ASPECTS/process/stages of taxation

1. TAX POLICY (LEVY)- legislative function

-passage of law
-prescribe filing/payment date
-defined object of tax -penalty for violations
-fix tax rates
- tax exemptions
2. TAX ADMINISTARTION(TAX ASSESSMENT AND COLLECTION
-Administrative function
__________________________________________________________
TAX ADMINISTRATION is a system of collecting taxes in accordance
with the countrys tax policies. It involves enforcement of taxes through
the following aspects of taxation (a) assessment, and (b) collection.
TAX ADMINISTRATIVE AGENCIES
Department of Finance(DOF) primarily responsible for the fiscal
policies and general management of the Philippines Governments
financial resources. IT has executive control over:
1. BIR- govt agency primarily in charge to assess and collect all
taxes and charges imposed by the NIRC, other tax laws and
regulations.
2. Bureau of Customs (BC) and Tariff Commission (TC)- the main
agencies tasked to enforce the tariff and Customs Code (TCC).
The BC also collects the taxes on imports embodied in the NIRC.
3. LTO- asked with the collection of registration fees and motor
vehicle tax
4. Duly and lawfully authorized collectors- persons, agencies or
duly accredited banks authorized by the BIR, BC, TC, LTC to
collects taxes
5. LOCAL offices in charge to enforce LOCAL TAXATION
Provl,Munl, City, and Brgy TREASURERS;
Provl and City Assessors;
Provl and City Board of assessment appeals;
Central Board of Assessment appeals.
OTHER TAX OFFICERS
Other governmental offices, private entities and individual that may
have incidental functions regarding tax ENFORCEMENT and
INTERPRETATION are as follows;
1.

Secretary of Justice as the CHIEF LEGAL OFFICER of the govt

Has the authority to render administrative
interpretation and;
Has the authority to ascertain the validity of tax laws
= subject to review by the courts of Justice

2. Various offices that indirectly provide assistance in the COLLECTION

of taxes
1.
2.
3.
4.
5.
6.
7.

The courts
Register of deeds
Sec. of Public works and Highways offices
PEZA
Board of investments
City Fiscals
Notaries Public

3. Head of appropriate govt offices and his subordinates

*in general, taxpayers are constituted withholding agents with regard to
their income payments to other taxpayers
*withholding taxes on salaries are income taxes that are temporarily
based on estimate.
The exact amount of taxable salary would only be determined at the end
of the year when the last pay for the year is computed and paid.
*any officer or employee of an authorized agent banks (duly accredited
by the CIR with respect to receipt of payments) assigned to receive
internal revenue tax payments and transmit tax returns or documents to
the BIR shall be subject to the same sanctions and penalties prescribed
for violations committed by govt enforcement officers.

BIR (bureau of internal revenue)

8. power to ensure the provision and distribution of forms,

receipts, certificates, and appliances and acknowledgment of
payment of taxes

POWERS and DUTIES (sec. 2 NIRC)

1. ASSESSMENT AND COLLECTION of all NATIONAL internal
revenue taxes, fees and charges

I.

Under the control of the Dept of Finance

Principally tasked with the ENFORCEMENT of the NIRC

2. ENFORCEMENT of all forfeitures, penalties

connected with the assessment and collection

and

fines

3. EXECUTION of judgments in all cases decided in its favor by

the CTA and ordinary courts
4. ADMINISTRATION OF THE SUPERVISORY POWER conferred by
the NIRC and other laws. Such as:
a. Assigning internal revenue officers to establishments
where articles subject to excise tax are produced.
b. Providing and distributing forms, receipts, certification,
stamps and other BIR documents to concerned officials;
c. Issuing receipts for tax collected; and
d. Submitting annual report and pertinent information to the
Congress;

*ONLY the CIR has the power to interpret the provisions of the
tax code and other tax laws (special laws).

II.

POWER TO DECIDE TAX CASES

The BIR commissioner has the power to DECIDE
-disputed assessments;
-refunds of internal revenue taxes fees or charges;
-penalties imposed arising under the Tax Code or other tax

laws

=> subject to the exclusive APPELLATE jurisdiction of

the CTA
III.

*The BIR can exercise police power only when

necessary in the enforcement of its principal
powers and duties consisting of the collection of
fees and charges, including the enforcement of all
forfeitures, penalties and fines connected

POWER TO SUMMON OR OBTAIN INFORMATION

The BIR commissioner has the power to obtain information to
to ascertain the correctness of tax return and to determine
the taxpayers liability and compliance. This includes the
authority to:
a.
b.
c.
d.
e.

