Period to investigate: The three yearr period to access or investigate commences to run 1 day after due

date if the tax was paid early or actual payment whichever is later.

If the defect of a tax is very clearly shown in the return itself without looking at other documents, the
BIR can collect without investigation or assessment. Collection without an assessment is valid provided:

1. THE TAX IS AN IR TAX (SELF COMPUTED ANG IR TAXES)

2. THE DEFECT OF a tax is very clearly shown in the return itself without looking at other
documents
3. THE GOVERNMENT IS ENFORCING COLLECTION WITHIN PRESCRIPTIVE PERIOD

Maski naka appeal ka yung interest tuloy tuloy yun,

When can the government offer a compromise agreement: ito lang ang grounds na pwede si
government mismo ang mag offer ng compromise settlement.

1. When the assessed tax is unreasonable or without legal basis

2. The financial condition of the tax payer clearly show that he or she cannot settle the tax liability

Bankruptcy, insolvency, death, or absence are not grounds to cancel your tax liability.

Compromise amounts:

500k and below

Between 500 and 1 m

More than 1 m

All compromise must be In writing; addressed to the commissioner of the BIR

10% and 40% - minimum compromise rates

10% ginagamit ng tx pyer that has no more capacity to pay the pax, he is insolvent.

Main tax ang titignan mo hindi kasama ang interest.

40% hindi ka bankrupt, hindi ka insolvent. No lower than that.

Whenever there is an offer from the tax pyer, the BIR can make an investigation. BIR can reject the
compromise.

If the amount of assessed tax is 500k and below- the comm of IR can delegate his power to reject or
accept to the RD. if the RD rejects the comp proposal that is not appealable it is FINAL. Wala na
magbabayad ka.

If he accepts his proposal of 300k, the acceptance is subject to review and approval of the commissioner
of internal revenue.
If the assessed tax is an amount between 500k and 1m -your written proposal will be submitted to the
comm of IR. The power of the comm to determine the feasibility of the proposal is a non delegable
authority, si comm of IR lang ang pwede mag determine nyan hindi nya pwede I delegate kay RD.

If the assessed tax is more than 1m, main tax lang ah, the tax payer can again submit a written
compromise proposal. The commission will accept the proposal but cannot act on that proposal, the
EVALUATION BOARD will study the proposal. THE EB includes the deputy commissioners at comm of IR.

The EB can act when if the comm proposal is below the minimum compromise rate. The tax payer can
appeal to the EB.

When you violate tax code – civilly and criminally liable ka

Comm of IR does not have a criminal jurisdiction, comm of IR will endorse it to the DOJ. The fiscal will
conduct investigation to determine if there is probable cause.

Example of criminal liability – under declaring, non filing of tax return.

Criminal liability cannot be subject of compromise agreement. But if the criminal complaint hindi pa
nadadala sa fiscal, the comm of IR can include the crim liability in the compromise. Pending palang sa
office ni comm of IR. Kung pumayag si COMM IR na isasama na yung crim liability mo sa compromise,
you must pay additional amount of money, the compromise penalty. Compromise penalty is the amount
paid in lieu of the criminal prosecution.

Naipadala n ani comm of IR sa fiscal’s office, can you still submit the compromise inclusive the crim
liability? No more. Kasi nasa fiscal na.

Can the fiscal accept the compromise in crim liability, YES. provided:

May personal written consent of the fiscal; no info filed in the court yet; the issue does not involve
fraud, it is just collection, wala pang fraud na na determine. Fraud is not presumed.

Limitations or restrictions on the power of the comm of IR to accept the compromise:

When there is fraud, no civil compromise is allowed. Halimbawa lumabas na yung decision ng court, talo
ako, wala ng compromise. Pending appeal – pwede kapa mag compromise because there is no final
decision yet when you are on appeal, pwede kapa mag compromise.

NO COMPROMISE: no personal written consent ni fiscal; if there is info filed in court; the issue involves
fraud.

