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(A) Examination of returns and determination of tax due – After a return has been filed as required under
the provisions of this Code, the CIR or his duly authorized representative may authorize the examination
of any taxpayer and the assessment of the correct amount of tax, notwithstanding any law requiring the
prior authorization of any government agency or instrumentality: Provided, however, that failure to file a
return shall not prevent the CIR from authorizing the examination of any taxpayer.
1. RMO 19-15
• Prescribes policies, guidelines and procedures to be observed in the audit/investigation of tax
returns to enhance taxpayers’ voluntary compliance
• In general, all taxpayers are considered as possible candidates for audit. The issuance, however,
provides for a list of (1) Mandatory Cases, (2) Priority Taxpayers/Industries, and (3) Other Priority
Audit.
a. Mandatory Cases
► Taxpayers with claims for income tax refund or issuance of tax credit certificate
► Taxpayers with claims for VAT refund/credit
► Claims for tax refund/credit on erroneous/double payment of taxes, regardless of amount
► Request for tax clearance of taxpayers due to retirement/cessation of business with gross
sales/receipts exceeding P 1,000,000.00 or gross assets exceeding P 3,000,000.00
► Request for tax clearance of taxpayers undergoing merger/consolidation/split-up/ spin-
off and other types of corporate reorganizations
► Cases with unresolved Letter Notices (LNs)
► Estate tax returns with other tax liabilities
► Policy cases covered by written directive of the Commissioner
The above officials are not precluded from selecting taxpayers which do not fall within the
foregoing criteria but may be possible candidates under other priority audit.
2. RMO 64-16
If the taxpayer has been audited for the last 2 years and has been selected for audit on the current
or 3rd year, the RDO/LTD/LTAD shall encode right away the requested audit of the subject taxpayer
in eLAMS/e-TIS CMS which shall be approved by the Regional Director/Assistant Commissioner
who heads the investigating office.
II. Implementation of BIR eTIS-1
eTIS-1 facilitates registration of taxpayer and assignment of a Tax Identification Number (TIN).
eTIS-1 is an internal application limited to BIR users only.
► All case events will be tracked to enable authorized users to monitor the case status. The man-
hours provided for accomplishing an event encourages the completion of an audit in less time
than that provided by law.
III. PROCESS
Important Issuances
1. RMC 75-18
It highlights the doctrine enunciated by the Supreme Court in the case of Medicard
Philippines, Inc. v. CIR (GR 222743).
The circumstances contemplated under Section 6 where the taxpayer may be assessed
through best-evidence obtainable, inventory-taking, or surveillance among others has
nothing to do with the LOA. These are simply methods of examining the taxpayer in order to
arrive at the correct amount of taxes. Hence, unless undertaken by the CIR himself or his
duly authorized representatives, other tax agents may not validly conduct any of these
kinds of examinations without prior authority.
The following differences between an LOA and LN are crucial. First, an LOA addressed to a
revenue officer is specifically required under the NIRC before an examination of a taxpayer
may be had while an LN is not found in the NIRC and is only for the purpose of notifying the
taxpayer that a discrepancy is found based on the BIR's RELIEF System. Second, an LOA is valid
only for 30 days from date of issue while an LN has no such limitation. Third, an LOA gives the
revenue officer only a period of 120 days from receipt of LOA to conduct his examination of
the taxpayer whereas an LN does not contain such a limitation. 31 31
Simply put, LN is entirely different and serves a different purpose than an LOA. Due process
demands, as recognized under RMO No. 32-2005, that after an LN has serve its purpose, the
revenue officer should have properly secured an LOA before proceeding with the further
examination and assessment of the petitioner.
2. RMO 32-18
One (1) eLA shall be issued for each taxable year to include all internal revenue tax liabilities
of the taxpayer, except when a specific tax type had been previously examined (e.g., audit of
VAT under the VAT Audit Program and claim for issuance of VAT refund/Tax Credit
Certificate). Under such instance, the phrase “All internal revenue tax liabilities, except VAT”
shall be indicated in the eLA.
