Business Taxation Notes| June 4, 2022

Taxpayers

A. Individual taxpayer
1. Compensation income earners

Are employees required to file income tax return? Yes

Are they physically filing it? No, there is substituted filing. (if only one employer)

When do they file? At the end of the year. (Calendar year: ends @ Dec. 31)

15th day of the 4th month following the close of the calendar year ( simple terms, April 15 of the next
year)

2. Self-employed earners or mixed earners

1st-3rd quarter income tax return then final adjustment return

Deadline for the 1st to 3rd quarter is the 45th day after the close of the quarter ( deadline for the 1 st
quarter is may 15 which started in march) (aug 15) (nov 15) (April 15 of next year)
JAN

1ST QUARTER FEB

MARCH

Due date: (45 DAYS FROM MARCH) : MAY 15

APRIL

2ND QUARTER MAY

JUNE

Due date: (45 DAYS FROM JUNE) : AUG 14

JULY

3RD QUARTER AUG

SEPT.

Due date: (45 DAYS FROM SEPT) : NOV.14

OCT.

FINAL ADJUSTMENT NOV.

RETURN
DEC.

DUE DATE: APRIL 15

ASSESSMENT

2 important requirements of assessment

- Exaction of tax liabilities (presenting the tax liability)

- The formal demand for payment

LOA

- Summoned or given by the commission of internal revenue

- Should cover one taxable year
- Validity is *120 days subject to extension and substitution
Cases of substitution- retired, under conviction, etc.

DATE OF ASSESSMENT

GR: The start of the prescription of the 3 years of assessment for the FAN start from the filing of the
return or the end of the quarter or the statutory due date whichever is later. For self-employed- start of
3years is at the final adjusted return

-SEC 222 NIRC (4) revenue memorandum circular

SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes.-

(a) In the case of a false or fraudulent return with intent to evade tax or of failure to file a return, the tax may be
assessed, or a proceeding in court for the collection of such tax may be filed without assessment, at any time
within ten (10) years after the discovery of the falsity, fraud or omission: Provided, That in a fraud assessment
which has become final and executory, the fact of fraud shall be judicially taken cognizance of in the civil or
criminal action for the collection thereof.

(b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the
Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed
within the period agreed upon. The period so agreed upon may be extended by subsequent written agreement
made before the expiration of the period previously agreed upon.

(c) Any internal revenue tax which has been assessed within the period of limitation as prescribed in paragraph (a)
hereof may be collected by distraint or levy or by a proceeding in court within five (5) years following the
assessment of the tax.

(d) Any internal revenue tax, which has been assessed within the period agreed upon as provided in paragraph (b)
hereinabove, may be collected by distraint or levy or by a proceeding in court within the period agreed upon in
writing before the expiration of the five (5) -year period. The period so agreed upon may be extended by
subsequent written agreements made before the expiration of the period previously agreed upon.

(e) Provided, however, That nothing in the immediately preceding and paragraph (a) hereof shall be construed to
authorize the examination and investigation or inquiry into any tax return filed in accordance with the provisions of
any tax amnesty law or decree.
 LOA
Authorizing the bir to Notice of discrepancy/ Taxpayer reply to NOD
audit the taxpayer letter Notice Sent to BIR
5 days to have discussion with - Contain in it is the explanation
-Valid 120 day subj. to
BIR why you dispute the findings.
extension and
substitution - General rule no time period to
reply

FAN & formal letter of demand

-sent if there is no pan required, failed to
reply to PAN, or the reply is without merit. REPLY TO PAN Preliminary
-30 days to protest from the issuance of assessment notice
15 days upon receiving the
FAN
PAN. Sent by the commission
-in detail the facts and the law, rules and
regulations or jurisprudence on which the
proposed assessment is based;

Filing of protest of the FAN

30 days from the receipt of FAN
Types of protest:
Reinvestigation or reconsideration
Reinvestigation- 60 days they should
have sent their supporting doc. + 180
days for bir to decide. Reckoning point:
from the filing of doc.
Reconsideration- 180 days bir should
decide or deny, reckoning point: from
the receipt of protest.