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BA223: TAXATION (INCOME TAXATION)  Donor’s tax – a type of tax that is imposed upon any person, natural
MODULE 2: OVERVIEW OF THE POWERS AND AUTHORITY
OF THE COMMISSIONER OF INTERNAL REVENUE – PART
2 
Learning Objectives
At the end of this module you are expected to:
1. Identify the different government officers handling the tax
administrative functions;
2. Discuss the powers and duties of the Bureau of Internal Revenue;
3. Enumerate the officials of the Bureau of Internal Revenue
4. Enumerate the power and extent of authority of the
Commissioner od Bureau of Internal Revenue
The National Internal Revenue Code (NIRC) of 1992 was enacted from
Republic Act (RA) No. 8424 otherwise known as the Tax Reform Act of
1997, which was enacted on December 11, 1997 and became effective on
January 1, 1998. Since then, this law has been amended numerous times and
few of the significant amendments of are the RA 9337 (Reformed VAT law),
Ra 9243 (Revised Documentary Stamp Tax Law), RA 9334 (Amended
Excise Tax Law), and RA 9504 dated June 17, 2008 (amending Title II –
Income Tax).
The NIRC or the “Tax Code” collates the internal revenue laws. It governs
the imposition and collection of the following national internal revenue taxes:
 Income tax – a type of tax that is levied by a government directly on
income earn by the taxpayers
 Estate tax – a type of tax that is levied on the net value of the estate
of a deceased person before distribution to the heirs
or juridical, resident or nonresident, who transfers or causes to
transfer by gift or donation, whether direct or indirect, real, personal,
tangible or intangible property
Value-added tax (VAT) - is a form of sales tax. It is a tax on
consumption levied on the sale, barter, exchange or lease of goods or
properties and services in the Philippines and on importation of
goods into the Philippines. Percentage taxes
 Excises Taxes – these are type of taxes paid when purchases are
made on a specific good, such as gasoline. Excise taxes are often
included in the price of the product
 Documentary stamp tax – is an excise tax levied on documents,
instruments, loan agreements and papers evidencing the acceptance,
assignment, sale or transfer on an obligation, rights, or property
incident thereto.
Government Offices that handle Tax Administrative Functions
The Department of Finance (DOF) is the principal government office that
handles the administration and supervision of tax related matters. Under the
DOF are the following administrative offices:
1. Bureau of Internal Revenue (BIR)
- an agency of Department of Finance that collects more than half
of the total revenues of the government
2. Bureau of Customs (BOC)
- is a Philippine government agency under the Department of
Finance which is responsible for regulation and facilitating trade,
assessment and collecting import duties and taxes, combating
illegal trade and other forms of customs fraud, and devising and
managing customs management systems for trade facilitation
3. Land Transportation Commission
- is an agency of the Philippine government under the Department
of Transportation and is responsible for all land
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transportation in the Philippines, especially implementing Powers and Duties of the Bureau of Internal Revenue
transportation laws, rules and regulations 1. To assess and collect all national internal revenue taxes, fees and
charges.
Government Officials that Administer and Enforce Tax 2. To enforce al forfeitures, penalties, and fines connected with the
Administrative Functions assessment and collection functions.
1. Secretary of Finance 3. To execute judgement in all cases decided in its favor by the Court
- is a Cabinet Member who is in charge of the Department od of Tax Appeals and the ordinary courts.
Finance 4. To give effect and administer the supervisory of police powers
2. Commissioner of Internal Revenue conferred to it by the Tax Code or other laws.
- is the head of the Bureau of Internal Revenue
3. Commissioner of Customs Officials of the Bureau of Internal Revenue
- is the head of the Bureau of Customs Chief Officials
4. Presiding Justice and Associate Justices of the Court of Tax Appeals 1. Commissioner of Internal Revenue – known as the BIR
- expedite the disposition of tax-evasion cases and decides other Commissioner
tax cases 2. Four (4) Deputy Commissioners
5. Deputy Commissioner of the BIR BIR Officers
- Assists the Commissioner of Internal Revenue in carrying the - They are tasked to administer and enforce the Tax Code
powers and duties of BIR 1. Revenue Regional Director
6. Regional Directors and Regional District Officers of the BIR 2. Revenue District Officer
- Administers and enforces internal revenue laws including the 3. Revenue Examiners
assessment and collection of all internal revenue taxes 4. Division Chiefs
7. Provincial, City, and Municipal Treasurers 5. BIR Collection Agents
- Responsible for managing the revenue and cash flow of the local
government unit, as well as banking, collection, receipt, Powers and Authorities of the Commissioner of Internal Revenue
reporting, custody, investment or disbursement of municipal 1. Power to interpret tax laws and decide tax cases (Section 4,
funds NIRC)
8. Examiners and Collection Agents of the BIR and BOC  power to interpret the provisions of this Code and other tax
- Conducts the tax assessment as well as collection of assessed tax laws
deficiencies  power to decide on
 disputed assessments,

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 refunds of internal revenue taxes, fees or other  joint ventures of consortia and
charges, penalties imposed in relation thereto, or  registered partnerships, and their members;
other matters arising under this Code
 To summon the person liable for tax or required to file a
 subject to the exclusive affiliate jurisdiction of the Court of
return, or any officer or employee of such person, or any
Tax Appeals.