Chief officials of the BIR:

1. CIR - Commissioner of Internal Revenue (chief)
2. 4 Deputy commissioners( assistant chiefs)
3. The Revenue Regional Director
4. Revenue district officer
5. Revenue Examiners and Officers
6. Division chief of the BIR
7. BIR collection agents
POWERS OF THE CIR
1. Interpret laws
2. Decide disputed tax assessment
3. Summon, and obtain information of testimony of persons
4. Make assessments and prescribe additional tax requirements
5. Compromise, abate and refund or credit taxes
6. Suspend the business operations of a taxpayer
7. Delegate powers

POWER TO INTERPRET LAWS

The BIR Commissioner(CIR) has the EXCLUSIVE and
ORIGINAL power to provisions of the NIRC and other tax laws
=> subject to review by the Sec. of DOF.

Examine taxpayers records

Obtain taxpayers financial information
Summon the person liable for tax
Take testimony of the person concerned under oath; and
Conduct regular canvass concerning all persons liable to
pay any internal revenue tax.

*the BIR can access the records of the taxpayers customers

or suppliers to confirm accuracy of the declared sales or
purchases in the tax returns subject to the presentation of
letter of authority
IV.

POWER TO MAKE ASSESSMENT and PRESCRIBE

ADDITIONAL REQUIREMENTS FOR TAX
ADMINISTRATION AND ENFORCEMENT includes:

A. Examination of:
a. Returns and determination of tax due, and
b. Statements, reports and other documents not submitted

B. Authority to:
a. Conduct inventory and surveillance, and prescribe
presumptive gross sales receipt

a. DECEDENT to determine the gross estate of such

decedent; and
b. ANY taxpayer who has FILED an application for
compromise of his tax liability under section 204(A)
of the tax code by reason of FINANCIAL
INCAPABILITY to pay his tax liability.

*The CIR may exercise this power at ANY TIME during the
taxable year ONLY if there are reasons to believe that a
taxpayer is not declaring the correct income, sales or
receipts for tax purposes.

*The application for compromise shall not be

considered unless the taxpayer waives in writing the
confidentiality of his bank deposits

b. Terminate taxable period

The BIR Commissioner shall declare the tax period
terminated, and demand for immediate payment of the
tax due when it comes to his knowledge that the taxpayer
Retires from business subject to tax;
Intends to leave the Philippines;
Removes his property;
Hides or conceals his property; and
Performs any act tending to obstruct the proceedings
of the collection of tax for the past or current quarter,
or renders the same totally or partially inefficient.

e. Accredit and register tax agents

The CIR shall accredit and register based on their
professional (CIM) competence, integrity and moral fitness,
individuals and general professional partnerships and their
representatives who prepare and file tax returns statements,
reports, protests, and other papers with, or who appear before
the BIR for taxpayers for a valuable consideration.
*IF DENIED accreditation---an APPEAL can be made to the
secretary of Finance who shall rule within 60 days.
FAILURE to rule within the prescribe period shall be deemed
as APPROVAL of the application for accreditation of the
appellant individual or general professional partnership.

*the termination of the tax period is referred to as

JEOPARDY ASSESSMENT

c. Prescribe real property values

e. Prescribe
additional
requirements.

The CIR is authorized to divide the Philippines into

different zones or areas and shall, upon consultation with
competent appraisers both from the private and the public
sectors, determine the fair market value of real properties
located in each zone or area.
For purposes of computing any internal revenue tax, the
value of the property shall be the HIGHER OF THE FAIR
MARKET value as:
1. Determined by the Commissioner (Zonal Value);OR
2. As shown in the schedule of values of the provincial
and City assessors(Assessed Value)(sec 6 NIRC)
d. Inquire into bank deposit accounts
The power of the BIR Commissioner to inquire into the
bank deposit accounts to taxpayer should not violate the
Secrecy of Bank Deposit Law (RA 1405) and other general
or special laws. He is therefore authorized only to inquire
into the bank deposits of:

procedural

or

documentary

The CIR prescribes the manner of compliance with any

documentary or procedural requirement in connection with
the submission or preparation of financial statements
accompanying the tax returns.
V.
-