2. RR 7-18 - Reinstated the Notice of Informal Conference Stage on February 16, 2018
3.1.1 Notice for Informal Conference. — The Revenue Officer who audited the taxpayer's
records shall, among others, state in his report whether or not the taxpayer agrees with his
findings that the taxpayer is liable for deficiency tax or taxes. If the taxpayer is not amenable,
based on the said Officer's submitted report of investigation, the taxpayer shall be informed,
in writing, by the Revenue District Office or by the Special Investigation Division, as the case
may be (in the case of Revenue Regional Offices) or by the Chief of Division concerned (in the
case of the BIR National Office) of the discrepancy or discrepancies in the taxpayer's
payment of his internal revenue taxes, for the purpose of "Informal Conference," in order to
afford the taxpayer with an opportunity to present his side of the case.
The Informal Conference shall in no case extend beyond thirty (30) days from receipt of the
notice for informal conference. If it is found that the taxpayer is still liable for deficiency tax
or taxes after presenting his side, and the taxpayer is not amenable, the Revenue District
Officer or the Chief of the Special Investigation Division of the Revenue Regional Office, or the
Chief of Division in the National Office, as the case may be, shall endorse the case within
seven (7) days from the conclusion of the Informal Conference to the Assessment Division
of the Revenue Regional Office or to the Commissioner or his duly authorized
representative for issuance of a deficiency tax assessment.
If after review and evaluation by the Commissioner or his duly authorized representative,
there exists sufficient basis to assess the taxpayer for any deficiency tax or taxes, the PAN
shall be issued.
C. PAN
1. RMC 11-14
(1) The Commissioner or his duly authorized representative shall issue the Preliminary
Assessment Notice (PAN), Formal Letter of Demand/Final Assessment Notice (FLD/FAN) and
Final Decision on Disputed Assessment (FDDA). The term "duly authorized representative"
therein refers to Revenue Regional Directors, Assistant Commissioner-Large Taxpayers
Service, and Assistant Commissioner-Enforcement and Advocacy Service.
(2) Prior to the issuance of the PAN, the taxpayer may be allowed to make voluntary
payments of probable deficiency taxes and penalties.
2. RDAO 4-18
Delegates the authority to sign and approve assessment notices and reports of investigation
of the Divisions under the LTS to LTS Assistant Commissioner (PAN) Deputy Commissioner
for Operations (FAN/FLD) Commisioner (FDDA).
3. RR 18-13
The PAN shall show in detail the facts and the law, rules and regulations, or jurisprudence on
which the proposed assessment is based.
If the taxpayer fails to respond within fifteen (15) days from date of receipt of the PAN, he
shall be considered in default, in which case, a Formal Letter of Demand and Final
Assessment Notice (FLD/FAN) shall be issued calling for payment of the taxpayer's deficiency
tax liability, inclusive of the applicable penalties.
If the taxpayer, within fifteen (15) days from date of receipt of the PAN, responds that he/it
disagrees with the findings of deficiency tax or taxes, an FLD/FAN shall be issued within fifteen
(15) days from filing/submission of the taxpayer's response, calling for payment of the
taxpayer's deficiency tax liability, inclusive of the applicable penalties.
(i) When the finding for any deficiency tax is the result of mathematical error in the
computation of the tax appearing on the face of the tax return filed by the taxpayer; or
(ii) When a discrepancy has been determined between the tax withheld and the amount
actually remitted by the withholding agent; or
(iii) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding
tax for a taxable period was determined to have carried over and automatically applied
the same amount claimed against the estimated tax liabilities for the taxable quarter or
quarters of the succeeding taxable year; or
(iv) When the excise tax due on excisable articles has not been paid; or
(v) When an article locally purchased or imported by an exempt person, such as, but not
limited to, vehicles, capital equipment, machineries and spare parts, has been sold, traded
or transferred to non-exempt persons.
In the above-cited cases, a FLD/FAN shall be issued outright.
