIR and the taxpayer within which the former may assess and collect revenue taxes. ‘The waiver must be accepted by the Commissioner of Internal Revenue or his duly authorized representative, and the date of acceptance must be indicated. ‘The taxpayer must be furnished a copy of the waiver accepted by the BIR. ‘The waiver must be signed by the duly authorized officer of the taxpayer. A waiver is an agreement between the taxpayer and the BIR that the period to issue an assessment and collect the taxes due is extended to a date certain. A waiver of the statute of limitations is not a unilateral act by the taxpayer or the BIR, but is a bilateral agreement between two parties. Pages® Taspayers igh & Remade scvWaivers of Statute of Limitations Requirements of a Valid Waiver Commissioner of Internal Revenue vs. East Asia Power Resources Corporation, C.T.A. EB CASE NO. 879. June 17, 2013, the Court ruled, thus: “Moreover, there is no indication that the Revenue District Officer was present during the notarization of the waivers. A plain reading of the "Acknowledgement" portion reveals that only one person appeared before the notary public as shown by the u: ‘of the singular pronoun “he/she” and such person is the representative of respondent. Pertinent portions of the acknowledgement are quoted below: personally appeared before me... known to me und to me known to be the same person who executed the foregoing waiver for and in behalf of the said taxpayer..." Cleatly the person who appeared before the notary public is the one who “executed the foregoing waiver for and in behalf ofthe said taxpayer", which can only be taken to mean as referring to the representative of respondent and not the Revenue District Officer.” CTA invalidated the waiver in this case. Pago ‘Terone/oFighie & Romeos sev JURISDICTION OF THE COURT OF TAX APPEALS Pogeao -Fre-BerLectirs in Tension: Toseyar Fighls and Remotes scvJurisdiction of the CTA British American Tobacco vs. Jose Isidro N. Camacho, et al. G.R. No. 163583 promulgated August 20, 2008 While RA 1125, as amended by RA 9282, confers on the CTA jurisdiction to resolve tax disputes in general, this does not include cases where the constitutionality of a law or rule is challenged. Where what is assailed is the validity or constitutionality of a law, or a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. Paget re-Bar Lecture in Toran: Tears fights ond Remodins scv Jurisdiction of the CTA Commissioner of Internal Revenue v. San Miguel Corporation G.R. No. 184428, November 23, 2011; Commissioner of Internal Revenue v. Fortune Tobacco Corporation G.R. No. 180006, September 28, 2011, 658 SCRA 289 11 and Philippine Bank of Communications v. Commissioner of Internal Revenue G.R. No. 112024, January 28, 1999, 302 SCRA 241 ‘The Supreme Court emphasized that an administrative issuance must not override, supplant or modify the law which is superior to the former. In these cases, the Supreme Court did not question the CTA's jurisdiction over refund or assessment cases where the issue of the validity of administrative ruling or requlation was amona the issues raised pertaining to cases falling before the CTA's jurisdiction under Republic Act ("R.A.") No. 1125 as amended by R.A. No. 9282, specifically refund claims or assessment cases aga ed Rams scvAn adverse ruling of the Secretary of Finance is appealable to the Court of Tax Appeals The Philippine American Life and General Insurance Company vs. The Secretary of Finance and CIR G.R. No. 210987 (Supreme Court Third Division), November 24, 2014 Facts: Philippine American Life and General Insurance Company (Phitamlife) sold through competitive bidding its PhilamCare common shares to STI Investments, Inc. The BIR notified Philamlife that it needed to secure a ruling, citing a pctential donor's tax liability. Philamlife filed a request for a BIR confirmatory ruling that the transaction is not subject to donor's tax on the ground that the shares were sold at their FMV, at an arm's length consideration, and with no donative intent. CIR denied and ruled that the transaction was subject to donor's tax pursuant to Section 100 of the Tax Code. Page 43 Unto en TapayersRemedias ad IR Procesues scv An adverse ruling of the Secretary of Finance is appealable to the Court of Tax Appeals Philamlife vs. The Secretary of Finance and CIR (Cont.) Philamlife appealed the ruling with the Secretary of Finance. Upon denial by the Secretary, Philamlife elevated the case to the Court of Appeals (CA) via a petition for review under Rule 43. The CA dismissed the petition for lack of jurisdiction. Issue: Who has jurisdiction to review the adverse ruling of the Secretary of Finance? Pane st Unaesen Taxpayer's Remedies ard BI Prcedes scvAn adverse ruling of the Secretary of Finance is appealable to the Court of Tax Appeals Philamlife vs. The Secretary of Finance and CIR (Cont.) Ruling: The Court of Tax Appeals (CTA) has jurisdiction to review the adverse ruling of the Secretary of Finance. RANo. 1125, as amended, provides that the CTA shall exercise exclusive appellate jurisdiction to review by appeal, among others, decisions of the CIR “in cases involving disputed assessments administered by the Bureau of Internal Revenue.” Even though the provision suggests that only rulings of the CIR are