REMEDIES OF THE STATE A finding by the taxing authority that the taxpayer has

not paid the correct taxes.

1. What are Remedies?
The National Internal Revenue Code or Tax Code
o Provide solutions to the problems of the
Government in enforcing tax laws and
solutions to the problems of taxpayers
against unlawful enforcement or collection of
tax.
o These solutions are termed remedies ,its
basic purpose is to maintain equilibrium
between the interest of the state and
taxpayer.
2. What are the different remedies available to the
State and Taxpayer?
It is also a written notice to a taxpayer to the effect
that the amount stated therein is due and containing a
demand for the payment thereof.
5. Who has the burden of proof in pre-assessment
Proceedings?
In accordance with the doctrine of presumption of
regularity in the conduct of official functions of
government instrumentalities.
There is a presumption of correctness on the part of
the Commissioner of Internal revenue (CIR) ;thus the
onus probandi or burden of proof lies on the taxpayer.
6. When pre-assessment notice not required?

(Collection proceedings may initiate without

3. What are the administrative powers of the BIR? assessment notice)
a. when the finding for any deficiency tax is the
Remedies of Common Remedies of result of mathematical error in the
the State Remedies the Taxpayer computation of the tax as appearing on the
Available to face of the return; or
Both
b. When a discrepancy has been determined
I. Administrative between the tax withheld and the amount
Level actually remitted by the witholding agent; or
Assessment Compromise Protest

Collection Abatement Refund c. when a taxpayer who opted to claim refund

or tax credit of excess creditable witholding
II. Judicial Level tax for a taxable period was determined to
have carried over and automatically applied
Civil Appeal to CTA the same amount claimed against the
Suit/Action estimated tax liabilities for the taxable
quarter or quarters of the succeeding taxable
Criminal Suit/ TRO/ Injunction
year.
Action

Criminal Suits d. when the excise tax due on excisable has

Against Erring not been paid.
BIR Officials
e. when an article locally purchased or
a. Assessment and Collection of all internal imported by an exempt person, such as but
revenue taxes, fees and charges not limited to vehicles ,capital equipment
b. Enforcement of all forfeitures, penalties and ,machineries and spare parts ,has been sold
fines connected therewith ,traded or transferred to non-exempt
c. Execution of judgments in all cases decided persons.
in its favor by the Court of Tax Appeals(CTA)
and the ordinary courts 7.What are the administrative collection remedies
d. Give effect to and administer the supervisory of the government?
and police powers conferred to it by the
Code or other laws. 1. Distraint (actual or constructive)
2. Levy
4. What is an Assessment? 3. Tax lien
4. Forfeiture of property
 5. Suspension of business operations in
violation of VAT
6. Enforcement of administrative fine
The remedies of distraint and levy as well as collection
by civil and criminal actions may. In the discretion of
the Commissioner be pursued singly or independently
of each other or all of them simultaneously.
8.What is distraint?
It is the seizure by the government of personal
property, tangible or intangible to enforce the payment
of taxes.
9. What is the nature of the warrant of distraint or
levy?
The warrant is a summary procedure “forcing “the
taxpayer to pay.
13. Who shall seize and distraint personal
property (Actual Distraint)
Amount of delinquent tax is more than 1,ooo,ooo-
Commissioner or his duly authorized representatives
Amount of delinquent tax is 1,000,000 or less –
Revenue District Officer
14. What are the procedures for the actual
distraint or garnishment ?
1.Commencement of distraint proceedings by CIR or
Revenue District Officer
2. Issuance /service of the warrant of Distraint upon
the delinquent taxpayer
3.Posting of public auction sale notices in two (2)
conspicuous places in the locality