3. RMO 26-16
If the taxpayer shall upon receipt of the PAN, accepts and pays the assessment either partially
or fully, a FLD/FAN shall be issued to formalize the assessment, and Payment Form 0605 shall
be duly prepared, filed and paid to acknowledge and provide evidence for the settlement of the
assessment or portion of the assessment paid.
The FAN must be issued within the prescriptive period. The BIR has three years (or the
exceptional 10 years) or an extended period agreed upon by the taxpayer and the BIR [Waiver of
Statute of Limitations].
1. RR 18-13
Formal Letter of Demand and Final Assessment Notice (FLD/FAN). — The Formal Letter of Demand
and Final Assessment Notice (FLD/FAN) shall be issued by the Commissioner or his duly authorized
representative. The FLD/FAN calling for payment of the taxpayer's deficiency tax or taxes shall
state the facts, the law, rules and regulations, or jurisprudence on which the assessment is
based; otherwise, the assessment shall be void.
2. RMC 11-14
An FLD/FAN issued reiterating the immediate payment of deficiency taxes and penalties
previously made in the PAN is a denial of the response to the PAN. A final demand letter for
payment of delinquent taxes may be considered a decision on a disputed assessment
(Commissioner of Internal Revenue vs. Isabela Cultural Corporation; G.R. No. 135210; July 11,
2001). This includes a disputed PAN. So long as the parties are given the opportunity to explain
their side, the requirements of due process are satisfactorily complied with (Calma vs. Court of
Appeals; G.R. No. 122787; February 9, 1999).
An FLD/FAN issued beyond fifteen (15) days from filing/submission of the taxpayer's response
to the PAN shall be valid, provided that, it is issued within the period of limitation to assess
internal revenue taxes. The non-observance of the fifteen (15)-day period, however, shall
constitute an administrative infraction and the revenue officers who caused the delay shall be
subject to administrative sanctions as provided for by law and pertinent revenue issuances.
3. RMO 26-16
Formal Letter of Demand and Final Assessment Notice (FLD)/(FAN) shall be issued fifteen (15)
days from date of receipt by the taxpayer of the PAN, whether the same was protested or not.
E. PROTEST
1. RR 18-13
3.1.4 Disputed Assessment. — The taxpayer or its authorized representative or tax agent may
protest administratively against the aforesaid FLD/FAN within thirty (30) days from date of
receipt thereof. The taxpayer protesting an assessment may file a written request for
reconsideration or reinvestigation defined as follows:
(i) Request for reconsideration — refers to a plea of re-evaluation of an assessment on the basis
of existing records without need of additional evidence. It may involve both a question of fact or
of law or both.
(ii) Request for reinvestigation — refers to a plea of re-evaluation of an assessment on the basis
of newly discovered or additional evidence that a taxpayer intends to present in the
reinvestigation. It may also involve a question of fact or of law or both.
► The term “relevant supporting documents” refer to those documents necessary to support the
legal and factual bases in disputing a tax assessment, as determined by the taxpayer.
If there are several issues involved in the FLD/FAN but the taxpayer only disputes or protests
against the validity of some of the issues raised, the assessment attributable to the undisputed
issue or issues shall become final, executory and demandable; and the taxpayer shall be required
to pay the deficiency tax or taxes attributable thereto, in which case, a collection letter shall be
issued to the taxpayer calling for payment of the said deficiency tax or taxes, inclusive of the
applicable surcharge and/or interest.
If there are several issues involved in the disputed assessment and the taxpayer fails to state
the facts, the applicable law, rules and regulations, or jurisprudence in support of his protest
against some of the several issues on which the assessment is based, the same shall be
considered undisputed issue or issues, in which case, the assessment attributable thereto shall
become final, executory and demandable; and the taxpayer shall be required to pay the
deficiency tax or taxes attributable thereto and a collection letter shall be issued to the taxpayer
calling for payment of the said deficiency tax, inclusive of the applicable surcharge and/or interest.