POWER OF comm of IR to change the tax period:

The commissioner is authorized to demand OUTRIGHT settlement of a liability. It can be delegated to

the RD, delegable authority:
WHEN ALLOWED: instances where comm can demand outright payment

Clorr

1. Concealment of properties for purposes of tax evasion

2. TP is leaving the country without tax payment; the BIR sent you an assessment notice, the BIR
will file collection case when amount is big, RTC will issue a hold departure order.
3. Obstruction; filing TRO against judicial collection of BIR
4. Retiring from business; you have to settle all your tax liabilities within 30 days from dissolution.
5. Removal of properties from where they are located under the doctrine of constructive restraint;

The BIR can issue warrant:

Warrant of: distraint; levy; garnishment

distraint: BIR can go to your properties and seize personal properties. They can sell your properties and
apply the proceeds to your tax liability. The 2 witnesses dala ng BIR papunta ng bahay mo hindi dapat
tao ng BIR yan, pwedeng police. Ang kukunin dapat amount of good or properties equivalent to the
assessed tax. Meron dapat assessment. They cannot get more.

2 kinds:

Actual distraint:

Talagang kukunin nya , there is actual getting of the properties, it can only be exercised with
assessment.

Constructive distraint: wala syang kukunin, so hindi kailangan ng assessment. Pupunta BIR where you
are residing, with 2 witnesses, ipapakita ID nya, then maglilista lang kung ano yung mga Nakita nya sa
bahay mo. After listing the personal properties seen at your place of residence they will ask you to sign
the tax document. Kapag ayaw mo pumirma okay lang, yung dalawang witnesses ang pipirma. Iiwanan
ka ng paper nay un, youre not allowed to remove property to where they are located. Pagbalik sa office
ng BIR mag ko compute na yan ng tax liability mo. After determining the tax liability, babalik na sila sa
bahay mo to collect.

When you remove the property, the BIR can demand outright payment of the tx.

During the investigation, the BIR Is NOT authorize to look into a bank deposit because it will violate RA.
1405, the bank secrecy law.

EXCEPTION:

WHEN MAY CIR look into bank deposit:

1. When TP consents; that is waiver

2. When you submit a compromise proposal, and you are invoking insolvency.
3. When the issue involves estate tax.
Warrant of levy: real property; BIR will freeze the real properties; you cannot mortgage it; you cannot
donate or transfer it to your heirs. Magbayad ka muna.

Garnishment: freezing your bank deposits and tangible personal properties; shares of stocks;

Is the comm of IR authorize to freeze the bank deposits: they will the bank not to allow you to withdraw:

Doctrine of constructive distraint: erap case the BIR is allowed to freeze the bank deposits under the
doctrine of constructive distraint; it is to protect the government.

Quiz next meeting feb. 25. – general principles, power of CIR and remedies

March 11, 2021

The commissioner is a different person from a regional director. Mas mababa ang RD.

No BIR employee can inspect your business receipts. Dapat may sulat that you will be subjected to an
investigation. Everything must be properly documented. There must letter of authority.

Sec. 10 of tax code powers of RD

TAX vs REVENUE

Revenue is ALL the money that comes to the government. Tax is just one of the sources of governmental
revenue. Revenue lahat ng pera na pumapasok sa gov kahit saan galling yan example aids from foreign
government.

Fees – basis police power;

Tax – purpose to raise revenue

Tax vs license MEMORIZE BAR FAVE

Ad valorem tax vs business tax

Excise tax a tax on goods products, locally or imported. Ang papasukan lang ng excise tax ay yung mga
hindi kailangan sa buhay, yosi, perfume. An additional business tax. Paid by manufacturer or importer of
the product.

Clothings wala sa enumeration ng excisable goods.

2 classes of computation in excise tax:

1. Specific tax – based on measuring tool an instrument example litter, kilos, gumamit ng
pangsukat sap ag compute ng tax or amount payable, the gov used a measuring standard.
Cigarettes, based on number of sticks on packs. Electric wires, LPG.

2. Ad valorem tax– did not used pangsukat but based on the value of the property or goods.
Example property taxes, ad valorem in nature the higher the value of the property the higher
the tax.

Kind of tax who bears the burden of taxation.

