Strat Man P3: Civil Remedies for Collection of Taxes PDF

STRAT MAN P3: CIVIL REMEDIES FOR COLLECTION OF TAXES SEC. 205 REMEDIES FOR THE taxpayer is intending to leave the PH COLLECTION OF DELINQUENT taxpayer is hiding/concealing TAXES property to avid ta...

STRAT MAN P3: CIVIL REMEDIES FOR COLLECTION OF TAXES SEC. 205 REMEDIES FOR THE taxpayer is intending to leave the PH COLLECTION OF DELINQUENT taxpayer is hiding/concealing TAXES property to avid taxes performing any act that would Distraint obstruct tax collection personal property (goods, chattels, stocks, securities, bank accounts, How is constructive distraint jewelry implemented? BIR can take the assets and sell to pay Personal Property for unpaid taxes o Restricts the taxpayer to sell or move it Levy o Taxpayer must sign a “receipt Real properties (land and building) of acknowledging the distraint” BIR can place a lien on the property o By signing, tax payer promises and sell it to preserve the property and not dispose of it in any way Civil Case without the permission of the Commissioner to compel taxpayers to pay unpaid o Refusal to sign: taxes ▪ create a list of the property Criminal Case ▪ With two witnesses if tax evasion / criminal violations ▪ Leave a copy where the are involved property is kept court can impose penalties or imprisonment & payment of delinquent taxes SEC 207 WHO CAN ORDER DISTRAINT? Simultaneous use: can use the all remedies at the same time depending on the situation If tax due is more than Php 1,000,000 Limitations: remedies cannot be used if o Commissioner / authorized amount of delinquent tax is Php 100 or less representative If tax due is Php 1,000,000 or less o Revenue District Officer SEC. 206 CONSTRUCTIVE Reporting requirements DISTRAINT OF THE PROPERTY OF A TAXPAYER Officer conducting restraint must submit report to RDO and RRD the taxpayer’s property is placed within 10 days of receiving warrant under a form of legal control without for distraint physically seizing it Power to lift distraint When is constructive distraint used: Commissioner & authorized tax payer is delinquent representative based on rules of taxpayer is retiring from a business Secretary of Finance STRAT MAN P3: CIVIL REMEDIES FOR COLLECTION OF TAXES How is levy implemented? Serving of Warrant: gives a copy to the IRO will prepare a certificate ; taxpayer and the company that issued tax taxpayer’s name, amount of tax due Bank’s Responsibility: when bank and penalties receives the warrant, the bank will tun over Certificate acts as legal authority for to the CIR the amount enough to recover the gov’t to seize and sell the RP in the taxpayer’s unpaid taxes the PH Notification of Levy BIR will send a written notice to: Register of Deeds SEC 209 SALE OF PROPERTY DISTRAINED& Taxpayer DISPOSITION OF PROCEEDS Occupant of the property Timing of Levy: If the PP seized is not Notification of Sale enough, BIR → levy on RP within 30 days who organized the sale after completing the distraint where to post the notification what the notification must include Reporting Requirements: officer timing of the sale conducting levy must submit report to the Who organizes the sale CIR/Authorized representative within 10 RDO or an authorized days after receiving the warrant/levy representative but not the officer who made the distraint Where to post the notification SEC 208 In at least two public places within DISTRAINT OF STOCKS, the city SECURITIES, DEBTS AND CREDIT One of the places must be at the mayor’s office Distraints of Stocks and Securities What the notification must include BIR gives a copy to the taxpayer Time and place of the sale and the company that issued tax Description of the property Distrain of Debts and Securities Timing of the sale Will give a copy of warrant to the Cannot happen sooner than 20 person owing the debt days after the notification is posted and after the owner has been gives the person holding the debt to notified pay the debt or transfer the credit Public Auction Sale to the Commissioner How the sale happens: sold to the Garnishment of Bank Accounts highest bidder Warrant of Garnishment: freeze Alternative sale method: through taxpayer’s bank account and collect funds licensed commodity or stock directly from it exchange ( with approval or CIR) STRAT MAN P3: CIVIL REMEDIES FOR COLLECTION OF TAXES Sale of Stock & Securities, sale officer SEC 212 must: PURCHASE BY GOVERNMENT AT Prepare bill of sale SALE UPON