10. What are the two types of Distraint? 4.Public auction sale

1. Actual 15. When may a taxpayer property maybe placed

there is taking of possession of personal property under constructive distraint?
from the taxpayer by the government. If the taxpayer
1. Is retiring from any business subject to tax
2. Constructive 2. Intending to :
the owner is merely prohibited from disposing of -leave the Philippines
his property . -remove his property therefrom
-Hide or conceal his property
11. What are the requisites for the exercise of the 3. is performing any act tending to obstruct the
remedy of distraint or levy? proceeding for collecting the tax due or which maybe
1. Taxpayer must be delinquent (except in due from him.
constructive distraint ) in the payment of
taxes. 16. What are the procedures for the constructive
2. There must be a subsequent demand for its distraint of personal property?
payment (assessment) A. CIR serves the warrant o constructive distraint to
3. The taxpayer must fail to pay the tax at the the delinquent taxpayer
time required and B. Taxpayer must sign the receipt and obligate
4. The period within which to assess or collect himself to preserve the thing distraint
the tax has not yet prescribed C. Upon failure to sign a receipt
a. proceed to prepare a list of such property
12.What are the distinctions between actual and and
constructive Distraint? b. in the presence of two( 2) witnesses leave a
Actual Constructive copy thereof in the premises where the
Made only on the Made on the property of any property distrained is located , after which
property of a taxpayer, whether delinquent the said property shall be deemed to have
delinquent taxpayer or not been placed under constructive distraint.
There is taking of Taxpayer is merely
possession prohibited from disposing his 17. What is levy?
property It refers to the act of seizure of real property in order
Effected by leaving a Effected by requiring the to enforce the payment of taxes.
list of distrained taxpayer to sign a receipt of
property or by service the property or by the 18. What are the procedures for levy?
of a warrant of distraint revenue officer preparing 1. Prepare a Certificate of Levy
or garnishment and leaving a list of such 2. Issuance /serve notice to the taxpayer and
property Registry of Deeds
3. Advertisement of public auction
4. Public Auction Sale
19. What are the distinctions of distraint and levy?
Distraint Levy
Refers to personal Refers to real property
property
Forfeiture by the Forfeiture is authorized
government is not
provided
The taxpayer is not The right of redemption is
given the right of granted in case of real
redemption with respect property levied upon and
to distrained personal sold or forfeited to the
property government.
20. May property levied be redeemed?
Within I year from the date of sale ,the property maybe
redeemed by the delinquent taxpayer or anyone from
him, upon payment of taxes, penalties ,and interest
thereon from the date of delinquency to the date of sale
together with interest on purchase price at 15% per
annum from the date of sale to the date of redemption.
21. What is a tax lien?
It is a legal claim charge on the property either real or
personal established by law, as a security in default of
the payment of taxes. Generally, it attaches to the
property irrespective of ownership or transfer thereof.
22. What is the extent and nature of lien?
 The tax together with interest, penalties, and
costs that may accrue in addition thereto is a
lien upon all property and rights to property
belonging to the taxpayer.
 The lien shall not be valid against mortgagee,
purchaser, or judgment creditor until notice of
such lien shall be filed by the Commissioner
of Internal Revenue in the Office of the
Register of Deeds of the province or city
where the property of the taxpayer is situated.
 Lien attaches not only from the service of the
warrant of distraint but from the time the tax
became due and payable.
23. What is forfeiture?
 Divestiture of property distraint or levied
 If there is no bidder in the public sale or
 if the amount of the highest bid is insufficient
to pay the taxes, penalties and costs,
 the real property shall be forfeited to the
government.
 The effect is to transfer the title of a specific
thing from the owner to the government.
 NIRC and other laws administered by the BIR, where
24. What are the judicial remedies of the State?
A. Civil Actions
B. Criminal actions
25. What are civil actions?
These are actions instituted by the government to
collect internal revenue taxes. It is normally resorted
to:
A. when a tax is assessed but the assessment
becomes final and unappealable because
the taxpayer fails to file an administrative
protest with the CIR within 30 days from
receipt.
B. when a protest against assessment is filed
and a decision of the CIR was rendered but
the said decision becomes final, executory
and demandable for failure of the taxpayer
to appeal the decision to the CTA within 30
days from receipt of decision.
However, the CIR authorization is essential before
instituting a civil or criminal action.
26. Who has jurisdiction over civil actions?
A. COURT OF TAX APPEALS
Where the principal amount of taxes and fees ,
exclusive of charges and penalties claimed is One
million pesos and above . The CTA has a total of 9
magistrate divided into 3 division compose of 3
justices per division.
B. REGIONAL TRIAL COURT, MUNICIPAL TRIAL
COURT. METROPOLITAN TRIAL COURT
Where the principal amount of taxes and fees ,
exclusive of charges and penalties claimed is less
than one million pesos.
27. What are criminal actions?
In consonance with the Constitutional limitations, ”no
person shall be imprisoned for non-payment of debt or
poll tax”.
The CIR may initiate criminal suit against delinquent
taxpayer and maybe punished behind bars.
28. Who has jurisdiction over criminal actions?
A. COURT OF TAX APPEALS
On criminal offenses arising from violations of the
NIRC and other laws administered by the BIR, where
the principal amount of taxes and fees , exclusive of
charges and penalties claimed is One million pesos
and above.
B. REGIONAL TRIAL COURT, MUNICIPAL TRIAL
COURT, METROPOLITAN TRIAL COURT
On criminal offenses arising from violations of the
the principal amount of taxes and fees, exclusive of
charges and penalties claimed is less than One
million pesos or where there is no specified amount
claimed.