AUTHORITY TO COMPROMISE, ABATE AND REFUND

OR CREDIT TAXES
The CIR may compromise, abate, refund or credit the payment
of any internal revenue tax when:
1. Compromise-(a)when a reasonable doubt as to the validity
of the claim against the taxpayer exists; The financial
position of the taxpayer demonstrates a clear inability to
pay the assessed tax.
2. The tax or any portion thereof appears to be unjustly or
excessively assessed; or
3. The administration and collection COSTS involved do NOT
justify the collection of the amount due. (SEC 204(B))

*The taxpayer shall be informed in writing of the laws and

facts on which the assessment is made; otherwise the
assessment cannot in turn be used as a basis for the
perfection of a tax compromise.
The CIR may:
1. CREDIT or REFUND taxes erroneously or illegally received
or penalties imposed without authority.
2. REFUND the value of internal revenue stamps when they
are returned in good condition by the purchaser; and
3. REDEEM or CHANGE unused stamps that have been
rendered unfit for use and refund their value upon proof of
destruction.
VI.
POWER TO SUSPEND BUSINESS OPERATIONS
-

The CIR or his authorized representative is empowered to

suspend the business operations and temporarily close the
business extablishment of any person for any of the ff
violations:
1. In the case of a VAT-registered person,
a. Failure to issue receipts or invoices;
b. Failure to file a VAT return as required under Sec 114 of
NIRC; or
c. Understatement of taxable sale or receipts by thirty
percent (30%...)or more of his correct taxable sales or
receipts for the taxable quarter.
2. FAILURE by any person to register as required under Sec
236 of NIRC.
The temporary closure of the establishment shall be for
the duration of not less than five (5 ) days and shall be
LIFTED ONLY upon compliance with whatever requirements
prescribed by the CIR in the closure order.

VII.

AUTHORITY TO DELEGATE POWER

The CIR may delegate the power vested upon him under the
pertinent provisions of the TAX code to any subordinate
official with a rank equivalent to a division CHIEF or HIGHER,
subject to such limitations and restrictions as may be imposed
under the rules and regulations to be promulgated by the
Secretary of Finance, upon the recommendation of the
commissioner(CIR)
The ff powers of the CIR shall not be delegated:

1. The power to recommend the promulgations of rules and

regulation by the SEC. of FINANCE.
2. The power to issue rulings of first interpretation or to
reverse, revoke, modify any existing ruling of the Bureau.
3. The power to assign or re-assign internal revenue officers
to establishments where articles subject to excise tax are
produced or kept; and
4. The power to compromise or abate
G.R. the power to compromise or abate under sec 204 of the
NIRC shall not be delegated
XPN. Assessment issued by the regional offices involving
basic deficiency taxes of P500 or LESS or minor criminal
violations may be compromised by the regional evaluation
board.
Composition of the Regl Evaln Board:
Chairman: Regional Director
Members: Head of the Legal assessment ad collections
division
Revenue District Officer having jurisdiction
over the taxpayer
VIII.

POWER
TO
ENSURE
THE
PROVISION
AND
DISTRIBUTION OF FORMS, RECEIPTS, CERTIFICATES,
AND APPLIANCES AND ACKNOWLEDGMENT OF
PAYMENT OF TAXES
Commissioners annual report
Contents:
Detailed statements of the collection specifying the
ff:
1. Sources of revenue by type of tax by manner
of taxpayment,
2. Disbursement by classes of taxpayer

Actual collection
Falls short by ..

*The CIR may exercise this power at ANY TIME during the
taxable year ONLY if there are reasons to believe that a
taxpayer is not declaring the correct income, sales or
receipts for tax purposes.
b. Terminate taxable period
The BIR Commissioner shall declare the tax period
terminated, and demand for immediate payment of the
tax due when it comes to his knowledge that the taxpayer
Retires from business subject to tax;
P
Intends to leave the Philippines;
I
R
Removes his property;
R
Hides or conceals his property; and
C
Performs any act tending to obstruct the proceedings
of the collection of tax for the past or current quarter,
or renders the same totally or partially inefficient.
*the termination of the tax period is referred to as
JEOPARDY ASSESSMENT

c. Prescribe real property values

TAX REMEDIES
ASPECTS/STAGES/PROCESS of TAXATION
1. LEVY (TAX POLICY)
2. ASSESSMENT(TAX ADMINISTRATION)
3. TAXPAYMENT/COLLECTION (TAX ADMINISTRATION)
LEVY- involves the passage of tax laws or ordinances through the
LEGISLATURE
ASSESSMENTinvolves
the
act
of
administration
and
implementation of the tax laws by the executive branch of the govt.
TAX COLLECTION/PAYMENT- involves the act of collecting the tax