DISTRAINT Deliver bill of sale to buyer Provide bill of sale to the company who issued stocks Provide option for gov’t to purchase Record transfer of ownership in property if: books o Highest bid < amount of tax Issue new stock certificated to the debt or buyer if requested o Significantly below market Disposition of proceeds value of the property The money from sale is used to cover: CIR can buy the property in behalf of Taxpayer’s delinquent tax debt national gov’t Penalties/interest owed Gov’t can resell property; proceeds of Expenses occurred during the sale → National Treasury the distrained process Resale must follow rules by SOF Return of excess funds and expenses: Returned to owner of property Deductible expenses are actual expenses of seizing and preserving SEC 213 the property ADVERTISEMENT AND SALE No additional charges should be imposed After the levy of property, officer will start advertising the property within 20 SEC 210 days RELEASE DISTRAINED PROPERTY Advertising should cover for 30 days UPON PAYMENT PRIOR TO SALE through the following channels: o Physical posting: city hall, building If nabayaran na lahat ng taxpayer ang o Newspaper or publication: once a unpaid taxes + interest & penalties week for three weeks before sale is finalized, the officer must Content of Advertisement return the property to the owner o Amount of taxes & penalties owed o Time and place of sale o Name of taxpayer who owns property SEC 211 o Short description of property REPORT OF SALE TO THE BIR Taxpayer’s opportunity to stop the sale After the sale, the sale officer must o By paying the unpaid taxes, interest submit “report of sale” within 2 days to and penalties before the date of sale the CIR Officer must keep copy as record STRAT MAN P3: CIVIL REMEDIES FOR COLLECTION OF TAXES Conducting the Sale o To redeem property, TP must pay o If taxpayer do no pay taxes before the ff. to RDO: sale date, the sale will proceed ▪ Amount of unpaid taxes, o Sale can be held at main entrance of interest and penalties city hall or premises of property accumulated from date of Within 5 days after the sale, the sale delinquency to date of sale officer must file a report of ▪ Interest on purchase price at proceeding with: 15% per year from date of sale o Revenue Collection Officer to redemption o Revenue District Officer o Redemption process: o Revenue Regional Director ▪ Person who redeems the Certificate of Sale property receives: o RCO after consulting with RDO will Certificate of sale issued to issue COS to buyer which includes: original purchaser ▪ Description of property Certificate of redemption ▪ Name of buyer from RDO ▪ Exact amount of tax, penalties ▪ RDO will pay the original and interest covered by sale purchaser the amount received Handling excess proceed advance of from redemption sale costs ▪ Once redeemed, property is o Sale > amount owed , excess is free from liens returned to original owner of o Possession of the Property property ▪ Owner is not deprived of o RCO w/ approval of RDO can possession during the advance necessary funds to cover redemption process costs of collection process ▪ Owner is entitled to any (advertisement/preservation) in rent/income generated from the collection fund property until the redemption o Advances → documented in period expires monthly collection report with receipts SEC 215 FORFEITURE TO GOVERNMENT SEC 214 FOR WANT OF BIDDER REDEMPTION OF PROPERTY SOLD Forfeiture due to lack of bidders Right of Redemption (Within 1 year) o If no one bids to property/ highest o Delinquent taxpayer has the right to bid is too low, IRO will declare buy back the property within one property forfeited to gov’t year from date of sale o Submit report to record forfeiture within 2 days STRAT MAN P3: CIVIL REMEDIES FOR COLLECTION OF TAXES o Register of Deed will transfer the Sec 218 title to gov’t once registered with no INJUNCTION NOT AVAILABLE TO court order needed RESTRAIN COLLECTION OF TAX Redemption after forfeiture Court cannot issue legal orders to stop o TP can redeem property within 1 BIR collect taxes year from date of forfeiture by TP cannot use court order to block or paying the taxes, penalties etc. delay tax collection o If not redeemed within one year, ***taxation power is pinakamataas na forfeiture is final, gov’t = ownership power SEC 216 Sec 219 RESALE OF REAL ESTATE TAKEN NATURE AND EXTENT OF TAX LIEN FOR TAXES If TP does not pay their taxes after notification, then