covered, itis sufficient to include appeals from the Secretary's review under Section 4 of the Tax Code. Pages Ups on Taxpayers er ne OR Proceaunes scv An adverse ruling of the Secretary of Finance is appealable to the Court of Tax Appeals Philamlife vs. The Secretary of Finance and CIR (Cont.) As the specialized quasi-judicial agency mandated to adjudicate tax, customs, and assessment cases, there can be no other court of appeliate jurisdiction other than the CTA that can decide the issues raised in the petition, which involves the tax treatment of the shares of stock sold. CTA can now rule on the validity or constitutionality of a revenue regulation or revenue memorandum circular but only if it is involved in a tax assessment case or claim for tax refund. Pago48 Updahs ce Taepay’ Remedios and BR Procedures scvReview of BIR Ruling by SC under Exceptional Circumstances BDO, et al. v. Republic, CIR, DOF, National Treasurer, G.R. No. 198756, Jan. 13, 2015, SC En Banc. The SC En Banc agreed with respondents that the jurisdiction to review the rulings of the CIR pertains to the CTA. The questioned BIR Ruling Nos. 370-2011 and DA 378-2011 were issued in connection with the implementation of the 1997 NIRC on the taxabilty of the interest income from zero-coupon bonds issued by the government. In exceptional cases, however, SC entertained direct recourse to it when “dictated by public welfare and the advancement of public policy, or demanded by the broader interest of justice, or the orders complained of were found to be patent nulities, or the appeal was considered as clearly an inappropriate temedy.” The nature and importance of the issues raised to the investment and banking industry and the novelty, thereof, constitute exceptional and compelling circumstances. Page? Utes Taxpayer's Remedies and IR Precoduree SGV Review of BIR Ruling by SC under Exceptional Circumstances BDO, et al. v. Republic, CIR, DOF, National Treasurer, G.R. No. 198756, Jan. 13, 2015, SC En Banc. The rule on exhaustion of administrative remedies also finds no application when the exhaustion will result in an exercise in futility. In this case, an appeal to the Secretary of Finance from the questioned 2011 BIR Ruling would be a futile exercise because it was upon the request of the Secretary of Finance that the 2011 BIR Ruling was issued by the Bureau of Internal Revenue. It appears that the Secretary of Finance adopted the Commissioner of internal Revenue's opinions as his ‘own. 158 This position was in fact confirmed in the letter 159 dated October 10, 2011 where he ordered the Bureau of Treasury to withhold the amount corresponding to the 20% final withholding tax on the interest or discounts allegedly due from the bondholders on the strength of the 2011 BIR Ruling. Pages Undats on Taxpayers Remadis nd BR Procedures scvReview of BIR Ruling by SC under Exceptional Circumstances Duty Free Philippines v. BIR, represented by Hon. Anselmo G. Adriano, Acting RD, RR No. 8, Makati City, G.R. No. 197228, Oct. 8, 2014. SC denied the petition assailing the Decision and Resolution of CTA Special First Division which found Duty Free Philippines liable to pay deficiency income tax and VAT of P1,036,956,477.90 and which refused to affirm petitioner's entitlement to immunities under Amnesty Law (RA 9480) for failure to present SALN as 31 Dec. 2005. SC ruled that it has no jurisdiction to review decisions rendered by a division of the CTA, exclusive appellate jurisdiction over which is with the CTA en banc. Pogo 4 Taxpayers ome an BI Procedures scV Jurisdiction of the CTA Review of interlocutory Orders of RTC The City of Manila vs. Hon. Grecia-Cuerdo En Banc G.R. No. 175723 dated February 4, 2014 City of Manila assessed SM, Ace-Hardware, etc. local business tax under Section 21 of Revenue Code of Manila in addition to Sections 14 to 17 thereof. SM paid under protest. Thereafter, it filed a claim for refund with prayer for injunction which was granted by RTC. City of Manila filed MR, RTC denied it. City of Manila went to CA alleging grave abuse. Issue: WIN CA has jurisdiction on the interlocutory order. Itis CTAnot CA who has proper jurisdiction to entertain on certiorari under Rule 45 any interlocutory order of RTCs in connection with any local tax case being heard by the latter. ageso Pre-Ber Lect n Txaton Temayrs Right an Readies SGVJurisdiction of the CTA Review of Interlocutory Orders of RTC The City of Manila vs. Hon. Grecia-Cuerdo En Banc G.R. No. 175723 dated February 4, 2014 Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split jurisdiction to conclude that the intention of the law is to divide the authority over a local tax case filed with the RTC by giving to the CA or this Court jurisdiction to issue @ writ of certiorari against interlocutory orders of the RTC but giving to the CTA the jurisdiction over the appeal from the decision of the trial court in the same case. It is more in consonance with logic and legal soundness to conclude that the grant of appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC carries with it the power to issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The supervisory power or jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with, and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and decisions of the RTC, in