TAX ADMINISTRATION

TAX ADMINISTRATIVE AGENCIES:

1. Department of Finance (DOF) – principally responsible for fiscal policies and

general management of government financial resources.
2. Bureau of Internal Revenue (BIR) – primarily in charge to assess and collect all
taxes
3. Bureau of Customs (BC) and Tariff Commission (TC) – main agencies task to
collect taxes on imports.
4. Land Transportation Office (LTO) – the office responsible to collect registration
fees and motor vehicle tax.
5. Local Government Units

BUREAU OF INTERNAL REVENUES

➢ Under the supervision and control of the Department of Finance (DOF)

➢ Powers and duties are (1) Assessment and (2) collection of all national internal
revenue taxes, fees, and charges, and the (3) enforcement of all forfeitures,
penalties, and fines connected therewith, including the (4) execution of judgements
in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts.
➢ The Bureau shall give effect to and administer the supervisory and police powers
conferred to it by this code or other laws.
➢ Shall have a chief to be known as Commissioner of Internal Revenue, Senior
Deputy Commissioner for (1) policy and planning, (2) Enforcement service, (3)
large taxpayers service and four (4) assistant chiefs to be known as Deputy
Commissioner for the following:
a. Operations group
b. Information system group
c. Resource management group
d. Legal and inspection group

COMMISIONER OF INTERNAL REVENUE (CIR) – chief official of the BIR with the
following powers:

1. Interpret tax laws and Decide tax cases

The power to interpret tax laws shall be under the exclusive and original jurisdiction
of the Commissioner, subject to the review (Motu proprio review), affirmation,
reversal or modification by the Secretary of Finance

The power to decide disputed assessments, refund of internal revenue taxes, fees
or other charges, penalties is vested in the Commissioner, subject to the exclusive
appellate jurisdiction of the Court of Tax Appeals.
➢ Taxpayers adversely affected by the decision may appeal within 30 days
to CIR
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➢ After final decision by CIR taxpayers may appeal to the Court of Tax
Appeals

2. Obtain information, and to summon, examine, and take testimony of persons

➢ To examine relevant or material records
➢ Obtain information from person and government agencies
➢ Summon persons liable for tax or required to file returns
➢ Take testimony of person concerned
➢ Does not include authority to inquire into bank accounts.

3. Make assessments and prescribe additional tax requirements

➢ Examine returns
➢ Conduct inventory taking and surveillance
➢ Inquire into bank deposit account of the following:
a. Decedent to determine gross estate
b. Taxpayer who filed application for compromise of his tax liability
c. Specific taxpayer requested by foreign tax authority under international
agreements
➢ Accredit tax agents and practitioners
➢ Assess market values of real properties

4. Compromise, abate and refund or credit taxes

➢ Cannot be delegated

5. Power to issue rulings, reverse, revoke or modify any existing ruling of the
Bureau
➢ Cannot be delegated

6. Suspend business operations

ADMINISTRATIVE REQUIREMENTS:

1. Registration
➢ Tax Identification Number (TIN) – only one TIN shall be assigned to a
taxpayer. Any person who shall secure more than one TIN shall be
criminally liable
➢ Annual registration fee of P500 for every separate establishment or place
of business
2. Printing of Receipts, Sales or Commercial Invoice – all person engaged in
business shall secure from the BIR an authority to print receipts, sales or
commercial invoice before they can print the same.
3. Issuance of receipts or sales invoices – required when the value of merchandise
sold or service rendered amounted to P25 or more.
4. Exhibition of certificate of payment at place of business
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TAX RETURNS

1. BIR Form Nos. 1700-1701 – Annual income tax returns for individuals
2. BIR Form No. 1702 – Annual income tax return for partnership and corporation
3. BIR Form No. 1800 – Donor’s tax return
4. BIR Form No. 1801 – Estate tax return

TAX EVASION – taxpayer uses unlawful means to evade or lessen the payment of tax
(ex. Non-inclusion of sales data or fabrication of expenses to reduce taxable income)

TAX COLLECTION REMEDIES:

1. Administrative
a. Distraint of personal property
b. Levy of real property
c. Others
➢ Imposition of injunction
➢ Enforcement of tax lien
➢ Enforcement of forfeiture
➢ Entering into compromise of tax case
➢ Requiring the filing of bonds
➢ Requiring proof of filing of income tax returns
➢ Giving of rewards to informers
➢ Making arrest, search and seizure
➢ Deportation of aliens
➢ Inspection of books of accounts
➢ Use of national tax register

2. Judicial
a. Civil action
b. Criminal action

REMEDIES AVAILABLE FOR TAXPAYERS

1. Administrative Remedies:

a. TAX AVOIDANCE or TAX MINIMIZATION – reducing or totally escaping

payment of taxes through legally permissible means like:

1. Tax option (ex. selling shares in through stock market for lower rates)
2. Shifting (ex. VAT) is the transfer of the burden of a tax by the original
payer or the one on whom the tax was assessed or imposed to someone
else. Only indirect taxes may be shifted
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3. Transformation (ex. absorb tax to reduce price)

4. Exemption from taxation which may be expressed, implied or contractual
(contracts entered into by government

b. Amendments of tax returns

c. Protesting an assessment
d. Entering into a compromise
e. Filing a claim for tax credit
f. Filing a claim for refund

2. Judicial Remedies:

a. Civil action
b. Criminal action