the unpaid amount Authority of the Commissioner: becomes lien on all property (CIR) Gov’t has legal claim on the TP o Responsible for managing real property until the debt is fully paid estate that gov’t acquires through Lien is not effective against 3rd forfeitures parties until BIR files “notice of lien” Resale of Property with Register of Deeds o CIR may resell through: ▪ Public auction (w/ at least 20 dtays notice) Sec 220 ▪ Private sale ( w/ prior approval FORM AND MODE OF PROCEEDING of SOF) IN ACTIONS ARISING UNDER THIS ▪ Proceeds are deposited in CODE National Treasury Accountability Legal actions (civil/criminal) related to o CIR must provide a financial report tax violations are filed in the name of to Chairman of COA after the resale gov’t & conducted by BIR legal officers no civil/criminal action can be file Sec 217 without approval of CIR FURTHER DISTRAINT OR LEVY Allows BIR to repeatedly seize RP or PP until the entire debt is fully paid STRAT MAN P3: CIVIL REMEDIES FOR COLLECTION OF TAXES Sec 221 Collection when assessment period is REMEDY FOR ENFORCEMENT OF extended STATUTORY PENAL PROVISIONS o If extended, tax can be collected within that extended period enforcing penalties under tax law can Tax Amnesty Exemption be criminal/civil action o Tax amnesty – allow TP to settle requires approval of CIR their tax under certain condition o Tax amnesty laws are exempt from rules of (a) and (b) o BIR cannot investigate returns file Sec 222 under tax amnesty law EXCEPTIONS AS TO PERIOD OF o Ensure that TP has protection LIMITATION OF ASSESSMENT AND against scrutiny COLLECTION Fraudulent Return or Failure to File a return (a) Sec 223 o For fraud, falsified tax returns or SUSPENSION OF RUNNING OF failure to file a return STATUE OF LMITATIONS o BIR can assess and collect taxes within 10 years from discovery of Assessment and collection of taxes is fraud or omission temporarily pauses/suspended ( clock ***normal time limit = 3 years under SEC stops) 203) do not apply here Situations that cause of statute of Written agreement to extend the limitation to be suspended assessment period (b) o When CIR is legally prohibited from o Normal = 3 years making tax assessments; suspension o TP and BIR agree in writing to continues for 60 days after extend the assessment period the prohibition ends o Tax can be assessed beyond years o Reinvestigation request by taxpayer o Can be extended further by o TP cannot be located; if TP notifies additional written agreement as long BIR of address, suspension doesn’t as they sign before the previous apply agreement expires o Warrant served but no property Collection of Assessed Tax ( 5-year was found Rule) o TP is not in the PH o 5 years to collect tax by distraint, levy or court proceedings o BIR assessed tax today, they have 5 years from today to collect it STRAT MAN P3: CIVIL REMEDIES FOR COLLECTION OF TAXES Sec 224 Sec 226 REMEDY FOR ENFORCEMENT OF DISPOSITION OF FUNDS FORFEITURES RECOVERED IN LEGAL PROCEEDINGS OR OBTAINED Forfeiture of PP ( chattels & fixture) FROM FORFEITURES o Can be seized o Either sold or destroyed Judgments and Monies Forfeiture of RP (land/building) o Funds obtained from legal action = o Enforced through judgment of treated like tax payments condemnation Accounting o Sale via civil/criminal court o Funds are accounted for like taxes proceeding o Follow same rules and processes Consistency o Uniformity in handling tax revenues Sec 225 WHEN PROPERTY TO BE SOLD OR DESTROYED Sec 227 SATISFACTION OF JUDGMENT Forfeited Chattels & Fixtures RECOVERED AGAINST ANY o Can be sold INTERNAL REVENUE OFFICER o Public notice and specific conditions apply to the sale Notification and defense Distilled Spirits, Liquors, Cigarettes, o If Internal revenue officer is sued, Tobacco Products, and apparatus for CIR must in notified through illicit production the Solicitor General o Can be destroyed by CIR if the sale Payment of Judgments would be harmful to public or o The CIR (w/ approval of SOF) will prejudicial to law enforcement satisfy the judgment Other excise-taxable articles and fake o Gov’t will pay the damages internal revenue stamps/labels Reimbursement to Officers o CIR will decide to destroy or sell o If the officer personally pays Twenty-day waiting period judgment = reimburse by CIR o Forfeited property should not be Exclusions destroyed until 20 days after it is o Officers in bad faith will not receive seized reimbursement