order to have complete supervision over the acts of the latter. Paget cen enation Tonpayes Regs and Remedios sev Refund Process Page 52 Pre Bar Lect Tasanon: Yamin fights and Remedios scvRefund Flowchart for Erroneously Paid (Other than Input Taxes) Taxes Under Section 229 of the Tax Code Filing of the administrative claim for refund with the BIR within 2 years from the payment of taxes 1 : CIR denies claim for refund als uate claim or does not act on the claim eae within the 2-year period 7 Appeal the denial or inaction End with the CTA before the lapse of the 2-year period. Page 53 rear Ltr n Texan Twoyor Figs ana Remedies sev Refund Flowchart for Unutilized input VAT under Section 112 of the Tax Code “Texpaye es elim or ofnd wit te BIR within 2 year fom dose oftaable quarter when to “Taxpayer submits complete supporting 4 ‘CIR grants claim for (IR denies daim for (Chaim fortuna romans ‘efundissuance of tax refundissuance of tax rac un arose a 720 days credit certificate eae (denial nation) Taxpayer appeals senianaction wit the CTAwithin 30 days from receipt of denial OR scv aa re Bar Lelie a Tanabr:TxpeyeroSELECTED CASES Pages PreBe Levin Tanai: Tagayers Fils cn Remoses Sov Issuance of PAN required to comply with due process requirements Commissioner of Internal Revenue vs. Metro Star Superama, Inc. G.R. No. 185371 promulgated December 8, 2010 Section 228 of the Tax Code clearly states that a PAN be sent to the taxpayer where the latter is informed that he is liable for deficiency taxes. He must be informed of the facts and the law upon which the assessment is made. This is a substantive and not merely a formal, requirement. This is confirmed under the provisions Revenue Regulations No. 12- 99 of the BIR, which requires the sending of a PAN to taxpayer to inform him of the assessment. Under RR 12-99, the PAN is part of the “due process requirement in the issuance of a deficiency tax assessment,” the absence of which renders nugatory any assessment made by the tax authorities. The use of the word “shalf' in RR 12-99 describes the mandatory nature of the service of a PAN. Page s6 Pr. Lecturein Taran. Texayars igs ond Remosios SGVThe CIR cannot adopt a position contrary to a previous ruling secured by a taxpayer by issuing an assessment Lear Automotive Services (Netherlands) B.V. — Philippine Branch vs. Commissioner of Internal Revenue (CiR) CTA Case Nos. 8421 & 8561 (Second Division), May 21, 2015 Facts: The CIR assessed Lear Automotive Services (Netherlands) B.V. Philippine Branch (Lear-PH) for deficiency income tax for taxable years 2007 and 2008 arising from the disallowance of royalty expense from Lear- PH’s gross income subject to the 5% tax. Lear-PH, a PEZA-registered entity, protested and argued that the royalty fees paid to Lear Automotive Services (Netherlands) B.V. (Lear-BV) for the use of intangible property required for its manufacturing activity, form part of its direct costs and are deductible from gross income. pres Renin a Proce scv The CIR cannot adopt a position contrary to a previous ruling secured by a taxpayer by issuing an assessment Lear Automotive Services (Netherlands) B.V. - Philippine Branch vs. CIR (Cont) Lear-PH also argued that it had previously secured BIR Ruling No. DA 147-2005 which confirmed that the said royalty payments are part of the cost of finished goods; hence, are deductible for purposes of computing the 5% income tax. The CIR claimed that BIR Ruling No. DA 147-2005 cannot be enforced as it misapplied the PEZA Law and RR No. 11-2005. Issue: Can the CIR unilaterally set aside BIR Ruling No. DA 147-2005 by issuing a deficiency assessment? Page st Untateson Taxpayers Renesas and SiR Procedures sevThe CIR cannot adopt a position contrary to a previous ruling secured by a taxpayer by issuing an assessment Lear Automotive Services (Netherlands) B.V. — Philippine Branch vs. CIR (Cont.) Ruling: No. The CIR cannot adopt a position contrary to previously issued tax exemption ruling by simply issuing an assessment against a taxpayer. To allow this would cause undue prejudice to Lear-PH which merely relied in good faith on the BIR ruling, BIR Ruling DA-147-2005 is binding to the CIR. Under Section 246 of the Tax Code, the CIR is precluded from adopting a position contrary to one previously taken if it results in injustice to the taxpayer. aga 60 Undotion Taipyar Remie and Procedures sov Element of willfulness in tax evasion cases People of the Philippines vs. Gloria V. Kintanar CTA EB Crim. No. 006 (CTA Crim. Case Nos. 0-033 & 0-034 promulgated December 3, 2010. - Willful in the tax crimes statutes means voluntary, intentional violation of a known legal duty, and bad faith or bad purpose need not be shown. An act or omission is "wilfully" done if done voluntarily and intentionally and with specific intent to do something the law forbids, or with specific intent to fail to do something the law requires to be done; that is, with bad purpose to either disobey or disregard the law. A willful act may be described as one done intentionally, knowingly and purposely, without justifiable excuse. Affirmed by the Supreme Court (G.R. No. 196340) through a Resolution dated January 2, 2042. Pagoso rear Lectin Toston Tew Rights vt Remedios scvNegligence not equivalent to fraud with intent to evade tax People