University of Pangasinan

College of Law
School Year 2021-2022
1st Semester

TAXATION LAW I

Assignment No. 4

1. Within what period should Preliminary Assessment Notice (PAN) be issued?

Answer:

Under Revenue Regulation No. 18-2013 and in relation to Section 228 of the National
Internal Revenue Code (NIRC), if after review and evaluation by the Commissioner or
his duly authorized representative, as the case may be, it is determined that there exists
sufficient basis to assess the taxpayer for any deficiency tax or taxes, the said Office shall
issue to the taxpayer a PAN for the proposed assessment.

At the onset, however, a written Notice of Informal Conference shall be issued to the
taxpayer informing him of the tax deficiency or additional taxes to be paid. Accordingly,
the taxpayer is given 30 days from receipt of such notice to explain his side. (Section 228,
NIRC and RR 7-2018 dated January 22, 2018)

If within the said period stated above, the taxpayer did not render voluntary payments or
agreed with the findings, the issuance of PAN is required as part of due process
requirement for the deficiency tax assessment.

2.
a. What is the effect if Bureau of Internal Revenue fails to make and issue a PAN
within the required period?

Answer:

Jurisprudence dictates that if PAN is not issued within the required period it is
tantamount to denial of due process against the taxpayer.

Accordingly, the taxpayer must be informed of the facts and laws upon which
assessment is made. It gives both the taxpayer and the Commissioner of Internal
Revenue the opportunity to settle the case at the earliest possible time without the
need for the issuance of FAN.
 b. Will the PAN be invalidated?

No, the PAN will not be invalidated. Under Section 228 of the NIRC, the taxpayer
must be informed in writing of the law and the facts on which the assessment is made;
otherwise, the assessment shall be void.

A pertinent reading of the above provision, however, does not mean to say that when
PAN is not issued within the reglementary period, it is void. It only bars the Bureau
of Internal Revenue (BIR) for the issuance of subsequent FAN because the issuance
of PAN is but part of due process.

3. Do the Delegated Authority/Representative and the CIR share the 180-day period?
or both of them have separate 180-day period?

Answer:

Yes, the 180-day period pertains to the time of both the CIR and its representative to act
on the appeal protest of the taxpayer.

Under Rule 4, Section 3 (a), (2) of the revised rules of Court of Tax Appeal and in
accordance with Section 228 of the NIRC, the inaction on the protest filed by taxpayer
within the 180-day period pertains to that inaction on the part of the Commissioner of
Internal Revenue.

However, since we are adopting a system of bureaucracy, a decision of a duly authorized

representative of a certain agency may be construed to be that of the same decision by
head of that agency, without any rules or law which provides otherwise. In the case of the
CIR, its duly authorized representative whom the taxpayer filed its protest, its inaction is
deemed an inaction by the CIR for purposes of filing an appeal to the Court of Tax
Appeal.