For requests for reinvestigation, the taxpayer shall submit all relevant supporting documents in
support of his protest within sixty (60) days from date of filing of his letter of protest, otherwise,
the assessment shall become final. The term "relevant supporting documents" refer to those
documents necessary to support the legal and factual bases in disputing a tax assessment as
determined by the taxpayer. The sixty (60)-day period for the submission of all relevant
supporting documents shall not apply to requests for reconsideration. Furthermore, the term "the
assessment shall become final" shall mean the taxpayer is barred from disputing the correctness
of the issued assessment by introduction of newly discovered or additional evidence, and the
FDDA shall consequently be denied.
If the taxpayer fails to file a valid protest against the FLD/FAN within thirty (30) days from date
of receipt thereof, the assessment shall become final, executory and demandable. No request
for reconsideration or reinvestigation shall be granted on tax assessments that have already
become final, executory and demandable.
2. RMO 26-16
Within thirty (30) days from receipt of the FLD/FAN, the taxpayer shall either:
a. Accept the assessment, fully or partially, and pay the amount due on the assessment accepted,
or
b. Protest the assessment fully or partially by filing either of the following remedy, and the filing
of one precludes the filing of the other remedy:
i. Request for Reconsideration if the taxpayer is not going to submit any other additional
evidence or documents and merely pleas for a re-evaluation of an assessment;
ii. Request for a Reinvestigation on the basis of newly discovered evidence or if the
taxpayer intends to present or submit additional evidence or documents.
After the issuance of the FAN/FLD, the taxpayer accepts and settles/pays the assessment in full,
Payment Form 0605 shall be duly prepared, filed and paid as evidenced of the settlement of the
assessment. If the taxpayer accepts and settle/pays the assessment in part, and protests the
remaining portion, Payment Form 0605 shall be prepared, filed and paid for that portion of the
assessment accepted and settled, and a FDDA shall be issued for the portion of the assessment
not settled and resolved. For that portion of the assessment resolved in favor of the taxpayer, an
Authority to Cancel Assessment (ATCA) shall be prepared to evidence the cancellation of the
assessment.
A request for Reinvestigation shall be available in a protest to a FAN/FLD only. After the issuance
of a FDDA, a request for Reinvestigation shall no longer be available as a taxpayer remedy.
3. RMC 39-13
All letters of protest, requests for reinvestigation/reconsideration and similar correspondences
shall only be filed by the taxpayers or their duly authorized representatives, in person or through
registered mail with return card, with the Office of the concerned Regional Director (RD), Assistant
Commissioner-Large Taxpayers Service (ACIR-LTS) and Assistant Commissioner-Enforcement
Service (ACIR-ES), who signed the Preliminary Assessment Notices (PANs), FANs and Formal
Letters of Demand, for proper recording of the protests, and evaluation if the same is in
accordance with Section 228 of the NIRC, as implemented by Revenue Regulations No. 12-99 . If
the aforesaid procedures are not followed, then the letters of protest, requests for
reinvestigation/reconsideration and similar correspondences shall be considered void and
without force and effect.
A waiver is not a unilateral act of the taxpayer, but an agreement between the taxpayer and the
BIR xxx. (CIR vs. FMF Development Corporation, 556 SCRA 709)
A defective waiver will not extend the period to assess. (CIR vs. Kudos Metal Corp., supra.)
The general rule when a waiver does not comply with the requisites of validity under RMO 20-90
and RDAO 01-05 is that said waiver is invalid and ineffective. Exception to the rule is a case of in
pari delicto or “in equal fault”. [CIR vs. Next Mobile, Inc. Supreme Court (3rd Division), G.R. No.
212825, 7 December 2015]
1. RMO 26-16
All decisions on protest to the FAN, whether the taxpayer's protest is accepted or denied partially
or wholly, shall be communicated to the taxpayer through the issuance of a Final Decision on a
Disputed Assessment (FDDA).
After the issuance of the FDDA, the taxpayer may accept and settle the assessment contained
therein, partially or fully. Payment Form 0605 shall be prepared, filed and paid for the assessment
accepted and settled by the taxpayer. If the FDDA were issued by the Commissioner's duly
authorized representative, the taxpayer shall within thirty (30) days from receipt of the FDDA file
a motion for reconsideration with the Commissioner of Internal Revenue or appeal to the Court
of Tax Appeals. In appealing the protest to the Court of Tax Appeals, the taxpayer shall manifest
and state that the appeal pertains only to the portion of the FDDA not settled and paid and
attached to their appeal a copy of the duly filed and paid Payment Form 0605.