of the Philippines vs. Judy Anne Santos y Lumagui CTA Crim. Case No. 0-012 promulgated January 16, 2013 Negligence, whether slight or gross, is not equivalent to fraud with intent to evade a tax which is criminally punishable under the Tax Code. Fraud must amount to intentional wrongdoing with the sole object of avoiding tax. Acquittal for the failure of the prosecution to prove all the elements of the criminal elements beyond reasonable doubt does not include extinguishment of civil liability. Accused is liable for deficiency income taxes including penalties and interests. arse Rie and Remesies sev Negligence not equivalent to fraud with intent to evade tax People of the Philippines vs. Dr. Vicente Gana Castillo and Dra. Ma. Teresa Chan Castillo C.T.A. CRIM. CASE NO. 0-219. October 7, 2013 “Willful Blindness” is defined by Black's Law Dictionary as “deliberate avoidance of knowledge of a crime, esp. by failing to make a reasonable inquiry about suspected wrongdoing despite being aware that it is highly probable." It "creates an inference of knowledge of the crime in question In order to prove the existence of “wilful blindness", two requirements must be satisfied 1. The accused must subjectively believe or is aware that there is a high probability that a fact exists or that there exists a suspected wrongdoing; and 2. The defendant must take deliberate actions to avoid learning of that fact. Pages? Pro-arLecieinTovalon:Teipayars Rl and Remecise scvNegligence not equivalent to fraud with intent to evade tax People of the Philippines vs. Dr. Vicente Gana Castillo and Dra. Ma. Teresa Chan Castillo C.T.A. CRIM. CASE NO. 0-219. October 7, 2013 It can also be observed that there was nothing in the evidence presented by the accused spouses which would show that they made a reasonable inquiry on the fling by Ms. Roxas of their Joint ITR for 2009 on their behalf, Nevertheless, itcan be inferred from the evidence of the accused spouses that they would not have suspected that the subject [TR was not fled or that the non-fling of the same was highly probable considering that Ms. Roxas (their tax agent), a former BIR Group Supervisor of Makati with over 40 years of experience in the BIR, ha: fling their Joint ITRs for fileen taxable years, and that a stamp received by the BIR ‘appears on the face of their copy of the Joint ITR for 2009, which was furnished to them by Ms. Roxas after having the alleged copy of the BIR of the said Joint ITR for 2009 received by RDO No, 47-East Makat ‘There was likewise no evidence presented by the prosecution which would indicate that the accused was previously delinquent in filing their ITR for the previous years: which may hint that the accused spouses might have been aware that the non-filing of their ITR for 2009 was highly probable and that they continuously refused to verify their compliance with their tax obligations. Page PreDarLectrein Telos Tampayers igs and Remedi scv Can the BIR Issue the FAN before the lapse of the 15-day period to Answer the PAN? A. Brown Co., Inc. vs. CIR, CTA Case No. 6357 dated June 7, 2004 Facts: A Brown Co., Inc. received from the BIR a Report on Investigation assessing the former for deficiency income tax for year 1997. a PAN was received by A Brown on January 4, 2001 for deficiency income tax, DST and VAT for a total amount of P132 Million. However, on January 19, 2001, without waiting for the A Brown's reply to the PAN or the lapse of the 15-day period to reply to the PAN, the BIR already served the FAN to the Company. Issue: Is the FAN valid? Paget Tarpayers Rite Remdios scvCan the BIR Issue the FAN before the lapse of the 15-day period to Answer the PAN? A. Brown Co., Inc. vs. CIR, CTA Case No. 6357 dated June 7, 2004 Ruling: No, the FAN is void. The issuance of the FAN prior to the lapse of the 15-day period to reply to the PAN violates the basic right of the taxpayer to due process. “Such actuations reveal a disposition to prejudge petitioner as liable for assessment, even before it could be given a chance to be heard. it cannot be argued that the issuance of a Preliminary Assessment Notice may be legally dispensed with inasmuch as the situation of the present case is not one of the excepted circumstances justifying the issuance of an Assessment without the Preliminary Assessment.” ys & Roma sov egos. Te Issuance of the FAN before the lapse of the 15-day period to reply to PAN does not violate due process Oakwood Management Services, Inc. vs. Commissioner of Internal Revenue (CIR) CTA Case No. 7989 (Special First Division) promulgated August 8, 2513) The CIR issued a Letter of Authority (LOA) against Oakwood Management Services (OMS) for the examination of its books of accounts and other accounting records for 2005. On January 6, 2009, OMS received by mail a Preliminary Assessment Notice (PAN), where the BIR proposed to assess OMS various deficiency taxes. Ten days after its receipt of the PAN and before the lapse of the 15-day period allowed to respond to the PAN, OMS received a Final Assessment Notice (FAN) from the BIR. Pago Taxpayer sfeahe& Rares sevIssuance of the FAN before the lapse of the 15-day period to reply to PAN does not violate due process Oakwood Management Services, Inc. vs. CIR (Cont.) Within the prescribed 15-day period, OMS filed its answer