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Tax Remedies
Tax Remedies
REMEDIES
Tax Remedies Defined (Tabag, 2022)
The definitions of tax remedies are as follows:
1. On the part of the government, these are courses of action provided by or allowed in the law to
implement the tax laws or enforce tax collection; and
2. On the part of the taxpayer, these are legal actions that a taxpayer can avail of to seek relief from
the undue burden or oppressive effect of tax laws or to check possible excesses by revenue
officers in performing their duties.
Assessment Process (Tabag, 2022)
Issuance of Notice of Discrepancy (NOD) (RR 22-2020 dated September 16, 2020)
NOD replaces Notice of Informal Conference (NIC). Before NOD, the taxpayer shall be informed, in
writing, by the Revenue District Office or by the Special Investigation Division, as the case may be (in
the case of Revenue Regional Offices) or by the Chief of Division concerned (in the case of BIR National
Office) of the discrepancy or discrepancies in the taxpayer's payment of his internal revenue taxes for
Informal Conference as required under RR 7-2018, to afford the taxpayer with an opportunity to
present the side of the case. NIC was replaced by NOD under RR 22-2022, issued on September 15,
2020.
Issuance of Formal Letter of Demand (FDL) and Final Assessment Notice (FAN)
The FDL/FAN shall be issued by the Commissioner or his duly authorized representative. The FDL/FAN
calling for payment of the taxpayer's deficiency tax or taxes shall state the facts, the law, rules,
regulations, or jurisprudence on which the assessment is based; otherwise, the assessment shall be
void (RR 18-2013).
Denial of Protest
The following are the ways to deny protest:
a. Direct denial. File an appeal with the Court of Tax Appeals (CTA) Division within 30 days of
receiving the denial letter.
b. Indirect denial. File an appeal with the CTA Division within 30 days from the lapse of the 180 days
or await the final decision of the CIR or his duly authorized representative and request such final
decision to the CTA within 30 days after the receipt of a copy of such determination (RR 18-2013).
If the appeal to the CTA en banc is denied, file an appeal with the Supreme Court (SC) Division within
15 days from receipt of the decision, then, finally, to the SC en banc.
The BIR can collect delinquent internal revenue taxes through the following means:
Distraint
The government seizes personal property, tangible or intangible, to enforce the payment of taxes.
• Actual distraint – personal property is physically seized by the BIR and offered for sale at public
auction. The property is sold to the highest bidder, and the sale proceeds are applied to the payment
of the tax due. Garnishment is the distraint of bank accounts.
• Constructive distraint – the person in possession of the personal property is made to sign a receipt,
undertaking that he will preserve the property and will not dispose of the property without the
express authority of the Bureau of Internal Revenue (BIR). Constructive distraint may be availed of
in the following cases:
o The taxpayer is retiring from any business subject to tax.
Right of Redemption
The taxpayer may redeem the property for one (1) year from the sale date. During this period, the
taxpayer is not deprived of the possession and fruits of the property. If the taxpayer fails to redeem the
property, a final sale deed is executed in favor of the buyer.
Rights of the owner during the one (1) year redemption period
During the one (1) year period of redemption, the owner shall not be deprived of the possession of the
said property and shall be entitled to the rents and other income thereof until the expiration of the time
allowed for its redemption.
Judicial Proceedings
• Filing of a civil case for collection
• File a criminal lawsuit (Tax Evasion)
Compromise (Tabag, 2022)
The following are the grounds for compromise:
1. A reasonable doubt as to the validity of the claim against the taxpayer exists; or
2. The taxpayer's financial position demonstrates an evident inability to pay the assessed tax.
All criminal violations may be compromised, except:
1. Those already filed in court; or
2. Those involving fraud.
Minimum Amounts
• For cases of financial incapacity, a minimum compromise rate is equivalent to 10% of the basic
assessed tax.
• For other cases, a minimum compromise rate is 40% of the basic assessed tax.
Cases when approval of the evaluation board is required
• Where the basic tax involved exceeds one (1) million pesos; or
• Where the settlement offered is less than the prescribed minimum rates.
References:
Bureau of Internal Revenue (BIR). (2022). Corporate Recovery and Tax Incentives for Enterprises Act
(CREATE). https://www.bir.gov.ph/index.php/create.html
Bureau of Internal Revenue (BIR). (2022). Tax Reform for Acceleration and Inclusion (TRAIN).
https://www.bir.gov.ph/index.php/train.html
Bureau of Internal Revenue (BIR). (2022). Tax Code. https://www.bir.gov.ph/index.php/tax-
code.html#title2
Tabag, E. (2022). CPA reviewer in taxation. EDT Books Publishing.
Tabag, E. (2022). Income taxation. EDT Books Publishing.