Amending certain sections of Revenue Regulation (RR) No. 12-99 relative to the due process requirement in the issuance of a deficiency tax assessment

28 November 2013

The Commissioner of Internal Revenue (“CIR”) has issued RR 18-2013 dated 28 November 2013 to amend provisions of RR No. 12-99.

The salient features of the RR are as follows:

1. The Notice for Informal Conference (NIC) stage has been deleted from the procedure of issuing deficiency tax assessment.

2. The BIR would issue a Preliminary Assessment Notice (PAN) if after its audit of the taxpayer’s books and accounts there is sufficient basis to assess the taxpayer for any deficiency tax or taxes.

3. A Formal Letter of Demand (FLD) and Final Assessment Notice (FAN) will be issued if the assessed taxpayer fails to respond within 15 days from the receipt of the PAN or 15 days from filing/submission of the taxpayer’s response.

4. The taxpayer must file a protest letter within 30 days from receipt of the FLD/FAN otherwise the assessment will be final and executory. A taxpayer must state whether the protest letter is a written request for reconsideration or written request for reinvestigation, whichever applies. (please refer to the following items below)

Request for reconsideration is a plea for re-evaluation of an assessment on the basis of existing records/evidences which were already presented before. Since there is no need for additional evidences, then the 60-day rule for submission of supporting document in this course of action does not apply.

Request for re-investigation is a plea for re-evaluation of an assessment on the merits of newly discovered documents/evidences that a taxpayer intends to present on the reinvestigation. The taxpayer has 60 days from the filing of the protest to submit its supporting documents.

In cases where there are several findings, a collection letter will be issued with regard to those tax deficiency findings which are not disputed or protested by the taxpayer as the same shall be considered final, executory and demandable or those disputed/protested items where the taxpayer fails to state the facts, the applicable law, rules and regulations, or jurisprudence in support of his protest. The collection letter shall include payment of the said deficiency tax, inclusive of the applicable surcharge and/or interest.

5. A taxpayer has 30 days from receipt of the decision denying the protest to elevate his/her case to the Court of Tax Appeals (CTA) or to appeal the same to the Commissioner, if the denial was made by the Commissioner’s duly authorized representative, otherwise the decision denying the taxpayer’s protest becomes final.

6. On the other hand, if the protest is not acted upon by the duly authorized representative of the Commissioner after 180 days from the date of filing of the protest in case of a request for reconsideration; or from date of submission by the taxpayer of the required documents in case of a request for reinvestigation, then the taxpayer may appeal to the CTA within 30 days after the 180 days or await the final decision of the duly authorized representative of the Commissioner.

7. The option of the taxpayer to appeal to the CTA or to wait for the Commissioner’s decision are mutually exclusive, the resort to an option prohibits the application of the other.

8. The RR also contains certain amendments on the modes of procedures in computing for the tax and/or applicable surcharge. A delinquency interest shall be imposed for late payment of the deficiency tax assessed.

The provisions of this regulation shall take effect after 15 days following publication in any newspaper of general circulation.