Appeal to the Commissioner or to the Court of Tax Appeals of the FDDA, shall not preclude the
taxpayer from voluntarily settling the assessment, partially or fully. Payment Form 0605 shall be
duly prepared, filed and paid and the taxpayer shall manifest before the Court of Tax Appeals the
fact of settlement of the assessment, partially or fully, present the duly filed and paid Payment
Form 0605, and file a motion for dismissal with prejudice as to the assessment or portions thereof
that has been settled and paid on the ground that the appealed disputed assessment has become
moot and academic.
An assessment shall become final, executory and demandable due to, among others, the
following grounds:
a. Failure of the taxpayer to file a valid protest within thirty (30) days from receipt of the Formal
Letter of Demand and Final Assessment Notice (FLD/FAN);
b. Failure of the taxpayer to submit all relevant documents in support of his protest by way of
request for reinvestigation within sixty (60) days from the date of filing thereof;
c. Failure of the taxpayer to appeal to the Commissioner of Internal Revenue or the Court of Tax
Appeals (CTA) within thirty (30) days from date of receipt of the FDDA issued by the
Commissioner's duly authorized representative;
d. Failure of the taxpayer to appeal to the CTA within thirty (30) days from date of receipt of the
FDDA issued by the Commissioner;
e. Failure of the taxpayer to timely file a motion for reconsideration or new trial before the CTA
Division or failure to appeal to the CTA En Banc and Supreme Court based on existing Rules of
Procedure; or
f. Failure of the taxpayer to receive any assessment notices because it was served in the address
indicated in the BIR's registration database and the taxpayer transferred to a new address or
closed/ceased operations without updating and transferring its BIR registration or cancelling its
BIR registration as the case may be, through the accomplishment and filing of BIR Form No. 1905
— Application for Registration Information Update, as prescribed by pertinent issuance and/or
amendments thereto.
The decision of the Commissioner or his duly authorized representative shall state the (i) facts,
the applicable law, rules and regulations, or jurisprudence on which such decision is based,
otherwise, the decision shall be void and (ii) that the same is his final decision.
► Upon the issuance of FDDA, a request for Reinvestigation shall no longer be available as taxpayer
remedy.
2. RMO 26-16
A taxpayer must be given an opportunity, if he/she/it so chooses, to explain his/her/its objection
to an assessment and present necessary documents in support of his/her/its objection, before a
FDDA is issued.
If the protest is not acted upon by the Commissioner's duly authorized represented within 180
days counted from the date of the filing of the protest in the case of a request for reconsideration,
or from the lapse of the 60 days period to submit relevant document in the case of a request for
reinvestigation, and the taxpayer appeals to the Court of Tax Appeals within 30 days after the
expiration of the 180 days period, an FDDA shall be issued automatically.
H. APPEAL
1. RR 13-18
► If the protest to the FAN or administrative appeal, as the case may be, is denied (in whole or in
part) by the CIR, the taxpayer may appeal to the CTA within 30 days from date of receipt of the
said decision.
► A Motion for Reconsideration on the CIR’s denial of the protest or administrative appeal shall not
toll the 30-day period to appeal to the CTA.
If the protest is not acted upon by the Commissioner's duly authorized representative within
one hundred eighty (180) days counted from the date of filing of the protest in case of a request
reconsideration; or from date of submission by the taxpayer of the required documents within
sixty (60) days from the date of filing of the protest in case of a request for reinvestigation, the
taxpayer may either:
(i) appeal to the CTA within thirty (30) days after the expiration of the one hundred eighty
(180)-day period; or
(ii) await the final decision of the Commissioner's duly authorized representative on the
disputed assessment.
