BIR Mission & Responsibilities PDF

BIR MISSION "We collect taxes through just enforcement of tax laws for nation-building and the upliftment of the lives of Filipinos." 103 BIR Aspiration 2028 RMC 2-2024; formerly referred to as BIR Vision "By 2028, the BIR is highly digital, pr...

BIR MISSION "We collect taxes through just enforcement of tax laws for nation-building and the upliftment of the lives of Filipinos." 103 BIR Aspiration 2028 RMC 2-2024; formerly referred to as BIR Vision "By 2028, the BIR is highly digital, propelled by empowered Revenuers with integrity, providing excellent services aligned with international tax standards." 104 Powers of the Commissioner of Internal Revenue Interpret tax laws and decide tax cases. Obtain information, summon, examine, and take testimony of persons in ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance. Make assessments and prescribe additional requirements for tax administration and enforcement. Compromise, abate and refund or credit taxes. Make arrests and seizures for violation of any penal law, rules and regulations administered by the BIR. 105 Powers of the Commissioner of Internal Revenue Assign internal revenue officers to establishments where articles subject to excise tax are produced or kept. Assign or re-assign revenue officers and employees of the BIR to other or special duties connected with the enforcement or administration of revenue laws as the exigencies of the service may require, subject to the rules promulgated by the Civil Service Commission and the Secretary of Finance. Suspend business operations and temporarily close the business establishments of any person for violations of certain provisions of the NIRC. Enter any house, building, or place where articles subject to tax are produced or kept, or are believed to be carrying articles on which excise tax has not been paid. 106 Powers of the Commissioner of Internal Revenue Detain any package containing or supposed to contain articles subject to excise tax that are believed to be illegally removed from place of production or customs custody. Administer oath and take testimony related to the investigation conducted in matters within the jurisdiction of the BIR. Enforce civil remedies and statutory penalties for the collection of delinquent taxes. Recommend to the Secretary of Finance the promulgation of rules and regulations for the effective enforcement of the provisions of the tax laws. 107 Powers of the Commissioner of Internal Revenue Delegate powers to subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations to be promulgated by the Secretary of Finance, upon recommendation of the CIR, except the following: o Power to recommend and implement rules and regulations by the Secretary of Finance. o Power to issue rulings of first impressions or to reverse and revoke, or modify any existing ruling of the BIR. o Power to compromise or abate any tax liability except assessments issued by regional offices involving deficiency taxes of Five Hundred Thousand Pesos (P500,000) or less, criminal case for violations of the NIRC or a finding of prima facie fraud discovered by the regional and district offices. 108 Duties of the Commissioner of Internal Revenue Ensure the provision and distribution of forms, receipts, certificates and applications and acknowledgment of payment of taxes. Prescribe, provide, and distribute to the proper officials the requisite licenses, internal revenue stamps, labels, all other forms, certificates, bonds, records, invoices, books, receipts, instruments, applications, and apparatus used in tax administration. Acknowledge receipt of payment of any tax made expressing the amount paid and the particular account for which such payment was made. Divide the Philippines into such number of revenue districts as may from time to time be required for administrative purposes, subject for approval of the Secretary of Finance. 109 Duties of the Commissioner of Internal Revenue Prepare Annual Report containing detailed statements of the collections of the BIR with specifications of the sources of revenue by tax type, manner of payment, revenue region, and industry group, and its disbursements by classes of expenditures. Furnish appropriate Committee of Congress, in aid of legislation, pertinent information such as industry audits, collection performance data, status reports in criminal actions initiated against persons, and taxpayer’s return. Submit pertinent information report required by Congressional Oversight Committee every six (6) months of each calendar year. 110 Assessment Definition Assessment is the official action of an authorized internal revenue officer in ascertaining the amount of tax due from a taxpayer. It may be a notice to the effect that the amount stated therein is due from the taxpayer as a tax with a demand for payment of the tax or deficiency stated therein. The action necessarily involves: Determination and computation of the sum due; Notification to the taxpayer; and Issuance of a demand notice (simultaneously with or sometimes after, the tax deficiency notice). 111 Assessment Classifications 1. Self – Assessment 2. Deficiency Assessment 3. Illegal and Void Assessment 4. Erroneous Assessment 5. Disputed Assessment 112 Principles Governing Tax Assessment Assessments are prima facie, presumed correct and made in good faith. Assessment should not be based on presumptions no matter how logical the presumptions might be. Assessment is discretionary on the part of the Commissioner. The authority vested in the Commissioner to assess taxes may be delegated. Assessment must be directed to the right party. 