person having possession, custody, or care of the books of
2. Power to obtain information, and to summon, examine and take
accounts and other accounting records containing entries
testimony of persons (Section 5, NIRC)
relating to the business of the person liable for tax, or any
In ascertaining the correctness of any return, or in making a return
other person, to appear before the Commissioner or his duty
when none has been made, or in determining the liability of any
authorized representative at a time and place specified in the
person for any internal revenue tax, or in collecting any such
summons and to produce such books, papers, records, or
liability, or in evaluating tax compliance, the Commissioner is
other data, and to give testimony:
authorized:
 To take such testimony of the person concerned, under oath,
 To examine any book, paper, record, or other data which
as may be relevant or material to such inquiry; and
may be relevant or material to such inquiry
 To cause revenue officers and employees to make a canvas
 To obtain on a regular basis from any person other than the
from time to time of any revenue district or region and
person whose internal revenue tax liability is subject to audit
inquire after and concerning all persons therein who maybe
or investigation, or form any office or officer of the national
liable to pay any internal revenue tax, and all persons owning
and local governments, government agencies and
or having the care management or possession of any object
instrumentalities, including the Bangko Sentral ng Pilipinas
with respect to which a tax is impose.
and government-owned or - controlled corporations, any
3. Power to make assessments and prescribe additional requirements
information such as, but not limited to,
for tax administration and enforcement (Section 6, NIRC)
 costs and volume of reduction,  Examination of Returns and Determination of Tax Due
 receipts or sales and gross incomes of (Section 6A, NIRC)
taxpayers, and the names, addresses, and  After a return has been filed as required by under the
 financial statements of provisions of this Code, the Commissioner or his
 corporations, duly authorized representative may authorize the
 mutual fund companies, examination of any taxpayer and the assessment of
 insurance companies, the correct amount of tax: Provided, however, that
 regional operating headquarters of failure to file a return
multinational companies,
 joint accounts,
 associations,

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shall not prevent the Commissioner from authorizing
the examination of any tax payer.
The tax or any deficiency tax so assessed shall be
paid upon notice and demand from the
Commissioner or from his duly authorized
representative.
Any return, statement of declaration filed in any
office authorized to receive the same shall not be
withdrawn: Provided, that within three (3) years
from the date of such filing, the same may be
modified, changed, or amended: Provided, further,
that no notice for audit or investigation of such
return, statement of declaration has in the meantime
been actually served upon the taxpayer.
 Failure to Submit Required Returns, Statements, Reports,
and other Documents (Section 6B, NIRC)
 In case a person fails to file a required return or other
document at the time prescribed by law, or willfully
or otherwise files a false or fraudulent return or other
document, the Commissioner shall make or amend
the return from his own knowledge and from such
information as he can obtain through testimony or
otherwise, which shall be prima facie correct and
sufficient for all legal purposes.
 Authority to conduct inventory-taking, surveillance and to
prescribe presumptive gross sales and receipts (Section 6C,
NIRC)
 The Commissioner may, at any time during the
taxable year, order inventory-taking of goods of
any taxpayer as a basis for determining his internal
revenue tax liabilities, or may place the business
operations of any person, natural or juridical, under
observation or surveillance if there is treason to
believe that such person is not declaring his correct
income, sales or receipts for internal revenue tax
purposes. The findings may be used as the basis for
assessing the taxes for the other months or quarters
of the same or different taxable years and such
assessment shall be deemed prima facie correct.
