Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 18-2013)
The main purpose is to amend certain sections of Revenue Regulations No. 12-99 relative to the due process requirement in the issuance of a deficiency tax assessment under the National Internal Revenue Code of 1997, as amended.
A PAN is a notice issued after review and evaluation by the Commissioner or authorized representative showing in detail the facts and law upon which a proposed assessment for deficiency tax or taxes is based. The taxpayer has 15 days from receipt to respond; failure to respond results in issuance of a Formal Letter of Demand and Final Assessment Notice (FLD/FAN).
A PAN is not required if the deficiency tax arises from (i) mathematical errors in the tax return, (ii) discrepancies between tax withheld and remitted, (iii) claimed excess withholding tax credit automatically applied against estimated taxes, (iv) unpaid excise tax on excisable articles, or (v) sale or transfer of exempt articles to non-exempt persons. In these cases, an FLD/FAN is issued outright.
The FLD/FAN must state the facts, laws, rules, regulations, or jurisprudence on which the assessment is based; otherwise, the assessment is void.
The taxpayer or authorized representative has 30 days from receipt of the FLD/FAN to file a written protest.
(i) Request for reconsideration - reevaluation based on existing records without new evidence; (ii) Request for reinvestigation - reevaluation based on newly discovered or additional evidence.
The assessment becomes final, executory, and demandable, barring the taxpayer from disputing the correctness of the assessment further.
Notices may be served by personal service, substituted service (e.g., leaving notice with a clerk or person in charge, or barangay official with witnesses), or by mail (registered or courier). Proper documentation and affidavit of service are required.
When the deficiency tax assessed is not paid within the time prescribed in the notice and demand, the taxpayer is liable for delinquency interest as provided under Section 249 (C)(3) of the National Internal Revenue Code.
A motion for reconsideration of the Commissioner's denial of the protest does not toll or extend the 30-day period to appeal to the CTA.
If the Commissioner or authorized representative does not act on the protest within 180 days, the taxpayer may either appeal to the CTA within 30 days after the period lapses or wait for the final decision of the Commissioner and then appeal within 30 days of receipt.
It means that the taxpayer is barred from disputing the assessment further and is required to pay the deficiency tax with applicable penalties and interests.
A 50% surcharge on the deficiency tax is imposed for filing fraudulent or false returns, plus 20% deficiency interest annually on the unpaid deficiency tax.