29. May criminal action be filed during the

pendency of an administrative protest in the BIR?
Yes, it is not a requirement for filing of criminal
complaint to have a precise computation and
assessment of the tax, since what is involved in the
criminal action is not the collection of tax but a
criminal prosecution for the violation of the NIRC.
REMEDIES OF THE TAXPAYER
1. What are the remedies of the taxpayer?
A. Administrative
-within the BIR
a. Protest
b. Refund
B. Judicial-with the courts
a. Appeal to the CTA
b. Temporary Restraining Order/Injunction from
CTA and
c. Filing criminal suit against erring BIR
Officials
2. What is a Protest?
A challenge against an assessment. Normally, a
taxpayer subject of an assessment will contradict or
repel the final demand of the BIR by filling a formal
letter address to the BIR Commissioner impugning the
validity of the Assessment made by stating clearly the
laws and the facts of his petition.
3.How is protest filed?
Filing a petition for reconsideration or reinvestigation
within 30 days from receipt of assessment with the CIR.
And within 60 days from filing of protest, all relevant
supporting documents should have been submitted ,
otherwise the assessment shall become FINAL –
cannot be disturbed.
4. What is a refund?
Remedy of a taxpayer in case of excessive or
erroneous payment of a tax with the BIR:
a. Tax is collected erroneously or illegally
b. Penalty is collected without authority
c. Sum collected is excessive.
5.What are the requisites of tax refund or tax
credit?
a. claim must be in writing
b. it must be filed with the CIR within 2 years
after the payment of the tax or penalty.
c. Show proof of payment.
6. What are the different judicial remedies
available to a taxpayer?
Civil Action:
1. Appeal to the Court of Tax Appeals-within 30
days from receipt of the decision on the
protest or from the lapse of 180 days due to
inaction of the Commissioner whichever
comes first.
2. action for damages against a revenue officer
by reason of any act done in the
performance of his official duty.
Criminal Action
a. filing of criminal complaint against erring BIR
officials and employees
b. Injunction –when the CTA in its opinion the
collection by the BIR may jeopardize
taxpayer.
7.When may the CTA issue a TRO/Injunction
against a collection of a Tax?
General Rule:
No action shall suspend the collection payment, levy
or distraint and or sale of any property of the
taxpayer.
Exception:
The CTA is empowered to suspend the collection of
internal revenue taxes and custom duties only when
there was a:
1. Showing that collection of the tax may jeopardize the
interest of the government and or the taxpayer.
2. Deposit of the amount claimed or file a surety bond
for not more than double the amount of tax with the
court when required and
3. showing by taxpayer that appeal is not frivolous nor
dilatory.
8. May the government be held liable for interest
on tax refunds?
Government cannot be required to pay interest on
taxes refunded to the taxpayer in the absence of
statutory provision clearly or expressly directing or
authorizing such payment.
9. What is a tax credit certificate?
a. In lieu of cash payment tax warrants or
certificate maybe applied against any
internal revenue tax except withholding
taxes.
b. Original copy is surrendered to the revenue
office
c. Must be used within a period of 5 years.
LIMITATIONS TO REMEDIES
1. What are the limitations to the assessment
power of the state?
Prescription
o Through the lapse of time, a right may
either be extinguished or acquired.
o The power of the state to
assess(investigate /audit) taxpayer shall
prescribe after three years (3) from the
date the return is due (required by law
or filed, whichever is later.
Exceptions:
1.Failure to file a return
Ten (10) years from the date of the
discovery of the omission to file a return
2. False or fraudulent return with the intention to
evade the tax
Ten (10) years from the date of the
discovery of the falsity or fraud.
2. When will the prescriptive period commence in
case of an amended return?
o If the amended return is substantially different
from the original return, the prescriptive
period shall be counted from the filing of the
amended return.
o But the said period shall run form the filing of
the original return if the same is sufficiently
complete to enable the commissioner to make
proper assessment.
When substantive:
o Substantial under-declaration
(exceeding 30% of that declared) of
taxable sales, receipts or income or a
substantial overstatement (exceeding
30% of actual deductions )of deductions
. denial decision.
3. What is the limitation to the collection power of
the State?
The State’s power to collect tax shall prescribe within:
o 5 years from assessment or within
period for collection agreed upon in
writing before expiration of the 5- year
period
o 10 years without assessment in case of
false or fraudulent return with intent to
evade or failure to file return.
4. What are the grounds for suspension of the
running of Statute of limitations?
A. when the CIR is prohibited (by TRO) from
making the assessment or beginning the