113  Means Employed in the Assessment of Taxes Examination of returns and determination of tax due; Use of best evidence obtainable; Authority to conduct inventory-taking, surveillance and prescribe presumptive gross sales and receipts; Authority to terminate taxable period; Authority to prescribe real property values; Authority to inquire into bank deposit accounts; Authority to accredit and register tax agents; and Authority to prescribe additional procedural or documentary requirements. 114 Prescriptive Periods for the Right to Assess General rule – internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall begin after the expiration of such period. However, in case where a return is filed beyond the period prescribed by law, the three-year period shall be counted from the day the return was filed. A return filed before the last day prescribed by law for the filing thereof, is considered as filed on such last day. 115  Considerations on the Prescriptions of Government’s Right to Assess Taxes Date of filing tax returns Effect of filing an amended return Effect of filing a wrong return Period applicable when the law does not require the filing of any return Applicable prescriptive period if taxpayer fails to file a return Prescriptive period of assessment when there is fraud 116  Determination of Deficiency Tax Assessment Audit of Tax Returns Basis of Audit of Returns Frequency of Audit 117  Prescription of Government’s Right to Collect Taxes Law governing prescription of collection When the three-year prescription period for collection start to run When the five-year prescription period for collection start to run When tax is deemed collected for purposes of the prescriptive period Judicial action to collect a tax liability even if there is no previous assessment Prescription of the government’s right to recover an erroneously refunded tax Waiver of the Statute of Limitations – extension of the prescriptive period 118  Important Documents in the Assessment Process 1. Letter of Authorization - Subject to the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, a Revenue Officer assigned to perform assessment functions in any district may, pursuant to a Letter of Authority issued by the Revenue Regional Director, examine taxpayers within the jurisdiction of the district in order to collect the correct amount of tax, or to recommend the assessment of any deficiency tax due in the same manner that the said acts could have been performed by the Revenue Regional Director himself. 119  Important Documents in the Assessment Process 2. Notice of Discrepancy- If a taxpayer is found to be liable for deficiency tax or taxes in the course of an investigation conducted by a Revenue Officer the taxpayer shall be informed through a Notice of Discrepancy (RR 22-2020, Annex A). The Notice of Discrepancy aims to fully afford the taxpayer with an opportunity to present and explain his side on the discrepancies found. 120  Important Documents in the Assessment Process 3. Pre-Assessment Notice (PAN) – if after review and evaluation by the proper authorities, as the case maybe, it is determined that there exists sufficient basis to assess the taxpayer for any deficiency taxes, the said office shall issue to the taxpayer, at least by REGISTERED MAIL, a PAN for the proposed assessment showing in details the following: facts and the law; rules and regulations; or jurisprudence on which the proposed assessment is based 121  Important Documents in the Assessment Process PAN SHALL NOT BE REQUIRED IN THE FOLLOWING CASES: Section 228 of the NIRC 1. When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return; or 2. When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent; or 122  Important Documents in the Assessment Process PAN SHALL NOT BE REQUIRED IN THE FOLLOWING CASES: Section 228 of the NIRC 3. When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable quarter or quarters of the succeeding taxable year; or 4. When the excise tax due on excisable articles has not been paid; or 5. When the article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital equipment, machineries and spare parts, has been sold, traded or transferred to non-exempt persons. 123  Important Documents in the Assessment Process 4. Final Assessment Notice (FAN) – the formal letter of demand and assessment notice shall be issued by the Commissioner or his duly authorized representative. The letter of demand calling for the payment of the taxpayer’s deficiency taxes shall state the facts, the law, rules and regulations or jurisprudence on which the assessment is based. The same shall be sent to the taxpayer only by registered mail or by personal delivery. 124 Protest to Assessment Administrative Protest Type of Protest Law Motion for Reconsideration Section 228 of the Tax Code in relation to RR 18-2013 Motion for Reinvestigation Judicial Protest Venue Law Court of Tax Appeals Republic Act No. 1125, as amended and the Revised Rules of CTA Supreme Court Article VIII of the 1987 Constitution and the Revised Rules of Court Enforcement of Judgment Writ of Execution of Judgment Rule 39 of the Revised Rules of Court 125 References Philippine Income Taxation by Dante Yson Cenido A Contemporary Study on Taxation by Vicente O. Baylon The Law on Income Taxation by Benjamin D. Teodoro and Hector S. de Leon 2016 BIR Annual Report Revenue Regulation No. 12-99 Revenue Regulation No. 22-2020 Revenue Regulation No. 18-2013 126 References 1987 Philippine Constitution o Article III : Sections 1, 4, 5, 10, 20 o Article VI: Sections 24, 27, 28, 29 o Article VII: Section 19 o Article VIII: Section 2 o Article X: Section 6 o Article XIV: Section 4 National Internal Revenue Code of 1997, as amended Republic Act No. 1125 Revised Rules of Court of Tax Appeals 127