Tax Law Statute of Limitations and Remedies

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Questions and Answers

What is the purpose of the certificate prepared by the internal revenue officer?

To indicate the taxpayer's debt and produce legal enforcement. (correct)

To authenticate the taxpayer's identity.

To provide a summary of tax regulations.

To notify third parties about the taxpayer's status.

What action is taken to effect a levy on real property?

A payment plan is established with the taxpayer.

The taxpayer is informed of potential penalties.

A verbal warning is issued to the taxpayer.

A description of the property is written on the certificate. (correct)

Who receives the written notice of the levy?

The taxpayer and the Register of Deeds. (correct)

Only the Register of Deeds.

The taxpayer's attorney only.

Only the taxpayer.

What happens if the warrant of levy on real property is not issued with the warrant of distraint?

Levy on real property must occur within thirty days after distraint. Signup and view all the answers

What must the levying officer submit within ten days of receiving the warrant?

A report on any levy executed. Signup and view all the answers

What authority does the Commissioner have regarding warrants of levy?

To lift them based on recommendations. Signup and view all the answers

What is the consequence if the taxpayer's personal property is insufficient to cover tax delinquency?

The levy on real property must be pursued. Signup and view all the answers

In addition to the taxpayer, whom else may be served written notice of the levy?

The taxpayer's agents or business manager. Signup and view all the answers

What is the typical period within which the BIR can assess and collect taxes?

3 years Signup and view all the answers

When is the prescriptive period for the assessment of a false or fraudulent tax return extended to ten years?

When there is intent to evade tax Signup and view all the answers

What does Section 222 of the Tax Code state about the collection of taxes?

It generally provides a 5-year prescriptive period for tax collections. Signup and view all the answers

Which of the following is NOT a civil remedy for the collection of delinquent taxes?

Criminal action Signup and view all the answers

What is the minimum amount of tax for which distraint and levy can be pursued?

P100 Signup and view all the answers

In the case of a criminal action for tax collection, what must also be imposed by the judgment?

Payment of the taxes subject to the criminal case Signup and view all the answers

What can be included under the remedies for the collection of internal revenue taxes?

Distraint of goods and personal property Signup and view all the answers

What happens if a taxpayer fails to file a return?

The assessment period is extended to 10 years. Signup and view all the answers

What is the minimum notice period before the sale of distrained property can occur?

Twenty (20) days Signup and view all the answers

Where must at least one notification about the sale of distrained property be posted?

At the Office of the Mayor Signup and view all the answers

Who is responsible for executing a bill of sale for stocks and securities sold during a distraint?

The officer making the sale Signup and view all the answers

What happens to any surplus amount realized from the sale of distrained property?

It is returned to the property owner Signup and view all the answers

How are goods and other personal property sold during the distraint process?

At public auction to the highest bidder Signup and view all the answers

Which entity must the officer furnish a copy of the bill of sale for stocks or other securities?

The issuing corporation, company, or association Signup and view all the answers

Who prescribes the rules and regulations for the distraint process?

The Secretary of Finance Signup and view all the answers

What type of sale can occur for stocks and other securities when authorized?

Through licensed commodity or stock exchanges Signup and view all the answers

What must an officer serving a warrant of distraint do with the account of goods distrained?

Leave a copy with someone of suitable age and discretion Signup and view all the answers

Which of the following parties must receive a copy of the warrant of distraint for stocks and securities?

The president or responsible officer of the issuing corporation Signup and view all the answers

Who receives the warrant of distraint for debts and credits?

An agent of the person owing the debts Signup and view all the answers

What happens to bank accounts upon receipt of a warrant of garnishment?

The bank must turn over sufficient funds to the Commissioner Signup and view all the answers

What expenses are chargeable upon each seizure and sale?

Actual expenses of seizure and preservation of the property Signup and view all the answers

What information must be included in the account of goods distrained?

A statement of the sum demanded Signup and view all the answers

Within what time frame can taxes be assessed for a false or fraudulent return?

Ten years after the discovery Signup and view all the answers

If both the Commissioner and taxpayer agree in writing to extend the assessment period, what can happen?

The tax may be assessed within the agreed period Signup and view all the answers

What authority does the warrant of distraint provide to the person holding debts or credits?

To pay the amount owed to the Commissioner Signup and view all the answers

Which of the following is NOT required after serving a warrant of distraint?

Notifying the police of the distraint Signup and view all the answers

How long after the assessment of a tax can it be collected by distraint or levy?

Within five years following the assessment Signup and view all the answers

When executing a warrant of distraint, who is responsible for paying the debts or credits to the Commissioner?

