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provision)
ADMINISTRATIVE
ORDER
01-03
(not
the
exact
protect their interests by making sure that the ruling issued to them is
signed by the proper Revenue Officer.
Likewise, it would be to the taxpayers advantage if, in requesting the
ruling, the taxpayer takes the initiative to search for and present to the
approving office other BIR rulings previously issued to other taxpayers
that may be used as precedent. This is especially recommended if the
issue being submitted for a ruling is not a clearly ruled subject. The
letter of request must explain and highlight the similarities between the
issue at hand and the precedent rulings being presented to facilitate the
understanding and resolution of the issue by the approving officers.
The burden to look for precedent rulings must not be shifted to or
passed on to the revenue officer. Since they are often assigned
numerous rulings to resolve, they may not have the time to do extensive
research and to look for precedent rulings. In the absence of precedent
rulings, the request for ruling shall be elevated to the Commissioner for
his review and approval. This will add a few more days, weeks or even
months to the process of approval. There is, of course, a possibility that,
since there is no precedent ruling, the taxpayer may be issued a
negative ruling or a denial of his request.
REVENUE
REGULATION
NO.
12-99
Issued September 14, 1999 implements the provisions of the Tax Code
of 1997 relative to the rules on assessment of national internal revenue
taxes, fees and charges, as well as provides the rules for the extrajudicial settlement of a taxpayer's criminal violation of the said Code or
any of its implementing Regulations through payment of a suggested
compromise penalty. As a general principle, in case the tax due from the
taxpayer is paid on a partial or installment basis, the interest on the
deficiency tax or on the delinquency tax liability of the taxpayer will be
imposed from due date of the tax until full payment thereof. The interest
will be computed based on the diminishing balance of the tax, inclusive
of interests.
SUBJECT
computed
based
on
the
diminishing
TO
Tax Assessment.
there exists sufficient basis to assess the taxpayer for any deficiency tax
3.1.1 Notice for informal conference. The Revenue Officer who
audited the taxpayer's records shall, among others, state in his report
whether or not the taxpayer agrees with his findings that the taxpayer is
liable for deficiency tax or taxes. If the taxpayer is not amenable, based
on the said Officer's submitted report of investigation, 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
with an opportunity to present his side of the case. If the taxpayer fails
to respond within fifteen (15) days from date of receipt of the notice for
informal conference, he shall be considered in default, in which case,
the Revenue District Officer or the Chief of the Special Investigation
Division of the Revenue Regional Office, or the Chief of Division in the
National Office, as the case may be, shall endorse the case with the
least
possible
delay
to
the
Assessment
Division
of
of
mathematical
error
in
the
The taxpayer shall state the facts, the applicable law, rules
or
shall state the facts, the law, rules and regulations, or jurisprudence on
hereof). The same shall be sent to the taxpayer only by registered mail
and the taxpayer fails to state the facts, the applicable law, rules
of the several issues on which the assessment is based, the same shall
duplicate copy of the letter of demand, showing the following: (a) His
name; (b) signature; (c) designation and authority to act for and in
attributable thereto.
carried
over
and
automatically
protest within sixty (60) days from date of filing of his letter of protest,
letter of demand and assessment notice within thirty (30) days from date
of receipt thereof. If there are several issues involved in the formal letter
evaluation
protests against the validity of some of the issues raised, the taxpayer
said Revenue Officer shall state this fact in his report of investigation.
the taxpayer calling for payment of the said deficiency tax, inclusive of
taxpayer's disputed issues until the taxpayer has paid the deficiency tax
persons.
by
conducting
the
audit.
The
If the taxpayer fails to file a valid protest against the formal letter of
demand and assessment notice within thirty (30) days from date of
receipt thereof, the assessment shall become final, executory and
demandable.
If the protest is denied, in whole or in part, by the Commissioner, the
taxpayer may appeal to the Court of Tax Appeals within thirty (30) days
from date of receipt of the said decision, otherwise, the assessment
shall become final, executory and demandable.
the taxpayer within the prescribed period from date of the posting
appeal to the Court of Tax Appeals within thirty (30) days from date of
notice of assessment; or
taxpayer elevates his protest to the Commissioner within thirty (30) days
effected by leaving the same in the premises of the taxpayer and this
least two (2) revenue officers other than the revenue officer who
form part of the docket of this case (see illustration in ANNEX D hereof).