1. Direct tax- payable only by statutory payer, person mentioned in the law.
2. Indirect tax - a tax that is advanced by somedbody to the gov and after he has paid the gov he is
given the authority to pass to burden to other persons. Example, VAT.

When the VAT reaches the end consumer, it becomes part of the purchase price.

The person who bears the indirect tax is the end consumer.

Here is an indirect tax, si businessman nagbayad na in advance, pagka advance nya pinas ana nya sa end
consumer kasi binili na yung product ni end consumer. Nalaman ni end consumer na yung pinasa sa
kanya, excise tax. Can the end consumer ask the gov for the refund? The case will not prosper, because
when the excise tax or VAT reaches the e.c. it becomes part of the purchase price, it is no longer a tax.

In case sobra yung bayad or invalid payment or excess payment sa excise tax, who has the personality to
claim refund from the gov? It is the payor. Walang personality yung end consumer, ang nagbayad yung
business man.

Progressive tax – it has many rates from lowest to highest, ex. Income tax

Flat tax- there is only one rate; estate tax, donor’s tax, iisa lang ang rate

Regressive Tax - as you earn or your money grows, the tax rate is becoming lesser.

Degressive Tax – pareho silang lumalaki pero hindi nagsasabay sa pagtaas ng rate.

National tax – imposed by the BIR

Local tax – imposed by the 4 political subdivision; provincial tax, municipal tax.

Whether a tax is national or local:

Prescriptive and remedies are different.

Tax and special assessment:

Special assessment is not special investigation. Under the tax code the meaning of assessment is
investigation. Pero pag special assessment is a kind of a property tax. It is collected by the gov when
there are improvements introduced benefiting property owners. A tax added to the real property tax.

A tax is different from subsidy and tax is different from penalty.

Tax situs – where do you pay your taxes.

If you pay your taxes at a wrong place, that is equal to NO payment at all. Yung mali, babawiin mo yun sa
government.

Where do you pay your income tax – where the person is working or residing.

Interest income paid where the debtor resides.

Business taxes

In taxation, immaterial kung may business permit ka or maski hindi ka nagreresibo or registered sa BIR, if
you are repeated engaged in a business activity, you have to pay your business tax. Registration and
licensing is not material in tax.

Business taxes has no concern in income tax. Magkaiba yun.

4 kinds of business taxes they are all indirect taxes

Paying one will not exempt you from the others. Paid where the business activities took place.

Professionals that are on their own, they are not employed. Example private practitioner ka na lawyer,
self employed tax payers are the sole proprietors and the professionals.

On or before Jan 31, go to the BIR and register yourself for business purposes. Kung ang kita mo last year
ay 3 M register yourself as VAT businessman. 3M and below, nonvat businessman. Isa lang, you cannot
be the same at the same time. That is mandatory, pag hindi ka nagpa register at nahuli ka ng BIR, Malaki
ang multa jan.

EXCEMPT from registration – customarily, habitually engaged in commercial activities – naglalako ng

BBQ, BJ, kwekwek, - hindi lalagpas ng 100k per annum. Not deemed to have engaged themselves in
business, they are simply engaged in livelihood activities only for subsistence. THEY ARE THE MARGINAL
BUSINESSMEN.

Religion – nagbebenta ng bibles, rosaries, required sila mag register sa BIR. Registration fee lang ang
kailangan nila bayaran, fee is NOT a tax.

VAT ---

Pag VAT registered ka, 12% or 0 or both.

What business activities are vatable?

SEBTIL

Sale, exchange, barter, transactions that are deemed sale for vat purposes, importation and lease.

Importation is always vatable. Maski hindi ka business man, importation is vatable, exportation is
exempt from tax. Destination principle.

Lease- of goods, machineries, equipments, they are vatabe.

Maski bumaba ang benta mo, pag vat registered ka, 12% ang tax mo. 3 years muna sa registration, your
change to registration from vat reg to non vat, subject to investigation yan, hindi automatic. Maski may
mga papel or resibo ka po na ipakita, hindi parin automatic yan. May investigation pa yan ng BIR.

