ICCT Colleges Foundation, Inc.

Income Taxation – CBTAX01

CHAPTER 4 – ACTIVITY / ASSIGNMENT

Answer the following questions/statements in not less than 5 sentences.

1. In your own words, explain the following and give examples.
a. Tax credit certificate (TCC)
• It's a document that shows the amount owed to a taxpayer as a result of an
overpayment or inaccurate tax payment. It shows your tax credits, exemptions,
and rate range for the tax year, as well as your basic universal charge rates and
rate range, and your employment identifier, which is a unique reference issued by
your company for your employment. According to the BIR, taxpayers can use the
TCC to settle any tax liabilities through a tax debit note, or it can be converted into
cash "if the taxpayer-owner has no purpose for it." TCCs which have already
expired when the restrictions take effect will be automatically cancelled by the BIR.
TCC that have been abandoned for more than a year will be converted to cash,
according to the BIR.
b. Forfeiture of tax credit
• It involves contractor certificate revocation, inspection, the consequences of failing
to enable inspection, and collection. A tax credit certificate that has been issued in
accordance with the relevant provisions of this Code but has not been used after
five years from the date of issue. If the forfeiture is the result of the contractor's
action rather than the taxpayer's, these taxes will be assessed against the
contractor rather than the taxpayer. If the taxpayer's property inside the Local
Enterprise Zone for which a credit has been granted is sold or ceases to be used
as a business during any tax year. If the taxpayer ceases to operate such a
business at said location, or if the taxpayer employs fewer than the number of
people required by this article.
c. Enforcement of tax lien
• It is a claim made by a tax authority against a piece of real estate due to a
taxpayer's inability to pay taxes. Tax lien enforcement solutions aimed in all facets
of out-of-state tax debt collection. For both out-of-state tax debtors and their assets,
tax lien enforcement performs extensive location and asset searches. A property
with such a tax lien cannot be transferred by the owner, making it difficult for the
owner to avoid paying the tax. Since a property holder cannot sell a property with
a lien on it, tax liens are highly effective for tax enforcement.
d. Abatement
• It is a decrease or exemption in the amount of tax that an individual or business
must pay. On new construction, rehabilitation, major upgrades, tax abatement
programs reduce or eliminate the amount of property taxes that owners pay. The
objective of this program is to attract purchasers to places with low demand, such
as restored city neighborhoods. To qualify for the tax abatement, properties are
frequently required to stay owner-occupied. The tax abatement will remain with the
property if it is sold from one holder to another. A person’s property tax payment
will not be totally eliminated by the abatements; they will still have to pay taxes on
the value of the property before it was improved.
e. Forfeiture
• It refers to the loss of the any property, money, or assets in which there is no
acknowledgment or compensation. Forfeiture is a form of payment for breaching a
contract's conditions. A party which fails to complete their contractual obligations
or fails their responsibility forfeits the contract assets or rights. The objective of
forfeiture is to reimburse the party that has been damaged by the contract's non-
performance. A forfeiture happens when a person fails to meet its contractual
payment obligations. It can also be used as a punishment for illegal business
practices.
f. Levy
• A levy is an amount of money which you must pay to the government, such as a
tax. A levy is just the entire amount of money that a local government can get with
a tax rate. A levy is a judicially transfer of your property to pay back a tax debt.
Liens are not the same as levies. A levy is when the property is taken to settle the
debt. The Internal Revenue Service may take your tax return or property if you do
not pay your taxes. Other assets, such as bank accounts, rental income, and
retirement accounts, might be seized by tax officials.
g. Actual distraint
• It is a physical confiscation or seizure of personal belongings. Actual distraint is
where t The property is being physically taken. This includes not only the physical
confiscation of personal property, but also debt collectors. If the bankruptcy is not
for cash but for other personal property, the property must always be disposed at
a public auction. The payments would be used to address the debt. The excess
from this will be given back to the taxpayer.