Opportunity to protest
Depriving taxpayers of the opportunity to protest tax assessments is a clear violation of due process.
Published in Daily Tribune on July 31, 2020
by: Glorydee Comparativo
Amid the heavy toll brought by the COVID-19 pandemic on our economy, the government must ramp up tax collection to defray the cost and expense of running the country. This effort includes Bureau of Internal Revenue (BIR) tax assessments, which taxpayers may fail to timely protest because of government-imposed quarantine.
Depriving taxpayers of the opportunity to protest tax assessments is a clear violation of due process. To balance the scale between the power to tax and taxpayers’ right to due process during this pandemic, Congress enacted Republic Act (RA) 11469, also known as the Bayanihan to Heal as One Act. Section 4(z) of RA 11469, extends the deadline for payments and filing of documents and requisite submissions to the BIR.
Ordinarily, BIR tax assessments must be made within three years from the last day prescribed by law for filing tax returns or from the day they are actually filed, whichever is later, except in tax fraud cases. The tax assessment process begins with the issuance of a Letter of Authority (LoA) to the taxpayer. It must be served within 30 days from the LoA’s date of issuance. Otherwise, it becomes null and void per Revenue Audit Memorandum Order 01-00. After the actual examination of the taxpayer’s records, the BIR shall issue a Notice of Informal Conference (NIC) to the taxpayer informing him of the audit findings. This NIC requirement was reinstated in 2018 per Revenue Regulation (RR) 7-2018.
If a taxpayer fails to respond to the NIC, or if the response made is found unacceptable, the BIR issues a Preliminary Assessment Notice (PAN) detailing the audit findings. If the taxpayer disagrees with BIR’s findings, the taxpayer may object to it in writing within 15 days from receipt of the PAN. Should the BIR reject the taxpayer’s protest, it will issue a Final Assessment Notice (FAN) or Final Letter of Demand (FLD). The FAN/FLD may be protested by filing a request for reconsideration or reinvestigation within 30 days from receipt thereof. If it is a request for reinvestigation, the taxpayers should submit all documents supporting the protest within 60 days from filing the protest.
Should the BIR fail to act on the taxpayer’s protest or issue a Final Decision on Disputed Assessment (FDDA) within 180 days from submission of supporting documents, the taxpayer may file a request for reconsideration with the Office of the BIR Commissioner or appeal to the Court of Tax Appeals (CTA) within 30 days from the lapse of 180-day period or from receipt of the FDDA. If the taxpayer fails to request a reconsideration or appeal to the CTA within the allowable period, the audit findings in the FAN/FLD (for BIR’s inaction) or FDDA shall become final, executory and demandable.
Due to the prevailing situation, however, replies to and submissions on tax assessments that were due on 16 March 2020 onward were given a reprieve. RR 11-2020, amending Section 2 of RR 10-2020 and RR 7-2020, extended the deadline for filing replies and submissions falling due during the quarantine by 30 days from the date the quarantine is lifted. RR 12-2020 further defines “quarantine” as any announcement by the National Government resulting in limited operations and mobility including, but not limited to, community quarantine, enhanced community quarantine and modified enhanced community quarantine.
Accordingly, taxpayers with pending tax assessments, which ordinarily may no longer be protested, may still file their protest since correspondences, protests and documents that need to be filed/submitted during quarantine may now be filed within 30 days from the date of the lifting of quarantine. This measure is enhanced by BIR Revenue Memorandum Circular 34-2020, which provides for a 60-day suspension of the running of the Statute of Limitations with respect to the issuance and service of assessment notices, warrants and enforcement and/or collection of deficiency taxes.
***
Atty. Comparativo is an Associate of Parker Faustino Pagayatan Law Offices.
Glorydee obtained her Juris Doctor degree from Centro Escolar University in 2016. Apart from being a lawyer, she is likewise a Certified Public Accountant. While studying law, she served as a Financial/Reports Analyst for United Coconut Planters Bank. Her practice areas include corporate law and compliance, taxation, civil, criminal and administrative litigation, labor, immigration, property and family law.