ASSESSMENT
POWER TO MAKE ASSESSMENT and PRESCRIBE ADDITIONAL
REQUIREMENTS FOR TAX ADMINISTRATION AND
ENFORCEMENT includes:
A. Examination of:
a. Returns and determination of tax due, and
b. Statements, reports and other documents not submitted
B. Authority to:
a. Conduct inventory and surveillance, and prescribe
presumptive gross sales receipt

The CIR is authorized to divide the Philippines into

different zones or areas and shall, upon consultation with
competent appraisers both from the private and the public
sectors, determine the fair market value of real properties
located in each zone or area.
For purposes of computing any internal revenue tax, the
value of the property shall be the HIGHER OF THE FAIR
MARKET value as:
1. Determined by the Commissioner (ZONAL VALUE);OR
2. As shown in the schedule of values of the provincial
and City assessors(ASSESSED VALUE)(sec 6 NIRC)
d. Inquire into bank deposit accounts
The power of the BIR Commissioner to inquire into the
bank deposit accounts to taxpayer should not violate the
Secrecy of Bank Deposit Law (RA 1405) and other general
or special laws. He is therefore authorized only to inquire
into the bank deposits of:
1. DECEDENT to determine the gross estate of such
decedent; and
2. ANY taxpayer who has FILED an application for
compromise of his tax liability under section 204(A)

of the tax code by reason of

INCAPABILITY to pay his tax liability.

FINANCIAL

*The application for compromise shall not be

considered unless the taxpayer waives in writing the
confidentiality of his bank deposits
e. Accredit and register tax agents
The CIR shall accredit and register based on their
professional (CIM) competence, integrity and moral fitness,
individuals and general professional partnerships and their
representatives who prepare and file tax returns statements,
reports, protests, and other papers with, or who appear before
the BIR for taxpayers for a valuable consideration.
*IF DENIED accreditation---an APPEAL can be made to the
secretary of Finance who shall rule within 60 days.
FAILURE to rule within the prescribe period shall be deemed
as APPROVAL of the application for accreditation of the
appellant individual or general professional partnership.
f.

Prescribe additional procedural or documentary requirements.

The CIR prescribes the manner of compliance with any
documentary or procedural requirement in connection with
the submission or preparation of financial statements
accompanying the tax returns.

I.
-

ASSESSMENT
refers to the process of determining the correct amount of tax
due in accordance with the prevailing tax laws.

a. taxpayers assessment (SELF-ASSESSMENT)

-thru tax returns
b. Governments Assessment
-before and after payment of tax
A. SELF-ASSESSING
- when the taxpayer earns income, he has the responsibility to
compute, file, and pay his tax the BIR.
- No need for the govt to make assessment to create the tax
liability of the taxpayer.

*by nature internal revenue taxes are SELF-ASSESSING. When the

TP earns income, he has the responsibility to compute, file and
pay his tax to the BIR. Hence, the TP creates his own liability
even w/o the govts assessment. --The TP reports his OWN ASSESSMENT of his tax liability in his
tax return to the internal revenue officer.
Q? Can the govt make tax assessment?YEAH!trula
*A tax assessment is a formal letter made by the BIR demanding the
taxpayer to settle his tax liability within the indicated period. It is
based on actual facts and not on hearsay evidence and it must be
directed to the right party subject to tax investigation.
B. ASSESSMENT by the GOVERNMENT
Assessment by the government is:
- Relevant in the proper pursuit of judicial and extra-judicial
remedies to enforce the taxpayers liabilities.
- It is relevant in the imposition of surcharges and interest,
in the application of statutes of limitations and in the
Establishment of tax liens.
*Assessment is NOT yet an action for the Collection of taxes. It is
an introduction to that purpose. It is the beginning and the
necessary step to the issuance of a warrant of distraint/ levy and
to establish a case for judicial action.
*Assessment is presumed to be correct and made in good faith in
the performance of official duties and failure to present proof
error will prosper such assessment.
*After the return has been filed, BIR commissioner or his duly
authorized representative may authorize the examination of any
taxpayer and the assessment of the correct amount of tax. Failure
on the part of the taxpayer to file a return shall not prevent the
commissioner from authorizing the examination of any taxpayer.
WHEN?
1. BEFORE a tax is filed
a. After prescription period expired (after the prescribed
period to pay)
b. If the taxpayer intends to leave the country or close
business
2. AFTER a fraudulent tax return is uncovered.