Kung non vat ka naman last year, tapos this year umabot ka ng 3M anytime within the year pag nag
increase at umabot ng 3m you have the obligation to go to the BIR within 30 days from reaching the
threshold to convert from nonvat to vat reg.

Sale exchange barter – of goods of services, pag nagbebenta ka ng good add mo lahat ng benta mo gross
sales yun. Pag services naman gross receipt - restaurants, professions, computer shops, parlor,

Yung mga resibo hindi dapat interchangeable, that is equal to no issuance of receipt.

Sales invoice or cash invoice – if you are selling goods, pa print mo sa printing press, with permit ka
dapat from the BIR.

Under the tax code, maski hindi umabot ng threshold pwede ka mag volunteer as a VAT taxpayer, kasi
may advantage ka pag VAT reg businessman ka. BUT UNDER THE TRAIN LAW, THERE IS NO VOLUNTARY
OR OPTIONAL REGISTRATION STAY WHERE YOU ARE. PAG UMABOT KA NG 3M OR LESS, NON VAT KA,
IF MORE 3M VAT KA.

Receipts – O.R. charge receipts, delivery receipts, if you are selling services. Business documents are not
interchangeable, once you used the wrong business document that is equal to no issuance at all.

12% VAT

Kung vat registered ka, at bibili ka paninda mo pupunta ka sa vat supplier sa kanila ka bibili. Ang vat
katapat ay vat.

Sa loob ng tax merong:

INPUT TAX – you own a store office supplies and you are VAT REGISTERED . dapat naka hiwalay ang vat
amount sa resibo.

The 12% that you are absorbing by reason of the purchase are input tax.

OUTPUT TAX – when you issue receipt to your customer, you have to charge the vat to your customer.
12% that you are passing to the customer by reason of the sale.

My input tax is 15k, added all the 12% that you have by reason of sale – the total is 20k

15k minus 20k = input is deducted to output – 5k this is your business tax payable to BIR
If output is bigger than input – pay to BIR the 12% VAT

Example input is 20k, output is 6k – you will deduct that, may hindi ka magamit na 14, ang tawag jan
unutilized input tax under the 12% domestic sale. -Ano gagawin mo? CFF, carry forward feature , you
can deduct that from the output tax in the suceeding months, regardless of the tax cycle, until fully
utilized.

VAT ZERO

Pag VAT businessman ka dalawa na rate, 12 or zero

Zero does not mean you will pay tax, may special privilege ka lang. example, export activity, zero VAT
yan. Yung exporter nay an naka benta din yan ng mahigit na 3M.

Example- to produce ceramic mugs, you have to buy raw materials, every time I buy raw material meron
akong ina absorb na 12% input tax. Ano nga proof mon a nag export ka? BILL OF LADING, freight
receipts.

Meron na kong BL meaning nabenta ko na. pag nag eexport ka it is non vat.

Paano yan marami akong input, wala akong pagbabawasan na output. Saan mo ibabawas ang input mo?
Unutilized input tax under the zero based tax – you will claim that from the government by way of tax
refund or tax credit.

Dito walang gusto mag export kasi mahal ang export tax natin.

Ang pwede lang maka claim ng refund or credit, ay registered tax payer.

Dressmaker ako, 3 daughters. 1 daughter in abroad, 2 kasama ko sa dress shop. Gumawa ako ng daster
ng marammi para ipadala sa anak ko sa Saudi ibebenta da nya sa Saudi kasi walang daster dun. Pinadala
ko yung limang kahon na daster, may bill of lading na ako, pwede ko ba yung 12% na input tax ko can I
claim now the refund to BIR? NO, because I did not say that I am a vat registered. And magke claim lang
VAT registered.

Revenue regulations are part of our tax laws. Kahit wala sa tax code, nasa revenue regulation.

Ang nakasulat sa batas, printed dapat ang zero tax, hindi rubber stamp. SC: do not interpret the law
literally, ZERO RATE SALE, kahit rubber stamped pa yan, for as long as it is there, printed or written.
Sufficient compliance.