If the protest or administrative appeal, as the case may be, is denied, in whole or in part, by the
Commissioner, the taxpayer may appeal to the CTA within thirty (30) days from date of receipt of
the said decision. Otherwise, the assessment shall become final, executory and demandable. A
motion for reconsideration of the Commissioner's denial of the protest or administrative
appeal, as the case may be, shall not toll the thirty (30)-day period to appeal to the CTA.
If the protest or administrative appeal is not acted upon by the Commissioner within one
hundred eighty (180) days counted from the date of filing of the protest, the taxpayer may
either:
(i) appeal to the CTA within thirty (30) days from after the expiration of the one hundred
eighty (180)-day period; or
(ii) await the final decision of the Commissioner on the disputed assessment and appeal such
final decision to the CTA within thirty (30) days after the receipt of a copy of such decision.
It must be emphasized, however, that in case of inaction on protested assessment within the 180-
day period, the option of the taxpayer to either: (1) file a petition for review with the CTA within
30 days after the expiration of the 180-day period; or (2) await the final decision of the
Commissioner or his duly authorized representative on the disputed assessment and appeal such
final decision to the CTA within 30 days after the receipt of a copy of such decision, are mutually
exclusive and the resort to one bars the application of the other.
► If the protest to the FAN or administrative appeal, as the case may be, is denied (in whole or in
part) by the CIR, the taxpayer may appeal to the CTA within 30 days from date of receipt of the
said decision.
► Otherwise, the assessment shall become final, executory and demandable.
► A Motion for Reconsideration on the CIR’s denial of the protest or administrative appeal shall
not toll the 30-day period to appeal to the CTA.
1. RMO 40-19
2. RR 18-13
3.1.6 Modes of Service. — The notice (PAN/FLD/FAN/FDDA) to the taxpayer herein required may
be served by the Commissioner or his duly authorized representative through the following
modes:
(i) The notice shall be served through personal service by delivering personally a copy thereof to
the party at his registered or known address or wherever he may be found. A known 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.
(ii) Substituted service can be resorted to when the party is not present at the registered or
known address under the following circumstances:
The notice may be left at the party's registered address, with his clerk or with a person
having charge thereof.
If the known address is a place where business activities of the party are conducted, the
notice may be left with his clerk or with a person having charge thereof.
If the known address is the place of residence, substituted service can be made by leaving
the copy with a person of legal age residing therein.
If no person is found in the party's registered or known address, the revenue officers
concerned shall bring a barangay official and two (2) disinterested witnesses to the address so
that they may personally observe and attest to such absence. The notice shall then 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 concerned shall bring a barangay official and
two (2) disinterested witnesses in the presence of the party so that they may personally observe
and attest to such act of refusal. The notice shall then 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.
"Disinterested witnesses" refers to persons of legal age other than employees of the Bureau of
Internal Revenue.
(iii) Service by mail is done by sending a copy of the notice by registered mail to the registered or
known address of the party with instruction to the Postmaster to return the mail to the sender
after ten (10) days, if undelivered. A copy of the notice may also be sent through 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.
(iv) Service to the tax agent/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."
3. RMC 11-14
The notice (PAN/FLD/FAN/FDDA) shall first be served to the taxpayer's registered address before
the same may be served to the taxpayer's known address, or in the alternative, may be served to
the taxpayer's registered address and known address simultaneously.
First, it lacks the definite amount of tax liability for which respondent is accountable. It does
not purport to be a demand for payment of tax due, which a final assessment notice should
supposedly be. An assessment, in the context of the National Internal Revenue Code, is a
"written notice and demand made by the [Bureau of Internal Revenue] on the taxpayer for
the settlement of a due tax liability that is there: definitely set and fixed." Although the
disputed notice provides for the computations of respondent's tax liability, the amount
remains indefinite. It only provides that the tax due is still subject to modification, depending
on the date of payment. Thus:
‘The complete details covering the aforementioned discrepancies established during the
investigation of this case are shown in the accompanying Annex 1 of this Notice. The
50% surcharge and 20% interest have been imposed pursuant to Sections 248 and 249
(B) of the [National Internal Revenue Code], as amended. Please note, however, that
the interest and the total amount due will have to be adjusted if prior or beyond April
15, 2004.‘
Second, there are no due dates in the Final Assessment Notice. This negates petitioner's
demand for payment. Petitioner's contention that April 15, 2004 should be regarded as the
actual due date cannot be accepted. The last paragraph of the Final Assessment Notice states
that the due dates for payment were supposedly reflected in the attached assessment:
‘In view thereof, you are requested to pay your aforesaid deficiency internal revenue
tax liabilities through the duly authorized agent bank in which you are enrolled within
the time shown in the enclosed assessment notice.’
