Kate Trisha T.

Alana September 15, 2020

AC 301 TAXN01B
Sir Leymar Toliba

1. Briefly describe the roles of the different branches of the government in our tax system.
The Legislative branch of the government, the Congress, has the power to create laws
and ordinances and to impose and collect taxes. The scope of its taxing power comprises of
subjects of taxation, tax rate, purpose of tax, apportionment of tax, situs of taxation and method
of taxation. This power cannot be delegated to other branches of the government.
The Executive branch, on the other hand, is the one who executes and administers the tax
laws enacted by the Legislative branch. The Department of Finance through the Bureau of
Internal Revenue is mainly concerned with this duty. Primarily, BIR is the agency in charge to
assess and collect taxes and charges imposed by the National Internal Revenue Code.
Lastly, the Judicial branch is also involved in the tax system as it has the authority to
interpret tax laws and decide on appeals to decision on tax cases made by the BIR. This authority
is vested upon the Court of Tax Appeals.

2. What is the BIR? Discuss its powers.

The Bureau of Internal Revenue is a government agency under the Department of
Finance in charge of assessing and collecting all taxes and charges imposed by the National
Internal Revenue Code. It is responsible for raising the country’s government revenues.
The powers and duties of BIR as provided by NIRC includes assessing and collecting all
national revenue taxes, fees and charges, enforcement of all forfeitures, penalties, and fines
connected with the aforementioned and the execution of judgments in all cases decided in its
favor by the Court of Tax Appeals and ordinary courts. BIR can also administer, supervise, and
give effect to police powers conferred to it by the NIRC and other laws. Police power, however,
can only be exercised by BIR if it is necessary for the enforcement of its principal powers and
duties.

3. Enumerate and discuss the different tax remedies available to the State.
The tax remedies available to the State are assessment and collection. Tax assessment
involves determining of the correctness of tax due in accordance with the tax laws. It is a formal
letter made by the BIR to demand for the payment of a taxpayer’s tax liabilities within the period
indicated therein. For an assessment to be valid, it must be in writing, stating the facts, law, rules
and regulations or jurisprudence on which the assessment is made and the tax official and the
taxpayer does not have any agreement during the pre-assessment stage. The BIR is allowed a
certain period of time known as the assessment period to investigate a taxpayer’s tax discrepancy
to enforce tax collection. The assessment period for regular return or simple neglect is within 3
years from Income Tax Return filing while for fraudulent return or willful neglect, assessment
period is within 10 years from the discovery of fraud.
Collection remedies, on the other hand, are provided to the government due to the reason
that situations where tax payments are not made within the prescribed period by reason of
neglect. The government can collect taxes through administrative and judicial remedies. Judicial
remedies are provided to enforce tax collections through a civil or criminal action.
Administrative remedies, on the other hand, include distraint of personal property, levy
of real property, tax lien, forfeiture of confiscated article, suspension of business operations in
violation of VAT and enforcement of administrative fine. Distraint refers to the act of taking a
tangible or intangible personal property by the government to enforce tax payments. This can be
actual where the property is physically seized or constructive where the taxpayer is only
restricted to dispose said property. Levy, in contrast with distraint, is enforcing tax payments by
taking an immovable or real property. Third is tax lien which is a legal claim on either real or
personal property that secures the proper payment of taxes and other charges on properties
subject to levy or distraint. This remedy is enforced by seizure or by sale of the property.
Another administrative remedy is forfeiture where the property is confiscated by the government
to satisfy the tax liability. It can be sold through bidding and if there is no bidder or the bid is
insufficient, the property will be forfeited to the government to serve as payment for the liability.
Other collection remedies are imposition of injunction, requiring filing of bonds and
proof of filing of income tax returns, giving of rewards to informers, making arrest search and
seizures, deportation of aliens, inspection of books and accounts and use of national tax register.

4. Enumerate and discuss the different tax remedies available to the taxpayer.

Remedies available to taxpayers are administrative remedies and judicial remedies.

Under administrative remedies, we have tax avoidance, amendment of tax returns, demand for
the Letter of Authority, protesting an assessment, applying for No Audit Program (NAP), filing
of claim for tax credit and claim for refund.
Tax avoidance refers to reducing or escaping tax liability if it is through legal means and
the taxpayer is in good faith.
Amendment of tax returns can also be made if it is within three years from the date of
filing and if there is no notice for audit or investigation that has been given to the taxpayer.
A taxpayer can also refuse audit if he/she is not under the jurisdiction of the one who
issues the Letter of Authority. For example, if the Regional Office issues a Letter of Authority
but the taxpayer is under the jurisdiction of National Office audit, he/she can refuse the audit of
Regional Office.
The taxpayer can also file a petition to reinvestigate the tax assessment provided it is
filed within 30 days from receiving the notice of assessment.
For the No Audit Program (NAP), the taxpayer’s income tax payment for the current
taxable year must be greater than the payment for the base year by at least 20% and the ratio of
income tax payment to gross sales for the current taxable year must be at least equal to that of
the base year in order for him/her to qualify. Those who have net loss or net operating loss carry-
over without minimum corporate income tax (MCIT) due and those who have net income but no
tax payable because of their tax deductions shall be disqualified from this program.
Tax credit is an amount that is permitted to be subtracted from the taxpayer’s liability for
any internal revenue tax. The certificate for tax credit could be issued to a taxpayer after his/her
payment. However, this cannot be applied to withholding taxes.
Lastly, refund is a remedy for taxpayers who have erroneously paid more than the tax
due or those that are charged illegally. Through this remedy, they may ask for the actual return
of the cash paid more than the real tax liability.
Under the judicial remedies for the taxpayer, we have civil action, criminal action, action
for damages against revenue officers and action to contest forfeiture of chattel. Under civil
action, the taxpayer may appeal to the Court of Tax Appeals (CTA) within 30 days from the
receipt of the decision or after the 180-day period if the protest was not acted upon. If after
receiving the decision from CTA, the taxpayer still wishes to appeal, he/she may take it to the
Supreme Court. He/she may also secure injunction order from CTA against distraint or levy if
collection of taxes would jeopardize his interest subject to the posting of bond.
For remedies under criminal action, the taxpayer may also file a complaint against BIR
officials or employees who committed violations specified under Section 269 of National
Internal Revenue Code.

5. Enumerate and discuss the different tax remedies available to both the State and the
taxpayer.

Tax remedies available to both the State and taxpayer includes compromise and
abatement. Compromise is a remedy where both parties concede and enter a contract to avoid
litigation or end an ongoing litigation. All criminal violations may be compromised except if it is
already filed in court or involves fraud. If the parties wish for a criminal compromise, they must
do so before filing with the court. In addition to this, a compromise may happen when there is
reasonable doubt as to the validity of the claim against the taxpayer or the financial position of
the taxpayer clearly shows inability to pay the liability. Abatement, on the other hand, refers to
the cancellation of tax by the BIR. Unlike in compromise where there is payment of a certain
percentage of the tax liability, this remedy does not require any payment since the liability is
already cancelled.