distraint or levy or a proceeding in court and
for sixty (60) days thereafter.
B. when the taxpayer requests for a
reconsideration which is granted by the CIR.
C. when the taxpayer cannot be located in the
address given by him in the return, unless he
informs the CIR of any change in his
address.
D. when the warrant of distraint or levy is duly
served, and no property is located and
E. When the taxpayer is out of the country.
5. What are the prescriptive periods for the
violation of any provision of the Tax
Code?
Should be filed within Five (5) years from the
1. day of the commission of the
violation of the law and if the same be not
known,
2. from the discovery thereof and the
institution of the judicial proceedings for its
investigation and punishment.
6. What are the different prescriptive periods
for protest?
A. A. A protest must be filed within 30 days
from receipt of assessment
B. B. Submit supporting documents within 60
days from date of the filing of the
protest.
C. If protest is denied
D. Appeal the matter to the division of the Court
of Tax Appeals(CTA) within 30 days from
receipt of final decision of CIR or if the CIR
fails to act on the protest within 180 days
from date of submission of evidentiary
document by taxpayer , whichever comes
first.
E. D. Appeal within 15 days to the CTA en banc
from receipt of the Division of the CTA
F. Appeal to the Supreme Court within 15 days
from receipt of the CTA en banc decision.
7. What are the prescriptive periods for refund?
A. claim for refund must be made within 2 years
from date of payment.
B. In case of the CIR’s denial of the claim for
refund , the 30-day period to appeal with the
CTA must be within the 2- year pre-emptory
period for instituting judicial action.
COMMON REMEDIES
Between the State and Taxpayer
1. What is a compromise?
Mutual concession between the taxpayer and the
government in settling a tax deficiency amicably.
2. What are the requisites for compromise?
A. The taxpayer must have a tax liability.
B. There must be an offer (by the taxpayer of an
amount to be paid by the taxpayer)
C. here must be an acceptance (by the
Commissioner or taxpayer as the case maybe )
of the offer in the settlement of the original claim.
3. What cases maybe compromised?
A. Delinquent actions
B. cases under administrative protest
C. Civil tax cases being disputed before the
courts
D. Collection cases filed in courts
E. Criminal violations , other than those already
filed in court or those involving criminal tax
frauds.
4. What are the grounds for compromise?
A. A Reasonable doubt as to the validity of the
claim against taxpayer exists; or
1. the delinquent account or disputed
assessment is one resulting from a jeopardy
assessment.
2. The assessment seems to be arbitrary in
nature, appearing to be based on
presumptions, and there is a reason to
believe that it is lacking in legal or factual
basis or
3. The taxpayer failed to file and administrative
protest on account of the alleged failure to
receive notice of assessment or preliminary
assessment and there is no reason to believe
that it is lacking in legal and or factual basis or
4. The taxpayer failed to file a request for
reinvestigation /reconsideration within 30
days from receipt of the final assessment
notice and there is reason to believe that it is
lacking in legal and or factual basis or
5. The taxpayer failed to elevate to the CTA an
adverse decision of the Commissioner , or his
duly authorized representative , in some
cases , within 30 days from receipt thereof
and there is a reason to believe that it is
lacking in legal and or factual basis; or
B. The financial position of the taxpayer
demonstrates a clear inability to pay the
assessed tax.
1. the corporation ceased operation or is
already dissolved or
2. the taxpayer is suffering from surplus or
earning deficit resulting to impairment in the
original capital by at least 50% or
3. the taxpayer is suffering from a net worth
deficit computed by deducting total liabilities from
total assets , taken from the latest audited
financial statement or
4. the taxpayer is a compensation earner with no
other source of income and family’s gross
monthly compensation does not exceed
(10,500/month if single; 21,000/month if
married)and that it appears that the taxapayer
possesses no other leviable /distrainable assets
other than his family home or
5. the taxpayer is a compensation earner with no
other source of income and family’s gross
monthly compensation does not exceed
(10,500/month if single; 21,000/month if
married)and that it appears that the taxpayer
possesses no other leviable /distrainable assets
other than his family home or
5. What are the Minimum Compromise rates?
o In case of financial capacity:
Minimum Compromise ate=10% of the basic
assessed tax
o Other cases :
MCR=40% of the basic assessed tax
6.What are the remedies in case the taxpayer
refuses or fails to abide the tax compromise?
A. Enforce the compromise by court action.
B. If it is judicial compromise .it can be enforced
by mere execution.
A Judicial Compromise
 -is one where a decision based on
the compromise agreement is rendered by
the court on request of the parties.

