Clarifying Certain Issues Relative to Due Process Requirement in the Issuance of a Deficiency Tax Assessment Pursuant to Revenue Regulations (RR) No. 12-99, as amended by RR 18-2013

18 February 2014

The Commissioner of Internal Revenue has issued Revenue Memorandum Circular No. 11-2014 (“RMC”) clarifying certain issues relative to the amendments introduced by RR 18-2013 on the issuance of a deficiency tax assessment.

1. The term “duly authorized representative” of the Commissioner of Internal Revenue (CIR) who may issue the Preliminary Assessment Notice (PAN), Formal Letter of Demand/Final Assessment Notice (FLD/FAN) and Final Decision on Disputed Assessment (FDDA) refers to Revenue Regional Directors, Assistant Commissioner-Large Taxpayers Service, and Assistant Commissioner-Enforcement and Advocacy Service.

2. Taxpayers shall submit their responses to the PAN and protests (requests for reconsideration / reinvestigation) to the FLD/FAN with the duly authorized representative of the CIR who signed the PAN and FLD/FAN in accordance with RMC No. 39-2013.

3. Protests in the nature of requests for reconsideration of taxpayers elevated to the CIR arising from inactions or adverse decisions of the “duly authorized representatives” shall be filed with the Office of the CIR.

4. Prior to the issuance of the PAN, the taxpayer may be allowed to make voluntary payments of probable deficiency taxes and penalties.

5. An FLD/FAN issued reiterating the immediate payment of deficiency taxes and penalties previously made in the PAN is a denial of the response to the PAN. A final demand letter for payment of delinquent taxes may be considered a decision on a disputed assessment.

6. An FLD/FAN issued beyond 15 days from filing/submission of the taxpayer’s response to the PAN shall be valid, provided the same is issued within the period of limitation to assess taxes. However, non-observance of the 15-day period shall constitute an administrative infraction and revenue officers who caused the delay shall be subject to administrative sanctions.

7. The failure of the taxpayer who requested for a reinvestigation to submit all relevant supporting documents within the 60- day period shall render the FLD/FAN “final” by operation of law.

8. The notice (PAN/FLD/FAN/FDDA) shall first be served to the taxpayer’s registered address before the same may be served to the taxpayer’s known address, or in the alternative, to the taxpayer’s registered address and known address simultaneously.

This circular is effective immediately.