to the PAN, where it disputed the proposed deficiency tax assessments. OMS also filed its protest on the FAN, and submitted the relevant supporting documents within the prescribed periods. Due to inaction on its protest, OMS appealed to the Court of Tax Appeals (CTA), Did the CIR violate OMS’ right to due process when he issued the FAN before the lapse of the 15-day period to respond to the PAN? Page 7 Teapayers Rania Roma scv Protest against the PAN is not indispensable, unlike the protest against the FAN Oakwood Management Services, Inc. vs. CIR (Cont.) Ruling No. The CIR did not violate OMS’ right to due process. A protest against the PAN, unlike the protest against the FAN, is not indispensable. A PAN may or may not be protested by the taxpayer, and the non-filing of such protest does not render the PAN final and unappealable. Panos Tospeyers Ris & Remedi: scvIssuance of the FAN before the lapse of the 15-day period to reply to PAN does not violate due process Oakwood Management Services, Inc. vs. CIR (Cont.) The issuance of the FAN before the lapse of the 15-day period for the taxpayer to file its protest to the PAN does not inflict prejudice on the taxpayer, for as long as the BIR properly served a FAN and the taxpayer was able to intelligently contest the FAN by filing a protest letter within the period provided by law. The BIR afforded OMS procedural due process when it fully apprised OMS of the legal and factual bases of the assessment and gave OMS the opportunity to substantially protest or dispute the assailed assessments. Pagese Taspoyers Rigi Remesae Is the Oakwood Management Services Case a correct decision? Why | disagree: 4. Section 228, middle par. provides, thus: "Within a period to be prescribed by implementing rules and eee the taxpayer shall be required to respond to said notice. Ifthe taxpayer fails to respond, the Commissioner or his duly authorized represent shail issue an assessment based on his findings. ‘Such assessment may be protested administratively by filing 2 roquost, for reconsideration or reinvestigation within thirty (30) days from rene of the assessment in such form and manner as may be proseibed Y implementing rules and regulations. Within sixty (60) days from Ting 7 the protest, all relevant supporting documents shall have been 5 otherwise, the assessment shall become final.” Rats & Remedios SGVIs the Oakwood Management Services Case a correct decision? Why | disagree: 2. Section 228 also provides the only five (5) specific circumstances when the PAN can be dispensed with. Hence, if you are not falling within the five cases, a PAN must be served and it must be answered - Because if it is correct to say that it is not important to answer a PAN, then, the PAN is also not important, we can also dispense with the PAN. Yet, the law clearly provides the only five (5) specific instances when you can dispense with the PAN. (Metro Star Superama Inc. Case G.R. No. 185371 promulgated December 8, 2010) if it is correct to say that the BiR need not consider your reply to the PAN, then, why did the law say you are “required” to respond to said notice? The simultaneous receipt of the PAN and FAN violates the right to due process Commissioner of Internal Revenue vs. Yumex Philippines Corporation CTA (En Banc) Case 1139 promulgated August 11, 2015 Petitioner CI assessed Respondent Yumex Philippines Corporation (YPC) for alleged deficiency income tax, fringe benefits tax, and Improperly Accumulated Tax (IAET) for taxable year 2007. YPC paid the deficiency income tax and fringe benefits tax assessments but continued to protest the IAET assessment arguing that it is not subject to IAET since it is a PEZA-registered enterprise. The CIR denied the protest and issued a Final Decision on Disputed Assessment reiterating the deficiency IAET assessment. YPC filed a Petition for Review with the CTA. In its Petition for Review, YPC alleged that it received on the same day both the Preliminary ‘Assessment Notice (PAN) dated December 16, 2010 and the Formal ‘Assessment Notice (FAN) dated January 10, 2011. Page72 FrpayersRighe & Rerases scvThe simultaneous receipt of the PAN and FAN violates the right to due process Commissioner of Internal Revenue vs. Yumex Philippines Corporation CTA (En Banc) Case 1139 promulgated August 11, 2015 Yes. The CIR violated due process requirements in issuing the subject assessment by depriving YPC of the 15-day period within Which to answer the PAN. FAN was VOID. The CTAEn Bane sustained the Third Division and ruled that the irregular issuance of the PAN and FAN was in fact raised as an issue in YPC's pleadings. The CIR ignored fairness when she did not provide YPC the opportunity to contest the issued PAN. For lack of said opportunity, there was a violation of the taxpayer's right to due process. Pagers a axooyer Rae 8 Rama sev The simultaneous receipt of the PAN and FAN violates the right to due process Commissioner of Internal Revenue vs. Yumex Philippines Corporation CTA (En Banc) Case 1139 promulgated August 11, 2015 Yes. The CIR violated due process requirerents in issuing the subject assessment by depriving YPC of the 15-day period within which to answer the PAN. FAN was VOID. The CTAEn Bane sustained the Third Division and ruled that the irregular issuance of the PAN and FAN was