MODULE 1 BUREAU OF INTERNAL REVENUE, FUNCTION AND POWERS

The Bureau of Internal Revenue is an agency of Department of Finance.

BIR collects more than half of the total revenues of the government.

Assessment of tax liability

BIR the principal agency for Internal Revenue TAX ADMINISTRATION
Collection of taxes

Chief Officials of the Bureau of Internal Revenue. –

The Bureau of Internal Revenue shall have a chief to be known as Commissioner of Internal Revenue, hereinafter
referred to as the Commissioner and four (4) assistant chiefs to be known as Deputy Commissioners.

Powers and Duties OF BIR:

I. assessment and collection of all national internal revenue taxes, fees, and charges, and the enforcement of all forfeitures,

penalties, and fines connected therewith,

II. execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts.
III. The Bureau shall give effect to and administer the supervisory and police powers conferred to it by this Code or other laws.
 Internal Revenue Commissioner

The Powers of the Internal Revenue Commissioner (Section 5 & 6)

• Interpret Tax laws in order to render a decision on tax cases (subject to review by the Secretary of Finance)

• Decide on tax cases (subject to the exclusive appellate jurisdiction of the Court of Tax Appeals)

• Summon and obtain information

• Make assessment and prescribe additional requirements for tax administration and enforcements.
 Authorities of the Commissioner
In Deciding Tax Cases

a. To abate or cancel tax liability ( excessively assessed, cost to collect does not
justify the amount due)

b. To enter into tax compromise ( financial incapacity of taxpayer/ doubtful

assessment)

c. To refund taxes ( erroneously or illegally collected)

 Authority of the Commissioner
To Abate/cancel Tax Liability

Authorized to be exercised when:

a. the tax is unjustly or excessively assessed.
b. the administration and collection costs involved do not warrant the collection of
amount due.

The Commissioner shall submit to the Chairmen of the Committee on Ways and Means of both the
Senate and House of Representatives, every six (6) months, a report on the exercise of his powers
under this Section, stating therein the following facts and information, among others: names and
addresses of taxpayers whose cases have been the subject of abatement or compromise; amount involved;
amount compromised or abated; and reasons for the exercise of power: Provided, That the said report
shall be presented to the Oversight Committee in Congress that shall be constituted to determine that
said powers are reasonably exercised and that the government is not unduly deprived of revenues.
 Authority of the Commissioner
To Enter Into a Tax Compromise

May be exercised 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.

Where 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 approval of the Evaluation Board which shall be

composed of the Commissioner and the four (4) Deputy Commissioners.

TAX COMPROMISE , An agreement to settle the tax liability at lower amount than what is actual amount being assessed.

What are tax cases that may be compromised?

 
• a. delinquent payments
• b. cases under administrative protest after issuance of final notice of assessment.
• c. criminal violations involving tax fraud, other than those already filed in court
• d. Civil tax cases being disputed before the courts
• e. collection cases filed before the court
 

What tax cases may not be compromised?

• a. withholding taxes
• b. criminal violations involving tax fraud, already filed in court
• c. tax cases with final judgment already rendered by court
 
 Refund or Credit Taxes
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 tax or penalty: Provided, however,
That a return filed 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.
RELATED VIDEO, copy the link to your web browser to view
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