The taxpayer or their responsible party Signup and view all the answers

What happens if a fraud assessment becomes final and executory?

Fraud is acknowledged in civil or criminal actions Signup and view all the answers

What can be done with an internal revenue tax that has been assessed and is within the agreed-upon period?

It may be collected by distraint or levy Signup and view all the answers

What is necessary for a written agreement to extend the assessment period?

It must be signed within the original assessment period Signup and view all the answers

In what circumstance can a tax be collected beyond the standard period?

If both parties agree to a new assessment period Signup and view all the answers

Study Notes

Statute of Limitations

The BIR (Bureau of Internal Revenue) has three years to assess taxes from the later of:
- The last day for filing the return
- The day the return was filed
For false or fraudulent returns or failure to file a return, the period is extended to ten years from the discovery of the falsity, fraud, or omission.
The collection of taxes has a five-year prescriptive period.

Remedies for the Collection of Delinquent Taxes

Civil Remedies:
- Distraint of goods, chattels, effects, and other personal property, including stocks, securities, debts, credits, bank accounts, and interests in real property.
- Levy on real property.
- Civil or criminal action
Distraint and Levy:
- Either remedy can be pursued simultaneously at the discretion of the authorities.
- Distraint and levy are not available for tax amounts below One hundred pesos (P100).
Criminal Action:
- The judgment in a criminal case includes ordering payment of the delinquent taxes as determined by the Commissioner.

Summary Remedies

Levy on Real Property:
- A description of the property is written on the certificate to execute the levy.
- The Register of Deeds and the delinquent taxpayer (or their agent/representative) are notified of the levy.
- If the warrant of levy on real property is not issued with the distraint warrant, and the taxpayer’s personal property is insufficient to cover the delinquency, the Commissioner has 30 days to proceed with the levy on the taxpayer’s real property after the distraint.
- A report on the levy must be submitted to the Commissioner within ten days of receiving the warrant.
- The Commissioner can lift levy warrants subject to rules and regulations.

Procedure for Distraint and Garnishment

Distraint:
- The distraining officer creates an account of the goods, chattels, effects, or personal property seized, leaving a copy with the owner or the person from whom the property was taken.
- This list includes the demand amount, the time, and place of sale.
Stocks and Securities:
- Distraint occurs by serving a copy of the warrant upon the taxpayer and the corporation’s responsible officer.
Debts and Credits:
- Distraint of debts and credits occurs by serving a copy of the warrant on the person holding the debt or credits.
Bank Accounts:
- A warrant of garnishment is served upon the bank and the taxpayer.
- The bank must then transfer sufficient funds from the taxpayer’s account to cover the government's claim.

Sale of Property Distrained and Disposition of the Proceeds

Sale Notice:
- The Revenue District Officer (or their authorized representative) gives notice of the time, place, and sale of the distrained property in at least two public places in the municipality or city where the distraint occurred.
- This notice must be posted at the city or municipality's Mayor's Office.
Sale:
- The sale is held at the time and place specified in the notice.
- The property is sold at public auction to the highest bidder for cash or, with the Commissioner’s approval, through licensed commodity or stock exchanges.
Stocks and Securities:
- A bill of sale is executed for the buyer, and a copy is furnished to the company that issued the stocks or securities.
- The corporation, company, or association makes the necessary entries, transfers the securities into the buyer’s name, and issues new certificates if required.
Proceeds:
- Any remaining proceeds after covering the claim and expenses are returned to the owner of the property sold.
- The expenses are limited to the actual expenses of seizure and preservation of the property and do not include any fees for the local internal revenue officer or their deputy.

Exceptions to the Period of Limitation of Assessment and Collection of Taxes

False or Fraudulent Return or Failure to File:
- Tax may be assessed or legal proceedings may be initiated without assessment within ten years of discovering the falsity, fraud, or omission.
Agreement:
- When the Commissioner and the taxpayer agree in writing to allow assessment after the prescribed period, the assessment can be made within the agreed-upon time.
- This agreement can be extended by subsequent written agreements.
Collection of Taxes:
- Any assessed tax within the limitation period can be collected by distraint, levy, or legal proceedings within five years of the assessment.
Agreed Upon Period:
- Any assessed tax within the agreed-upon period can be collected by distraint, levy, or legal proceedings within the agreed-upon period.
- Subsequent written agreements can extend the agreed-upon period.

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Description

This quiz covers the statute of limitations for tax assessments and the remedies available for the collection of delinquent taxes. You will learn about the timeframes for assessments, civil remedies, and the implications of criminal actions in tax collection. Test your knowledge on these important tax law concepts.