ISSUES:

I. AS TO THE FINAL ASSESSMENT ON DEFFICIENT TAX:

Issue number 1: Absence of Preliminary Assessment Notice, Notice of Discrepancy, and Discussion on
Discrepancy, all of which are due process requirements. With the absence of foregoing, the FAN void.

Issue number 2: The Formal Assessment Notice does not indicate any reasons or justifications why the
defenses or arguments raised by the taxpayer were rejected. In fact, it did not mention any discussion as
to how the issues raised by the taxpayer were resolved. This further strengthens the argument that the
taxpayer was not afforded the opportunity to present evidence or to make oppositions in the
assessment process conducted by the BIR. (For an assessment to be valid, it should not merely reiterate
those that are contained in the PAN. The FAN should at the very least contain the explanations by the
BIR why the evidence presented by the taxpayer are rejected).

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However, with regards to “issue number 1”, it is advised to agree with the tax imposed due to non-
withholding (see Schedule 3 of the Details of Discrepancy) since PAN is no longer required when the
discrepancy is determined between the tax withheld and the tax remitted.

Therefore, we pay the tax with regards to the non-withholding but we will protest all other tax imposed
in the assessment.

II. AS TO THE FINAL ASSESSMENT OF COMPROMISE PENALTY:

Issue Number 1: The Preliminary Assessment Notice was not served/delivered to the taxpayer as
required by the law and the rules (i.e. personal service as the preferred mode of service; or in lieu
thereof, substituted service or by registered mail). The onus probandi to show evidence that the
taxpayer indeed received the PAN is shifted to the BIR. The non-receipt of PAN is evidenced by the lack
of name and signature in the PAN by the taxpayer or any authorized person to receive the same.

Issue number 2: Since the taxpayer was not afforded due process in the assessment process due to the
non-receipt of PAN (part 2) and the absence of PAN (part 1 – which refers to the deficient taxes), the
FAN with regards to the compromise penalty is also void since the assessment from which the said
compromise penalties was based is also void.

Issue Number 3: The PAN failed to state the factual basis for the compromise penalty. In the PAN, what
is only provided is a table containing the offenses, their nature, respective penalties under the law, and
respective compromise penalties. There is no discussion as to what specific facts made by the taxpayer
that would constitute as offenses subject to compromise penalty. (For an assessment to be valid, it must
contain the FACTUAL and legal basis for the assessment. Absent the factual basis, the assessment is
void).

Issue Number 4: The FAN merely reiterates the contents of PAN (Part 2). Under the existing rules, when
the FAN merely reiterates the contents of the PAN, the same is void. It should contain explanations why
the BIR disregarded the evidence presented by the taxpayer. The fact that there is no such discussion
further proves the fact that the taxpayer never received the PAN during the assessment process. (For an
assessment to be valid, it should not merely reiterate those that are contained in the PAN. The FAN
should at the very least contain the explanations by the BIR why the evidence presented by the taxpayer
are rejected).

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All amounts in FAN (Part 2) should be protested.