Compromise Penalty

It is an amount of money which the taxpayer pays

to compromise a tax violation.

This is paid in lieu of criminal prosecution.

8. What is abatement?

A tax maybe cancelled or obliterated upon

authority of the BIR under certain circumstances.

9. What are the grounds for abatement?

A. The tax or any portion thereof appears to be

unjustly or excessively assessed :

1. when the filing of the return /payment is made

at the wrong venue;

2. when the taxpayer’s mistake in payment of his

tax is due to erroneous written official advice of a
revenue officer;

3. when the taxpayer fails to file the return and

pay the tax on time due to substantial losses from

o prolonged labor dispute

o Force majeure
o Legitimate business reverses

provided ,however ,the abatement shall

only cover the surcharge and the
interest imposed under Section 249 of
the National Internal Revenue Code

4. When the assessment is brought about or the

result of taxpayers’ non-compliance with the law due
to a difficult interpretation of said law.

5. when the taxpayer fails to file the return and pay

the correct tax on time due to circumstances beyond
his control , provided , however ,the abatement shall
only cover the surcharge and the interest imposed
under Sec 249 of the Code.

B. he administration and collection costs involved

do not justify the collection of the amount due.

C. The Commission may also , even without a

claim , therefore, refund or credit any tax where
on the face of return upon which payment was
made such payment appears clearly to have
been erroneously paid.