4.1.1 Failure to file any return and pay the tax due
fraud: Provided,
4.1.2 Unless
otherwise
authorized
by
the
served the same shall make a written report of this matter which shall
That
substantial
shall
constitute prima
only on June 30, 1999. The tax due per return amounts to
payment
(P100,000.00
25%)
15-99 to 6-30-99
(P100,000.00 times .
investigation. cda
0415524)
1998 was due for filing on April 15, 1999 but the taxpayer
voluntarily filed his tax return, without notice from the BIR,
P100,000.00
times
Total
amount
(excluding
P25,000.00
P4,155.24
P29,155.24
due
suggested
compromise for
late filing and late payment
of the tax)
P129,155.24
=========
Only one 25% surcharge shall be imposed for late filing of the return
and late payment of the tax.
5.2 The tax return is filed on time but filed
through an internal revenue officer other than with whom
the return is required to be filed. Illustration: The
taxpayer's 1998 income tax return is required to be filed
through the authorized agent bank under the jurisdiction of
income tax return for the calendar year 1997 which was
due for filing on April 15, 1998. He was notified by the BIR
of his failure to file the tax return, for which reason, he filed
his tax return and paid the tax, only after the said notice,
imposed.
BIR, the taxpayer filed his tax return and paid the tax
P100,000.00
P100,000.00.
P100,000.00
P25,000.00
P125,000.00
P100,000.00
P25,000.00
=========
P24,155.2
P74,155.24
Tax due per pre-audit
Total
amount
due
(excluding
suggested
compromise
for late filing and late payment of the tax)
P120,000.00
P100,000.00
P174,155.24
=========
P20,000.00
P4,831.05
P24,831.05
=========
Deficiency income tax
Add: 20% int. p.a. fr. 4-15-98 to 6-30-99 (P70,000
times .2415524)
Illustration No. 2: ABC CORPORATION filed its
income tax return for calendar year 1997 and paid on time
P70,000.00
P16,908.67
P86,908.67
=========
P350,000.00
P175,000.00
tax rate of 35% for the year 1997, its income tax amounted
P175,000.00
or false
P87,500.00
P42,271.67
P129,771.67
P304,771.67
=========
P170,000.00
P100,000.00
=========
deficiency
income
tax
assessment
against
XYZ
said
assessment.
Assuming,
further,
that
the
Less:
Balance as of 4-15-99
Add:
for late payment of the tax since its deadline for payment
Total deficiency income tax assessed on May
P304,771.67
31, 1999
P76,192.9
times .0166667)
P5,079.54 P81,272.46
amount
due
(excluding
suggested
compromise
penalty for late payment)
15-99
2nd
installment
P762,500.03
on
5-15-99
(P250,000.00 plus
P12,500.03 interest)
Balance as of 5-15-99
Add:
P500,000.00
15-99
P262,500.03
7-31-99 (P304,771.67
Total
P750,000.00
P1,000,000.00
follows:
Example:
3rd
P508,333.35
installment
on
6-15-99
(P250,000.00 plus
P8,333.35 interest)
Balance as of 6-15-99
Add:
P258,333.35
15-99
to
P250,000.00
(P866,666.70
times .0166667)
P14,444.47
Amount
Income
===========
return
Add:
tax
due
per
25%
surcharge
annum from 4-
15-99
to
P250,000.00
5-15-99
1998 which was due on April 15, 1999. The BIR informed
the corporation of its failure to file its said tax return and
99
due
for
the
said
year
amounts
to
Partial
P811,111.17
=========
(P1,000,000.00
Less:
suggested compromise
late payment
the
P1,000,000.00
of
due
late payment
tax
still
(exclusive
P254,166.68
P866,666.70
6-15-99
income
Balance as of 5-15-99
payment
on 5-15-99
P266,666.70
P1,266,666.70
P400,000.00
SECTION
6. Suggested
Compromise
Penalty
in
Extra-judicial
schedule
of
compromise
penalties
provided
tax
assessment
Any
issued
hence, may not be imposed on the taxpayer without his consent. Hence,
the BIR may only suggest settlement of the taxpayer's liability through a
compromise. prLL
otherwise
deficiency
Assessment.
modified accordingly.
Tax
violation of the pertinent provision of the Code may be settled extrajudicially instead of the BIR instituting against the taxpayer a criminal
Deficiency
known
as
be
the
Provisions.
Any
provision
effective
specifically
provided
of
otherwise
in
the
National
National