Amendment to Due Process in Deficiency Tax Assessment
- Deleted the requirement for a Notice of Informal Conference.
- Provides new procedural rules for issuance of deficiency tax assessments.
Preliminary Assessment Notice (PAN)
- Issued after review by the Commissioner or authorized representative if sufficient basis exists for deficiency tax.
- PAN must detail facts, laws, rules, or jurisprudence supporting the proposed assessment.
- Taxpayer has 15 days to respond; failure to respond leads to issuance of Formal Letter of Demand and Final Assessment Notice (FLD/FAN).
- If taxpayer disagrees and responds within 15 days, FLD/FAN issued within 15 days after response.
Exceptions to the Prior Notice (PAN) Requirement
- No PAN required in the following cases:
- Mathematical errors in tax computation on the return.
- Discrepancy between tax withheld and amount remitted.
- Automatic application of excess creditable withholding tax against estimated tax liabilities.
- Unpaid excise tax on excisable articles.
- Transfer/sale of articles by exempt persons to non-exempt persons.
- FLD/FAN issued outright in these cases.
Formal Letter of Demand and Final Assessment Notice (FLD/FAN)
- Issued by Commissioner or authorized representative.
- Must state facts and legal basis for assessment or it is void.
Disputed Assessment—Administrative Protest and Appeal
- Taxpayer or authorized representative may protest within 30 days of receipt of FLD/FAN.
- Types of protest:
- Request for Reconsideration: Reevaluation based on existing records, involves fact or law.
- Request for Reinvestigation: Reevaluation based on new or additional evidence.
- Protest must state type, date of assessment notice, and legal basis; else considered void.
- Disputed and undisputed issues treated separately: undisputed issues become final and demandable.
- For reinvestigation, supporting documents must be filed within 60 days; no time limit for reconsideration.
- Failure to protest within 30 days renders assessment final and demandable.
- No reconsideration or reinvestigation allowed if assessment is final.
Denial of Protest and Appeal Options
- If protest denied in whole or part:
- Appeal to Court of Tax Appeals (CTA) within 30 days;
- Or file request for reconsideration to Commissioner within 30 days (no reinvestigation allowed).
- If no action within 180 days:
- Taxpayer may appeal to CTA within 30 days after 180-day period or await decision and appeal thereafter.
- Election between two options is mutually exclusive.
Final Decision on Disputed Assessment (FDDA)
- Commissioner’s decision must state facts and legal basis, and declare it final.
- Decision void if these conditions not met.
Modes of Service of Notices
- Personal service at registered or known address.
- Substituted service when party is absent:
- Leave notice with clerk or responsible person at place of business/residence.
- If no one found, notice given to barangay official in presence of disinterested witnesses.
- Service by mail:
- Registered mail with return instructions.
- Professional courier service acceptable; ordinary mail as last resort.
- Written report under oath required for service.
- Service to duly appointed tax agent/practitioner deemed service to taxpayer.
Amendment on Late Payment Penalties
- Deficiency tax must be paid within prescribed time; otherwise, delinquency interest applies.
- Detailed illustrations provided for computing surcharges, deficiency and delinquency interests.
- Illustrations cover scenarios of late payment without protest, with protest upheld late, and with fraudulent/false returns.
Repealing Clause
- Any inconsistent rules or parts thereof are repealed, amended, or modified accordingly.
Effectivity
- Regulations take effect 15 days after publication in a newspaper of general circulation.