 Authority to terminate taxable period (Section 6D, NIRC)
 When it shall come to the knowledge of the
Commissioner that the taxpayer is retiring from
business subject to tax, or is intending to leave the
Philippines or to remove his property therefrom or to
hide or conceal his property, or is performing any act
tending to obstruct the proceedings for the collection
of the tax for the past or current quarter or year or to
render the same totally or partly ineffective unless
such proceedings are began immediately, the
Commissioner shall declare the tax period of such
taxpayer terminated at any time and shall send the
taxpayer a notice of such decision, together with a
request for the immediate payment of the tax for the
period so declared terminated and the tax for the
preceding year or quarter, or such portion thereof as
may be unpaid, and said taxes shall be due and
payable immediately and shall be subject to all the
penalties hereafter prescribed, unless paid
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within the time fixed in the demand made by the
Commissioner.
 Authority to prescribe real property values (Section 6E,
NIRC)
 The Commissioner is hereby authorized to divide the
Philippines into different zones or areas and shall,
upon consultation with competent appraisers both
from the private and public sectors, determine the
fair market value or real properties located in each
zone or area. For purposes of computing any
internal revenue tax, the value of the property shall
be, whichever is the higher of:
(1) The fair market value as determined by the
Commissioner; or
(2) The fair market value as shown in the schedule
or values of the Provincial and City Assessors
 Authority to inquire into bank deposit accounts (Section 6F,
NIRC)
 Notwithstanding any contrary provision of Republic
Act No. 1405, Republic Act No. 6426, otherwise
known as the Foreign Currency Deposit Act of the
Philippines, and other general or special laws, the
Commissioner is hereby authorized to inquire into
the bank deposits and other related information held
by financial institutions of:
(1) A decedent to determine his gross estate;
and
(2) Any taxpayer who has file an
application for compromise of his tax
In case of a request from a foreign tax authority for
tax information held by banks and financial
liability under Section 204(A)(2) of this
Code by reason of financial incapacity to
pay his tax liability.
In case a taxpayer files an application to
compromise the payment of his tax
liabilities on his claim that his financial
position demonstrates a clear inability to pay
the tax assessed, his application shall not be
considered unless and until he waives in
writing his privilege under Republic Act No.
1405, Republic Act No. 6426, otherwise
known as the Foreign Currency Deposit Act
of the Philippines, or under other general or
special laws, and such waiver shall
constitute the authority of the Commissioner
to inquire into the bank deposits of the
taxpayer.
(3) A specific taxpayer or taxpayers subject
of a request for the supply of tax information
from a foreign tax authority pursuant to an
international convention or agreement on tax
matters to which the Philippines is a
signatory or a party of: Provided, that the
information obtained from the banks and
other financial institutions may be used by
the Bureau of Internal Revenue for tax
assessment, verification, audit and
enforcement purposes.
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institutions, the exchange of information shall be
done in a secure manner to ensure confidentiality
thereof under such rules and regulations as may be
promulgated by the Secretary of Finance, upon
recommendation of the Commissioner.
The Commissioner shall provide the tax information
obtained from banks and financial institutions
pursuant to a convention or agreement upon request
of the foreign tax authority when such requesting
foreign tax authority has provided the following
information to demonstrate the foreseeable relevance
of the information to the request:
(a) The identity of the person under examination or
investigation;
(b) A statement of the information being sought,
including its nature and the form in which the said
foreign tax authority prefers to receive the
information from the Commissioner;
(c) The tax purpose for which the information is
being sought;
(d) Grounds for believing that the information
requested is held in the Philippines or is in the
possession or control of a person within the
jurisdiction of the Philippines;
(e) To the extent known, the name and address of
any person believed to be in possession of the
requested information;
(f) A statement that the request is in conformity
with the law administrative practices of the said
foreign tax authorities, such that if the requested
information was within the jurisdiction of the said
foreign tax authority then it would be able to obtain
the information under its laws or in the normal
course of administrative practice and that it is in
conformity with a convention or international
agreement; and
(g) A statement that the requesting foreign tax
authority has exhausted all means available in its
own territory to obtain the information, except those
that would give rise to disproportionate difficulties.
The Commissioner shall forward the information as
promptly as possible to the requesting foreign tax
authority. To ensure a prompt response, the
Commissioner shall confirm receipt of a request in
writing to the requesting tax authority and shall
notify the latter of deficiencies in the request, if any,
within sixty (60) days from receipt of the request.
If the Commissioner is unable to obtain and provide
the information within ninety (90) days from receipt
of the request, due to obstacles encountered in
furnishing the information or when the bank or
financial institution refuses to furnish the
information, he shall immediately inform requesting
tax authority of the same, explaining the nature of
the obstacles encountered or the reasons for refusal.