in fact raised as an issue in YPC's pleadings. The CIR ignored fairness when she did not provide YPC the opportunity to contest the issued PAN. For lack of said opportunity, there was a violation of the taxpayer's right to due process. Pager Taxpayers Ras & Reeds scvWhat if FAN was issued a day after the lapse of the 15- days period or a day after the filing of protest vs. PAN? Is this a violation of taxpayer's right to due process? Does it make the FAN void particularly in view of the fact that the rule now requires the automatic issuance of the FAN regardless of what the taxpayer writes in his protest letter vs. the PAN? -why is the law requiring you to respond to PAN if it is not necessary to answer it? - Section 228 gives right to the BIR to issue the PAN only when the taxpayer fails to answer the PAN However, look at the Oakwood Case decided by the CTA. agers Tepayecs Rigs 8 Remedi sev FAN sent by the BIR to a wrong address of the taxpayer is not deemed received and cannot attain finality CIR vs. v Basf Coating + Inks Phils., Inc. (Cont.) The CTA ruled in favor of BC/P! and cancelled the assessments. The CTA found that the BIR was actually aware of BCIPI's new address and that the CIR's failure to send the FAN to BCIPI’s new address must not be taken against BCIPI. Since there were no valid notices sent to BCIPI, the assessments made against it were void. The CIR appealed to the Supreme Court and argued that the prescriptive period to assess under Sections 203 and 222 of the Tax Code was suspended when BCIPI failed to notify the CIR, in writing, of its change of address, pursuant to Section 223 of the Tax Code, as implemented by Section 11 of Revenue Regulations (RR) No. 12-85. Poya 78 “Tewsyars igre & Reader scvFAN sent by the BIR to a wrong address of the taxpayer is not deemed received and cannot attain finality CIR vs. v Basf Coating + Inks Phils., Inc. (Cont.) Was there a valid issuance of the FAN by the CIR? No, BCIPI is not liable for deficiency taxes because there was no valid issuance of the FAN by the CIR. Section 223 in relation to Section 203 of the Tax Code prescribes that if the taxpayer cannot be located in the address given by him in the return filed upon which a tax is being assessed or collected, the three- year prescriptive period for assessment will be suspended. If the taxpayer informs the CIR of any change in address, the running of the prescriptive period will not be suspended. Page? apayersfigned Remactes scv FAN sent by the BIR to a wrong address of the taxpayer is not deemed received and cannot attain finality CIR vs. v Basf Coating + Inks Phils., Inc. (Cont.) Section 11 of RR No. 12-85, on the other hand, provides that in case of change of address, the taxpayer must give a written notice to the RDO having jurisdiction over his former legal residence and/or place of business. In case of failure to provide notice, any communication previously sent to his former legal residence or business address as appearing in its tax returns for the period involved shall be considered valid and binding, for purposes of the period within which to reply. However, the foregoing provisions apply only if the CIR is not aware of the whereabouts of the taxpayer. Page 78 CaroayersRighs 4 Roreios scvFAN sent by the BIR to a wrong address of the taxpayer is not deemed received and cannot attain finality CIR vs. v Basf Coating + Inks Phils., Inc. (Cont.) The CIR is well aware that BCIPI had moved to its new address in Calamba, Laguna, as shown by documents which form part of the BIR's records. All of the documents were accomplished and signed by officers of the BIR, clearly show that BCIPI's address is at Carmelray Industrial Park, Canlubang, Calamba, Laguna. Moreover, the CTA found that BIR officers, at various times prior to the issuance of the FAN, conducted its investigation of BCIPI's 1999 tax liabilities at BCIPI’s new address in Laguna, as evidenced by a September 27, 2001 letter signed by Revenue Officer (RO) Eugene R. Garcia and the Final Request for Presentation of Records before Subpoena Duces Tecum dated March 20, 2002. ane79 Taye fehl & Raneaas sev FAN sent by the BIR to a wrong address of the taxpayer is not deemed received and cannot attain finality CIR vs. v Basf Coating + Inks Phils., Inc. (Cont.) The CTA found various documents (i.e. Notice for Informal Conference and a letter acknowledging BCIPI's letter on the informal conference) sent by the BIR to BCIPI, addressed to BCIPI's new address in Laguna. Despite the fact that the Preliminary Assessment Notice (PAN) was sent to BCIPI's old address and was returned to sender the BIR still sent the FAN to the old address. Hence, despite the absence of a formal written notice of BCIPI's change of address, the CIR was aware of BCIPI's new address and therefore, the running of the three- year prescriptive period for assessment was not suspended. Page0 “TarpayersRigne Remedios sevAppellate jurisdiction of the CTA involves other matters arising from the Tax Code CIR vs. Abundance Providers and Entrepreneurs Corporation CTA (En Banc) Case No. 999 promulgated August 18, 2014 On April 26, 2004, Respondent Abundance Providers and Entrepreneurs Corp. (APEC) received a Formal Letter of Demand (FLD) from Petitioner CIR for alleged deficiency VAT for taxable year 2001. The