TAX
ASSESSMENT
PERIOD
(LIMITATIONS
OF
ASSESSMENT)
- Assessment period refers to the span of time allowed by law
to the BIR to INVESTIGATE a taxpayers tax discrepancy to
enforce collection of taxes
1. Within the 3-year prescription
-period when the TP file an accurate tax return
-due to simple neglect
AGREEMENT
*before the expiration of the tax period the BIR and the
taxpayer may AGREE in writing on the period of
assessment.
- Tax may be assessed within the period AGREED upon.
-The period so agreed upon may be EXTENEDED by
subsequent written agreement made before the
expiration of the period agreed upon
AMENDMENT
*The return, statement or declaration can be modified,
changed or AMENDED from within 3 years from the date
of filing as long as no tax investigation has been served to
the taxpayer.
COUNTED FROM
*a return filed before the last day prescribed by law for the
filing thereof shall be considered filed on the last day,
*in case where the return is filed beyond the period prescribed
by law, the 3-year period shall be counted from the day
the return was filed (actual date of filing).
*if the tax return is substantially amended, the period starts
from the amendment.
- the taxpayer has within 3 years from the date of filing of
the original tax return to modify, change or amend tax
return. This privilege is available only while the BIR has not
issued a notice of investigation against the taxpayer.
2. Within the 10-year prescription period,
-when the BIR discovers that the tax return filed was
fraudulent.
-no tax return was filed.
*FRAUDULENT ITR- the tax may be assessed OR a
PROCEEDING IN COURT for the collection of such tax may

be filed without assessment at any time within 10 years

after the discovery of the falsity, fraud or omission.
*In case of FAILURE to file a return, the tax may be assessed
within 10 years after the omission, and any tax so
assessed may be collected by LEVY upon real property
within 3 years following the assessment of the tax.
*Assessment is NOT necessary before filing criminal charges
complaint for tax evasion
*if the govt has NOT assessed/or collected within this period, its right
to act has expired and thereafter the taxpayer is DEEMED to have
paid the correct amount of tax
*An assessment is presumed correct and made in good faith in the
performance of official duties and failure to present proof of error will
prosper such assessment.
3. JEOPARDY ASSESSMENT
- Wwew5u7tAssessment
period.

anytime

by

terminating

*retires from business

*leaves the country
*hides or conceals his property
*performs any acts intending to
proceedings in the collection of the tax

taxable

obstruct

the

*In cases where the taxpayer refuses to acknowledge receipt of

assessment notice from the BIR, it is the burden of the BIR to prove
that such notice was indeed received by the taxpayer concerned.
*Assessment is not yet an action for the collection of taxes. It is an
introduction to that purpose. It is the beginning and the necessary
step to the issuance of a warrant of distraint or levy, and to establish
a case for judicial action.
*A revenue officers computation of the taxpayers liability
communicated to the latter, giving him an opportunity to disprove
the BIR examiners findings, is not an assessment because it is not
yet definite
ASSESSMENT PROCEDURE
PRE- ASSESSEMENT NOTICE (due process reuirement)

a. The BIR sends a NOTICE OF INFORMAL CONFERENCE(NIC) to

the taxpayer(with the noted discrepancy)
-the taxpayer is given 15 days to respond from the
date of receipt
-FAILURE to respond will warrant endorsement of the
case to the Assessment Division
b. The BIR sends a PRELIMINARY ASSESSMENT NOTICE(PAN) to
the taxpayer
-if the result of the review conducted by the
Assessment Division has established sufficient basis to
assess the taxpayer for any deficiency tax, the
preliminary assessment notice shall be served.
-the taxpayer is given 15 days to respond.
-FAILURE to respond will warrant the issuance of Formal
Letter of Demand of Payment together with the
assessment showing the computation inclusive of the
applicable penalties.
WHEN NOT REQUIRED:
Pre-assessment notice shall not be required when:
a. The finding of deficiency tax is the result of
MATHEMATICAL ERROR appearing on the face of the
return;
b. a discrepancy has been determined between the tax
withheld and the amount actually remitted by the
withholding agent;
(mas Malaki cguro ninekwat kesa sa binigay sa govt ganun)

c. a taxpayer who opted to claim a refund or tax credit of

excess creditable withholding tax for a taxable period
automatically applied the same against the estimated tax
liabilities for the quarters of the succeeding taxable year;
d. when the excise tax due has been paid;
e. An article locally purchased or imported by an exempt
person, such as vehicles, capital equipment, machinery,
and spare parts, has been sold, traded or transferred to
non-exempt persons.
2.