The term “foreign tax authority,” as used herein,
shall refer to the tax authority or tax administration
of the requesting State under the
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tax treaty or convention to which the Philippines is a
signatory or party of.
 Authority to accredit and register tax agents (Section 6G,
NIRC)
 The Commissioner shall accredit and register, based
on the professional competence, integrity and moral
fitness, individuals and general professional
partnerships and the representatives who prepare and
file tax returns, statements, reports, protests, and
other papers with or who appear before, the Bureau
for taxpayers.
 Authority to prescribe additional procedural or documentary
requirements (Section 6H, NIRC)
 The Commissioner may prescribe the manner of
compliance with any documentary or procedural
requirement in connection with the submission or
preparation of financial statements accompanying
the tax returns.
4. Authority to delegate power (Section 7, NIRC)
The Commissioner may delegate the powers vested in him under the
pertinent provisions of this Code to any or such subordinate officials
with the rank equivalent to a division chief or higher, subject to such
limitations and restrictions as may be imposed under rules and
regulations to be promulgated by the Secretary of finance, upon
recommendation of the Commissioner: Provided, however, that the
following powers of the Commissioner shall not be
delegated:
(a) The power to recommend the promulgation of rules and
regulations by the Secretary of Finance;
(b) The power to issue rulings of first impression or to
reverse, revoke, or modify any existing ruling of the Bureau;
(c) The power to compromise or abate, under Sec. 204
(A) and (B) of this Code, any tax liability;
(d) The power to assign or reassign internal revenue officers
to establishments where articles subject to excise tax are
produce or kept.
5. Authority to compromise, abate and refund or credit tax (Section
204, NIRC)
The Commissioner may
(A) Compromise the payment of any internal revenue tax, when:
(1) A reasonable doubt as to the validity of the claim
against the taxpayer exists, or
(2) The financial position of the taxpayer demonstrates a
clear inability to pay the assessed tax:
The compromise settlement of any tax liability shall be
subject to the following minimum amounts:
For cases of financial incapacity, a minimum
compromise rate equivalent to ten percent (10%) of
the basic assessed tax; and
For other cases, a minimum compromise rate
equivalent to forty percent (40%) of the basic
assessed tax
When the basic tax involved exceeds One million
pesos (P1,000,000) or where the settlement offered
is less than the prescribed minimum rates, the
compromise shall be subject to the
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approval of the Evaluation Board which shall be
composes of the Commissioner and the four (4)
Deputy Commissioners.
(B) Abate or cancel a tax liability, when:
(1) The tax or any portion thereof appears to be
unjustly or excessively assessed; or
(2) The administration and collection costs involved do
not justify the collection of the amount due.
Links to Supplemental Readings
All criminal violations may be compromised except:
(a) those already filed in court, or
(b) those involving fraud.
original copy of the Tax Credit Certificate showing a creditable
balance is surrendered to the appropriate revenue officer for
verification and cancellation: Provided, further, that in no case
shall a tax refund be given resulting from availment of incentives
granted pursuant to special laws for which no actual payment
was made.
• End of Module 2 •
1. https://www.chanrobles.com/legal6nircmain.htm#.WW14qRUr LIU
2. https://www.bir.gov.ph/index.php/tax-code.html#title1
3. https://www.bir.gov.ph/index.php/tax-code.html#title2

(C) Credit or refund taxes erroneously or illegally received, or Links to Other Video Lectures
penalties imposed without authority, refund the value of internal 1. https://www.youtube.com/watch?v=6FV_GQ58G1g
revenue stamps when they are returned in good condition by the 2. https://www.youtube.com/watch?v=nEkSZtKuRjQ
purchaser, and, in his discretion, redeem or change unused 3. https://www.youtube.com/watch?v=EAkl8OZzf1o
stamps that have been rendered unfit for use and refund their
value upon proof of destruction. No credit or refund of taxes or
penalties shall be allowed unless the taxpayer files in writing
with the Commissioner a claim for credit or refund within two
(2) years after the payment of the ta penalty: Provided, however,
that a return file showing an overpayment shall be considered as
a written claim for credit or refund.

A Tax Credit Certificate validly issued under the provisions of

this Code may be applied against any internal revenue tax,
excluding withholding taxes, for which the taxpayer is directly
liable. Any request for conversion into refund of unutilized tax
credits may be allowed, subject to the provision of Section 230
of this Code: Provided, that the