(BDB Laws Tax Law For Business appears in the opinion section of BusinessMirror every

Thursday. BDB Law is an affiliate of Punongbayan & Araullo (P&A).

Reinvestigations effect on prescription of tax collection

Subject to certain exceptions, the Bureau of Internal Revenue (BIR) has five years,
following the assessment of taxes, within which to initiate the collection of taxes. But have
you ever received a collection notice even after the expiration of this period? If your case is
not one of the instances where the suspension of the prescriptive period applies, then you
have all the right to contest the collection.
More often, if an assessment is not settled even after the issuance of a final assessment
notice, the remedy of the taxpayer is to file an administrative protest. The protest must be
filed within 30 days from the receipt of the assessment, otherwise, the same becomes final.
Once a protest is seasonably filed, is the BIR granted an indefinite period of time within
which to collect? Or should the taxpayer consider an assessment closed after the lapse of
a certain period of time?
While the Tax Code fixes a period within which deficiency assessments may be collected,
there are also a number of instances where the period of limitations can be affected,
adjusted or suspended. The most common form is the issuance of a valid waiver of the
statute of limitations of the taxpayer, duly accepted by the BIR Commissioner or his
authorized representative. But even in the absence of a valid waiver, the suspension or
non-suspension of the period may depend upon the type of protest filed by the taxpayer. A
protest may either be a request for reconsideration or reinvestigation. A request for
reconsideration is a plea for a re-evaluation of an assessment on the basis of existing
records without need of additional evidence.
On the other hand, a request for
reinvestigation is 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 types of protests may involve questions of fact, or law or both.

Based on court decisions, this distinction is significant because a request for

reconsideration does not interrupt the running of the statute of limitations on the collection
of deficiency tax assessments. The running of the prescriptive period for collection of taxes
can only be suspended through a request for reinvestigation, and not through a request for
reconsideration. This is justified on the ground that a request for reconsideration is limited
to the evaluation of evidence already made available to the BIR, while a request for
reinvestigation requires the production of additional evidence by the taxpayer and the
evaluation thereof by the BIR, which, understandably, requires more time.
Nonetheless, the filing of a request for reinvestigation does not itself automatically suspend
the period within the deficiency taxes may be collected. The Tax Code requires that the
request for reinvestigation must be granted by the Commissioner in order that it suspends
the running of the prescriptive periods for the assessment and collection. In fact, it should
not be the taxpayer who should prove such fact. This is a matter which the BIR must
substantiate, especially so if denied by the taxpayer. If no written justifications are
available, this may be implied from the actions of the commissioner or his representatives.
Absent showing that the request for reinvestigation is granted by the Commissioner, the
running of the statute of limitations cannot be suspended. Thus, aside from proving the
type of protest filed by the taxpayer, the BIR must also show the request has been granted.
Taxpayers must, therefore, understand the significance of the difference between a request
for reconsideration and reinvestigation. Aside from the effects discussed in the column,
there are other differences which may affect the remedies available to the taxpayer. While
the type of protest may be deduced from the position stated by the taxpayer in the protest,
it is still important that this should be specified in the protest. Nonobservance of these rules
may result in undue denial of a basic remedy available to a taxpayer.