ISSUES FORMAL LETTER OF ASSESSMENT

Requisites of a valid assessment:
i. The tax official and the taxpayer have no agreement
made during the pre-assessment stage;
ii. It(the assessment) must be in WRITING;
iii. It must state the facts, law, regulations or
jurisprudence on which the assessment is made;
An assessment is issued by the BIR based on the findings
of facts and/or law the revenue officers. The factual

findings and law violated by the taxpayer must be stated

in the report and in the assessment issued by the BIR.
Such requirement is indispensable, failure to do so would
render the assessment null and void.
3. The taxpayer files a PROTEST within 30 days from receipt of
assessment
-- Taxpayer SUBMITS PROOF(documents) within 60 days
FROM FILING the protest.
-- If
NO PROTEST/NO SUPPORTING documents, the
assessment becomes final and the taxpayer is required to
pay;
4. COURT OF TAX APPEALS
1. BIR DENIES the protest; or
-TP may appeal to the CTA in division for a petition for
review within 30 days from receipt of denial.
- IF no appeal was made, BIR decision on Tax Assessment
becomes FINAL, EXECUTORY, and DEMANDABLE
2. IF
THE
BIR
IGNORES(does
not
act
on)
protest/supporting documents within 180 days upon
submission
- The TP must appeal to the CTA in division for petition for
review within 30days from the LAPSE of the 180-day
period
- IF no appeal was made, BIR decision on Tax Assessment
becomes FINAL, EXECUTORY, and DEMANDABLE
i.

DENIES the petition

a. TP may file a Motion for Reconsideration
to the SAME division within 15 days from
receipt of denial
b. If no MR has been filed the CTA decision on the
Tax Assessment becomes final ,executory and
demandable.
ii. DENIES MR
a. TP may file petition for review to the CTA EN
BANC within 15 days from receipt of denial.
b. If no petition for review has been filed with the
CTA en banc, the CTA decision on the Tax
Assessment becomes final ,executory and
demandable.
5. SUPREME COURT
-Petition for review on certiorari within 15days

- If no petition for review on certiorari has been filed

with the SC, the CTA decision on the Tax Assessment
becomes final ,executory and demandable.
*after the letter of assessment has been received or has become
final and executory (when no protests has been made), the
internal revenue tax that has been assessed may be collected by
distraint or levy or by a proceeding in court within 5 YEARS .

pre-ass
Final ass

BIR/CTA
BIR
NIC
PAN
FLA//demand

TAXPAYER
within 15 days
within 15 days
1. PROTESTS
within 30 days; and
SEND S. S DOCUMENTS
within 60 days after
protests

Denies protests;or

180 NO ACTION

CTA in div.
denies APPEAL
CTA in div.
denies MR
CTA en banc
denies

APPEAL to CTA
within 30 days
APPEAL to CTA
within 15 days

MR wihtin 15 days
APPEALS to CTA en banc
M. for review on certiorari
to the SC

II.

COLLECTION

TAX COLLECTION
- The government is clothed with authority to devise ways and
means to accomplish tax collection in the most effective
manner.
- But the law protects the TP with against the abuses of tax
collection
- Hence, even if taxes are obligatory by reason of command,
the taxpayer is still protected by the principle of due process.
*there would be instances that tax payments are not voluntarily
observed within the prescribed period by reason of delinquency.
For this reason, the law provides the govt various remedies to
enforce effective collection of internal revenue taxes.
The Govt can use administrative and judicial remedies in the
collection of taxes.
A.

B.

Administrative remedies in the collection of taxes are

available at the administrative level.
DISTRAINT of Personal property
Levy of real property; and
Other administrative collection remedies
Judicial remedies are means of enforcing tax collection
through court litigation which may be:
Civil action; and
Criminal action

Either or both of these remedies may be pursued

SIMULTANEOUSLY in the collection of taxes once the
assessment becomes final and demandable.
Any internal revenue tax that has been assessed within
the prescribed limitation period may be collected by
distraint or levy, or by proceeding in court within 5 years

COLLECTION REMEDIES AVAILABLE TO THE GOVERNMENT

The law provides the government various remedies to enforce
effective collection of internal revenue taxes, fees and charges
and increments thereto where the taxpayer is delinquent.
If (after) the Internal revenue HAS BEEN ASSESSED.

