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The year
2007 has ended and a new one has just been ushered in.
For most businesses, this means a fresh start and a new
shot at profitable business operations.
The closing of a company’s books and the
preparation of financial reports are normal activities
at the start of the new year. Businessmen normally
devise new methods to improve their business operations
and to lessen, if not to correct, erroneous business
decisions in the past year.
For tax
authorities, the end of 2007 means a new taxable year
during which taxpayers’ books can be examined and tax
assessments can be made. New revenue targets will be
imposed upon our revenue-generating agencies in order to
collect the much-needed funds to defray government
expenses.
Indeed,
we can expect a lot of things to happen during the year
and this definitely would include the resumption of
pending tax investigations and the issuance of new
letters of authority to look into our 2007 records
vis-à-vis the 2007 financial reports to be submitted on
or before the statutory April 15 deadline. Revenue
officers will be coming in and business records will be
required for presentation. Tax-assessment notices will
be prepared and issued to taxpayers. This may be an
unwelcome fact for most of us, but our tax authorities
and their agents are mandated by law to do this
particular job.
So what
are we to do upon receipt of a formal assessment notice
from the tax authorities? We normally deal with
assessment notices by resorting to our
statutory-provided remedy of filing “protests to
assessments.” Section 228 of the 1997 Tax Code
specifically provides the rules to be followed when
protesting an assessment.
There
are two types of protests against an assessment. These
are the requests for a (1) reconsideration and (2)
reinvestigation. A request for reconsideration refers to
a plea for reevaluation of an assessment on the basis of
existing records, without need for additional evidence.
A request for reinvestigation, on the other hand, refers
to a plea for re-evaluation of an assessment on the
basis of newly discovered evidence or additional
evidence that a taxpayer intends to present in the
investigation. Both may invoke either a question of fact
or of law or both (CIR v. Philippine Global
Communications, Inc., GR No. 167146, October 31, 2006).
Our tax court has ruled that for a protest filed to be
valid, it must indicate whether it is a request for
reinvestigation or reconsideration. A protest which does
not specify any of these would not bar the finality of
the Final Assessment Notice, or as if there was no
protest filed.
The
taxpayer or his duly authorized representative must
administratively protest a formal assessment notice
within 30 days from its receipt. Failure to file a valid
protest against the assessment within this 30-day period
shall render the assessment final, executory and
demandable. If there are several issues involved in the
formal letter of demand and assessment notice, and the
taxpayer only disputes and protests against the validity
of some of the issues raised, the taxpayer shall be
required to pay the deficiency taxes on the undisputed
issues. A collection letter calling for payment of the
deficiency taxes on the undisputed issues, inclusive of
the applicable surcharge and/or interests, shall be
issued to the taxpayer. The prescriptive period for
assessment or collection of the tax or taxes
attributable to the disputed issues shall be suspended.
The
taxpayer should state the facts, the applicable law,
rules and regulations or jurisprudence on which the
protest is based; otherwise, the protest may be
considered void and without force and effect. Within 60
days from the filing of the protest, all relevant
supporting documents shall be submitted; otherwise, the
assessment shall become final.
If the
protest is denied in whole or in part by the
commissioner or his duly authorized representative, the
taxpayer may appeal to the Court of Tax Appeals (CTA)
within 30 days from receipt of the decision; otherwise,
the assessment shall become final and executory.
However, if the denial of the protest was made by a
revenue officer with a rank lower than the commissioner,
the taxpayer may elevate his protest to the commissioner
himself within 30 days from the date of receipt of the
decision by such revenue officer.
The
commissioner or his duly authorized representative has
to act on the taxpayer’s protest within 180 days from
the date of submission of the required documents in
support of such protest. Inaction on the part of the
commissioner within the 180-day period shall be
construed as a denial of the protest. The taxpayer has
the option to either (a) file an appeal with the CTA
within the 30-day period after the lapse of the 180-day
period, or (b) wait for the final decision of the
commissioner on the disputed assessment and file an
appeal with the CTA within 30 days after receipt of such
decision (Lascona Land Co. v. Commissioner, CTA Case No,
5777, January 4, 2000).
Although
we can never really tell what will happen during the
year, one thing remains certain: we can always hope for
a happy new year ahead of us.
The author is an associate of BDB Law. If you have any
comments or questions concerning the article, you can
e-mail the author at christian.m.cantera@bdblaw.com.ph
or call 8562952. |