Another case: maraming alteration, may snowpake, maraming erasures. Sc: ERASURES CANNOT BE
EQUATED TO FRAUD AUTOMATICCALY, hindi porke may erasure peke na yung resibo. Okay lang may
erasure basta may signature on top of alteration yung nag erase at affidavit sworn aff explaining why
there was an erasure.

Another case: exporter meron syang zero rate sale sa kanyang resibo. Nag file sya ng claim nya sa BIR,
denied by BIR kasi sa left hand lower corner walang authority to print number walang ATP.
SC: there is nothing in the law or evenue regulation that requires na dapat may nakasulat yung atp. It is
not a ground for denial. ATP is required only for monitoring purpose only, not a ground for denial. BIR
can ask the taxpayer to bring out his permit.

How to claim unutilized input taxes?

2 years to claim, reckoned from last day of the last month of the quarter of export. 4 dates: sent your
goods in feb, last month of first quarter is march, march 31.

Pag second quarter- June 30

Third quarter – Sept 30

Fourth quarter – December 31

At the time that you are going to file your claim – you have to complete all your documents within the 2
year period.

NOW, AT THE TIME OF FILING YOU SHOULD HAVE FILED YOUR COMPLETE DOCUMENTS. Wala ng partial
filing ngayon. Dapat may sworn affidavit ka na kapag finile mo yung documents nay an kumpleto na wala
ka ng idadagdag.

After you have file your complete docs, you give the BIR 120 days to resolve the validity of your claim. Sa
TRAIN LAW 90 days na. pero dahil sa pandemic, binalik sa 120 days from the filing of the complete
documents.

During the period of 120 days, may reso na denied yung claim, you have 30 days to petition for review to
CTA.

Admin claim pag sa CIR

Pag sa CTA – judicial claim.

Silence is an implied denial of your claim. 120 plus 30 day rule – when to go to the CTA on appeal.
Gagamitin ang 30 days kapag inaction ang BIR, WALANG DECISION. Ubos na yung 120 days at hindi kapa
sinasagot, you have 30 days immediately following the expiration of the 120 day period, you can go to
CTA invoking that silence is an implied denial.

Pag may decision during the 120 days, within 30 days from receipt of the denial to go to cta to appeal.

When you appeal within 120 days, walang decision, hindi pa ubos yung 120 days mo then nag appeal ka
sa CTA. You have no cause of action, that is premature.

When you appealed after the expiration of 30 day period, you are time barred.

Case:

There was this tax payer, nag file sya ng claim nya within 2 year. 2 years reckoned from the last day of
the last month of the quarter of export.
Partial refund granted by BIR. The taxpayer did not agree kasi kumpleto naman daw yung documents
nya. Denied ng CTA, no jurisdiction. Kasi hindi sya nag MR sa denial. Dapat mag MR ka muna bago ka
umakyat sa CTA. Ang nirereview ng CTA yung denial ng MR mo.

Yung denial ng mga MR ang nirereview ng appellate court not the decision. Dapat ang ginawa nya nag
MR sya sa amended decision.

Case:

BIR in default, walang sagot si BIR. Nag decide si CTA, in favor of taxpayer, ordering BIR to refund or tax
credit certificate. Nung natanggap na ni commissioner yung order to issue tax credit cert, nagging final
and executory na ang decision ng CTA.

Dali dali ng MR si commissioner sa EN BANC. CTA en banc does not have the power to review the
decision of CTA division na final and executory, IMMUTABILITY OF DECISION. CTA en banc cannot nullify
the decision of CTA div if it has been final and executory.

PERFECTAGE TAX

OTHER PERT. TAXES

EXCISE TAXES

DOCUMENTARY STAMP TAX ON COMMERCIAL DOCUMENTS

COVERAGE – VAT GENERAL PRINCIPLES AND POWER OF CIR- SUNDAY MARCH 21 – 4-7 TYPE WRITTEN.
SEND DIRECTLY TO YOUR EMAIL, AND WAIT FOR CONFIRMATION BEFORE LEAVING YOUR CHAIR.
PANGALAN MO WITH PAGES KUNG ILANG PAGES LAGAY MO, MARY JANE 8 PAGES.