(Within the 3 year period or 10 year period or after the agreed

period for assessment)

property) effect the distraint. *(CIR has the power to lift such
order of distraint)
BIR Commissioner or HIS duly authorized representative
if the amount involved is in excess of P1M
CIR= +++P1M
Revenue District Officer(RDO) if the amount involved is
P1M or LESS.
RDO= P1M----

The internal revenue tax that has been assessed may be

collected by distraint or levy or by a proceeding in court within 5
YEARS following the assessment of tax

I.

COLLECTION REMEDIES AVAILABLE TO THE GOVERNMENT

a. DISTRAINT of personal property
b. LEVY of real property
c. CIVIL ACTION
d. CRIMINAL ACTION

Either or both of these remedies may be pursued

SIMULTANEOUSLY in the collection of taxes once the assessment
becomes final and demandable.
When the amount of the tax liability is NOT more than P100, the
remedies of distraint and levy shall not be availed of.
A. DISTRAINT of personal property
-

The seizure of the govt of PERSONAL property to enforce the

payment of taxes, to be followed by its PUBLIC SALE if taxes
accruing thereto are NOT VOLUNTARILY paid.
Any excess from the sale of the property shall be returned to
the taxpayer

KINDS OF DISTRAINT
1. ACTUAL DISTRAINT
-the govt takes possession of the personal property and
sells the same through public auction to settle the latters
tax liabilities.
2. CONSTRUCTIVE DISTRAINT
-the govt prohibits the taxpayer from disposing his
personal property to enforce collection of taxes
PROCEDURES
A) ACTUAL DISTRAINT
1. SEIZURE
- Upon FAILURE by the TP to pay delinquent tax within the time
required the BIR officers shall (seize and distraint the personal

(sec 208). The officer serving the warrant or distraint shall make
or cause to be made an account of the goods, chattels, and other
personal property distrained and *LEAVE a COPY of the WARRANT
which he signed with the owner or person from whom the
personal properties were taken, at the dwelling place or place of
business of such person and with someone of suitable age and
discretion.
*To which list shall be a STATEMENT of the sum demanded and
note of the TIME and PLACE of sale.
The property to be taken should be sufficient to satisfy the:
a. The Tax , or charge
b. Any increment thereto incident to delinquency
c. The expenses of the distraint and the cost of the subsequent
sale
THE EXPENSES CHARGEABLE upon each seizure and sale shall
embrace only the:
a. ACTUAL expenses of the seizure;
b. And preservation of the property pending the sale
*And NO charge shall be imposed for the services of the local internal
revenue officer or his deputy
2. SALE of property distraint and Disposition of proceeds
-

(sec209). The RDO or his duly authorized representative

cause the notification to be exhibited in not less than two (2)
public places in the municipality of City where the distraint is
made, specifying the TIME and PLACE of sale and the
ARTICLES distrained.

(sec209). The time of sale shall NOT be less than twenty (20)
days after notice. One place for posting shall be at the Office
of the Mayor of the City or Municipality in which the property
is distrained.

at the time and place fixed in such notice the said officer shall
sell the goods, chattels or effects or other personal property,

including stocks and other securities at PUBLIC AUCTION to

the highest bidder for cash, or with the approval of the
commissioner, through duly licensed commodity or stock
exchanges.
*any EXCESS on what is required to pay the entire claim, INCLUDING
expenses, shall be RETURNED to the owner of the property sold.
The amount to be paid by the delinquent taxpayer (out of the
property sold or before the sale) shall be:
a) The Tax , or charge
b) Any increment thereto incident to delinquency
c) The expenses of the distraint and the cost of the subsequent
sale
THE EXPENSES CHARGEABLE upon each seizure and sale shall
embrace only the:
i.
ACTUAL expenses of the seizure;
ii.
And preservation of the property pending the sale
*And NO charge shall be imposed for the services of the local internal
revenue officer or his deputy
3. RELEASE OF DISTRAINT PROPERTY
- If at any time PRIOR to the consummation of the sale all proper
charges are paid to the officer conducting the sale, the goods of
effects distrained shall be restored to the owner
4. REPORT OF SALE To BUREAU
- Within 2 days AFTER the sale, the officer amking the same
shall make a report of his proceedings in WRITING to the
COMMISSIONER and shall himself PRESERVE a copy of such
report as an official record.
5. PURCHASE BY THE GOVT
- When the AMOUNT BID for the property under distraint is NOT
EQUAL to the AMOUNT OF THE TAX
- Or when the AMOUNT BID is SUBSTANTIALLY LOWER than the
ACTUAL MARKET VALUE of the ARTICLES offered for sale
= The BIR commissioner may PURCHASE the same in BEHALF
of the NATL GOVT for the amount of the TAXES, PENALTIES
ISdue
NOT
EQUALwith the TAX
AND COSTS
thereon