CIR alleged that APEC is liable for VAT on its trust fund contributions. On April 29, 2004, APEC protested the assessment. On July 15, 2004, APEC received the decision of the OIC Deputy Commissioner denying the protest and affirming the assessment in the FLD. On July 16, 2004, APEC wrote the BIR Appellate Division requesting to hold in abeyance any action, pending resolution by the CIR of the industry issue on whether the trust fund contribution of pre-need companies is subject to VAT. Pose “Taayers Rane 8 Reads scV Appellate jurisdiction of the CTA involves other matters arising from the Tax Code CIR vs. Abundance Providers and Entrepreneurs Corp. (Cont.) On February 22, 2010, the BIR served a Warrant of Distraint and/or Levy (Warrant) on APEC enforcing the collection of the deficiency VAT for taxable year 2001. On March 23, 2010, APEC filed a Petition for Review with the CTA seeking to quash, nullify and invalidate the Warrant. On December 7, 2010, the CIR affirmed the decision of the OIC Deputy Commissioner on the deficiency VAT assessed and ordered APEC to pay the amount plus surcharge and increments. The CTA Third Division cancelled the Warrant issued by the CIR and declared the same as null and void, on the ground of prescription of the statute of limitations on collection. Pagaaa “TpayersReghis& Remsen scvAppellate jurisdiction of the CTA involves other matters arising from the Tax Code CIR vs. Abundance Providers and Entrepreneurs Corp. (Cont.) The CIR appealed to the CTA En Banc and argued that (a) the CTA has no jurisdiction to determine the validity of a Warrant, and (b) the prescriptive period to collect was suspended when APEC wrote the BIR Appellate Division to hold in abeyance any action pending the resolution by the CIR relative to the industry issue involving VAT on trust fund contributions. Pace es Tarpoyers fight & Remedioe sov Appellate jurisdiction of the CTA involves other matters arising from the Tax Code CIR vs. Abundance Providers and Entrepreneurs Corp. (Cont) Does the CTA hava jurisdiction to determine the validity of Warrant of Distraint and/or Levy? Yes. The CTA has jurisdiction to determine the validity of a Warrant under Section 7(a)(1) of RA No. 9282, which gives exclusive appellate jurisdiction to the Court in Division to review by appeal decisions of the CIR in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, or “other matters arising under the National internal Revenue Code or other laws administered by the Bureau of Internal Revenue.” Thus CTA’ appellate jurisdiction includes the authority to determine the validity of a Warrant issued by the CIR. Pag a4 Toayor Rips Remdas scvRequest for reconsideration does not suspend the 5-year prescriptive period to collect the assessed tax CIR vs. Abundance Providers and Entrepreneurs Corp. (Cont.) Has the right of the CIR to collect deficiency VAT against APEC prescribed? Yes. The right of the CIR to collect deficiency VAT against APEC has prescribed. APEC’s letters to the Appellate Division to hold in abeyance any action, pending resolution by the CIR relative to the industry issue it raised involving VAT on trust fund contributions of pre- need companies, did not suspend the 5-year prescriptive period for the collection of the assessed tax. The letters were requests for reconsideration and not requests for reinvestigation. A request for reconsideration, unlike a request for reinvestigation, does not toll the Tuning of the prescriptive period to collect tax. Pag 8s TanpayersFighls & Remees ‘sv Request for reconsideration does not suspend the 5-year prescriptive period to collect the assessed tax CIR vs. Abundance Providers and Entrepreneurs Corp. (Cont.) Has the right of the CIR to collect deficiency VAT against Has the righ xy VAT against APEC The CTA ruled that when the FLD was issued and received by APEC. on April 26, 2004, the BIR had 5 years or until April 26, 2009 to enforce collection of the assessed deficiency VAT. However, it was only on February 22, 2010 when the Warrant was served on the company, or after the lapse of the 5-year reglementary period, Thus the right of the BIR to collect the same has prescribed. : Pago Teaver sins 8 Remedies scvPeriod for filing claims for refund of unutilized input VAT Commissioner of Internal Revenue vs. Aichi Forging Company of Asia, Inc. GR. No. 184823 promulgated October 6, 2010 Section 112(D) of the Tax Code clearly provides that the CIR has “120 days, from the date of the submission of the complete documents in support of the application,” within which to grant the claim. In case of full or partial denial by the CIR, the taxpayer's recourse is to file an appeal before the CTA within 30 days from receipt of the decision. However, if after the 120-day period the CIR fails to act on the application for tax credit or refund, the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days from the lapse of the 120- day period. Poser Pre ar Lace n Tati Fayars Rite ana Roeder scv Period for filing claims for refund of unutilized input VAT Commissioner of Internal Revenue vs. Aichi Forging Company of Asia, Inc. G.R. No. 184823 promulgated October 6, 2010 The 2-year prescriptive period does not apply in judicial claims. While Section 112(A) states that “any VAT-registered person, whose sales ae zero-rated