“The trial court observed that LOA No. 00012289 authorized the BIR officers to examine the
books of account of Lancaster for the taxable year 1998 only or, since Lancaster adopted a
fiscal year (FY), for the period 1April1997 to 31March1998. However, the deficiency income
tax assessment which the BIR eventually issued against Lancaster was based on the
disallowance of expenses reported in FY 1999, or for the period 1 April 1998 to
31March1999. The CTA concluded that the revenue examiners had exceeded their authority
when they issued the assessment against Lancaster and, consequently, declared such
assessment to be without force and effect.”
“ A void FDDA does not ipso facto render the assessment void.
An assessment becomes a disputed assessment after a taxpayer has filed its protest to the
assessment in the administrative level. Thereafter, the CIR either issues a decision on the
disputed assessment or fails to act on it and is, therefore, considered denied. The taxpayer
may then appeal the decision on the disputed assessment or the inaction of the CIR. As such,
the FDDA is not the only means that the final tax liability of a taxpayer is fixed, which may
then be appealed by the taxpayer. Under the law, inaction on the part of the CIR may likewise
result in the finality of a taxpayer's tax liability as it is deemed a denial of the protest filed by
the latter, which may also be appealed before the CTA.
Clearly, a decision of the CIR on a disputed assessment differs from the assessment itself.
Hence, the invalidity of one does not necessarily result to the invalidity of the other—unless
the law or regulations otherwise provide.”
K. ARTICLES
1. Handling BIR Tax Audit in the Philippines (Tax Acctg Center, Atty. Pearl Fatima Evardone)
https://taxacctgcenter.ph/handling-bir-tax-audit-in-the-philippines/
“Within 30 days from receipt of the final resolution of the BIR, you must file an appeal through
a Petition for Review with the Court of Tax Appeals-Division. You will need a counsel of your
choice, pay the filling fees based on the amount of the disputed assessment. If the case is
much of factual issues, the CTA may opt to appoint an Independent Certified Public
Accountant (ICPA) as an officer of the court for the factual verification and evaluation.
Should you lose on the CTA-Division, you may file a Motion for Reconsideration with the Court
of Tax Appeals- En Banc within fifteen days from receipt thereof.
Within 30 days from receipt of the final resolution of the CA En Banc, you must file an appeal
through a Petition for Review with the Supreme Court-Division. You will also need a tax lawyer
during the proceedings with the Supreme Court. Should you lose your case with the Supreme
Court-Division, then, you could also file an MR with the Supreme Court En Banc within fifteen
days from receipt of such decision of the SC Division.”
“The precepts of due process dictates that every taxpayer must be accorded the opportunity
to produce evidence on its behalf based on the factual and legal grounds indicated on the
assessment notice.
However, to invoke the right to due process, the taxpayer is also expected to come forward
with clean hands. It is incumbent on the taxpayer to inform the BIR of the change in its
address so that the assessment notice can be served accordingly. Failure to inform or update
such information would mean that the data on the BIR’s official record is presumed to be
correct. Relying on the taxpayer’s representation, the BIR’s mailing of notice based on the
address on record would then be considered regular and binding on the taxpayer.”
“LOAs need to be specific, containing which types of taxes will be audited and for what taxable
year. While sanctioning the audit of all types of taxes is allowed, LOAs can only cover one
taxable year. For audits of multiple years, separate LOAs need to be issued.
The LOA needs to be served to the taxpayer within 30 calendar days of its issuance, otherwise
it is voided and will need to be revalidated.