DUE
IS SUBSTANTIALLY LOWER
ACTUAL MARKET VALUE

6. FURTHER DISTRAINT
- The remedy of distraint of personal property may be
REPEATED if necessary until the full amount due, including all
expenses, is collected.
B). CONSTRUCTIVE DISTRAINT
- to safeguard the interest of the government. The commissioner
may place under constructive distraint the property of the
delinquent taxpayer or any taxpayer who in his opinion:
1. is RETIRING from any business subject to tax
2. is Intending to LEAVE the Philippines
3. intends to REMOVE his property therefrom
4. HIDES or CONCEALS his property
5. Performs any act tending to OBSTRUCT the proceedings for
the
collection of the tax due or which may be due from
him
1. The constructive distraint shall be effected by requiring the
taxpayer or any person having possession or control of such
property to sign a RECEIPT covering the property distrained and
obligate himself to preserve the same INTACT and UNALTERED
and not to dispose of the same in any manner without the
express authority of the Commissioner.
2. In case the person having possession and control of the property
sought to be placed under constructive distraint refuses or fails to
sign the receipt the revenue officer effecting the distraint shall
proceed to prepare a LIST of SUCH PROPERTY and in the
presence of 2 WITNESSES leave a copy of the same in the
premises where the property distrained is LOCATED after which
the property shall be DEEMED to have been place under
constructive distraint.
B. LEVY of REAL PROPERTY
-

Is the seizure by the government of REAL PROPERTY in order

to enforce the payment of taxes. The property may be sold at
a public sale if after seizure the taxes are not voluntarily paid.
When the amount of tax liability is NOT more than P100 the
remedies of DISTRAINT and LEVY shall NOT be availed of.

PROCEDURE
1. - After the expiration of the time required to pay the delinquent
tax or delinquent revenue as prescribed by law, real property may

be levied upon, before, simultaneously or after the distraint of

personal property belonging to the taxpayer.
-

Levy shall be EFECTED in WRITING upon the certificate

detailing a description of the property upon which levy is
made.
A failure of Notice is a FATAL DEFECT.

2. WITHIN 20 days after levy, the officer conducting the proceedings

shall proceed to advertise the property or a usable potion thereof
as may be necessary to satisfy the claim and cost of sale
-

Such advertisement shall cover a period of at least 30 days.

It shall be effectuated by posting a notice at the main
entrance of the municipal building or city hall and in public
and in public and conspicuous place in the BARRIO OR
DISTRICT in which the real estate lies
By PUBLICATION once a week for 3 weeks in a NEWSPAPER of
general circulation in the city or municipality where the
property is located
The advertisement shall CONTAIN:
a. A statement of the TAXES and PENALTIES so due;
b. And the TIME and PLACE of SALE;
c. NAME of the TAXPAYER against whom taxes are levied;
d. And Short DESCRIPTION of the property to be sold

3. REDEMPTION PERIOD
- Within 1 YEAR from the date of SALE, the delinquent taxpayer
or anyone for him, shall have the right of paying the RDO the

amount of the taxes, penalties thereon from the date of

delinquency to the date of the sale, together with interest on
said purchase price at the RATE of 15% per ANNUM from the
date of purchase to the date of redemption.
The owner shall not, however, be deprived of the possession
of the said property and shall be entitled to the rent and other
INCOME thereof until the expiration of the redemption period.

4. In case the taxpayer does NOT REDEEM the property, The RDO
shall, as grantor, EXECUTE a DEED OF CONVEYING to the
purchaser how much the property has been sold, free from all
liens of any kind whatsoever.
5. FURTHER LEVY
- The LEVY, as a remedy, may be repeated if necessary until
the FULL amount due, including all expenses, is collected.
C.CIVIL and CRIMINAL ACTIONS
-

Civil and criminal actions instituted in behalf of the Govt

under the authority of the NIRC or other law enforced by the
BIR shall be brought in the NAME of the Govt of the
Philippines and shall be conducted by leagal officers of the
BIR.
NO civil or criminal action shall be brought for the recovery
of taxes or the enforcement of any fine, penalty or forfeiture
under this code shall be filed in court without APPROVAL of
the BIR commissioner.