or effectively zero-rated may, within two years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales,” the same refers to applications for tax credit or refund filed with the CIR and not to appeals made to the CTA. The second paragraph of Section 112(0) envisions two scenarios, namely (1) when a decision is issued by the CIR before the lapse of the 120-day period; and (2) when no decision is made after the 120- day period. in both instances, the taxpayer has 30 days within which.to file an appeal with the CTA. Pago Pre-Ba Lectin Tena: Tanayore igh and Remedios SGVCompliance of 120+30 day period in judicial claim for refund of unutilized input VAT attributable to zero-rated sales CIR vs. San Roque Power Corporation (G.R. No. 187485) Taganito Mining Corporation vs. CIR (G.R. No. 196113) Philex Mining Corporation vs. CIR (G.R. No. 197156) Supreme Court (En Banc), promulgated February 12, 2013 Administrative claim for refund must be filed within two (2) years from the close of the taxable quarter when the sales were made. Strict compliance with the 120+30 day periods is necessary for a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No, DA-489-03 on December 10, 2003 to October 6, 2010 when the Aichi Forging doctrine was adopted, which again reinstated the 120+30 day periods as mandatory and jurisdictional. age 82 Pena Lace in Tato: Taxyer igh wht Renee sev Compliance of 120+30 day period in judiciai claim for refund of unutilized input VAT attributable to zero-rated sales CIR vs. San Roque Power Corporation (G.R. No. 187485) Taganito Mining Corporation vs. CIR (G.R. No. 196113) Philex Mining Corporation vs. CIR (G.R. No. 197156) ‘Supreme Court (En Banc), promulgated February 12, 2013 Application of the Aichi Forging decision: In these cases, the Supreme Court discussed the application of the Aichi Forging decision. The Supreme Court reiterated the ruling in Aichi Forging that the observance of the 120-day period given to the CIR to decide the claim for refund is mandatory. The taxpayer can only appeal to the CTA if the CIR fails to act on the refund claim within 120 days. Said appeal must be made within 30 days from the lapse of the 120-day period. Pagaaa Pra Latin Tatar Tateayers Riis and Reresos sevjiance of 120+30 day period in judicial claim for refund ed input VAT attributable to zero-rated sales CIR vs. San Roque Power Corporation (G.R. No. 187485) Taganito Mining Corporation vs. CIR (G.R. No. 196113) Philex Mining Corporation vs. CIR (G.R. No. 197156) Supreme Court (En Banc), promulgated February 12, 2013, Application of the Aichi Forging decision: However, the Supreme Court gave the following exceptions to this rule: 1) If the CIR, through a specific ruling, misleads a particular taxpayer to prematurely file a judicial claim with the CTA; and 2) Where the CIR, through a general interpretative rule, misleads all taxpayers into filing judicial claims with the CTA prematurely. Paget rear Leste Featon Tngyer Right and Remedios Sov Compliance of 120430 day period in judicial claim for refund of unutilized input VAT attributable to zero-rated sales CIR vs. San Roque Power Corporation (G.R. No. 187485) Taganito Mining Corporation vs. CIR (G.R. No. 196113) Philex Mining Corporation vs. CIR (G.R. No. 197156) ‘Supreme Court (En Banc), promulgated February 12; 2013 Application of the Aichi Forging decision: general interpretative rule issued by the CIR may be relied upon by taxpayers from the time the rule is issued up to its reversal by the CIR or the Supreme Court, following Section 246 of the Tax Code. Under Section 246, any revision, modification or reversal by the CIR or the Supreme Court of a ruling made by the CIR cannot be given retroactive effect if it will be prejudicial to taxpayers. Pageo2 Pie GarLectrn Tani: Toxpoyer eh and Remedies SovCompliance of 120+30 day period in judicial claim for refund of unutilized input VAT attributable to zero-rated sales CIR vs. San Roque Power Corporation (G.R. No. 187485) Taganito Mining Corporation vs. CIR (G.R. No. 196113) Philex Mining Corporation vs. CIR (G.R. No. 197156) Supreme Court (En Banc), promulgated February 12, 2013 Application of the Aichi Forging decision: BIR Ruling No. DA-489-03 is a general interpretative ruling because it was in response to a query made by the One Stop Shop Inter-Agency Tax Credit and Drawback Center of the Department of Finance, on what to do in cases where the taxpayer did not wait for the lapse of the 120-day period. Thus, all taxpayers can rely on this ruling from the time of its issuance on December 10, 2003 up to its reversal in the Aichi Forging decision on October 6, 2010. P9098 Pre-derLactue in Taran: Taxpayer igh and Ramecles scv Compliance with 120+30 day period in judicial claim for refund of unutilized input VAT attributable to zero-rated sales Mindanao lf Geothermal Partnership vs. Commissioner of internal Revenue (G.R. No. 193301), and Mindanao I Geothermal Partnership vs. CIR (G.R. No. 194637) Supreme Court (Second Division) promulgated March 11, 2013 ‘Summary of the ruies on the determination of the prescriptive period for filing a claim for refund of unutilized input VAT under Section 112 of the Tax Code: a. An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. Pageoe Pr Bar Lect nTeation: Taxpavrs gts and Remaclae scv