A. ADMINISTRATIVE REMEDIES
1) Tax lien
If any person neglects or refuses to pay internal revenue taxes after demand, the amount shall be a lien in favor of the Government of the Philippines from the time when the assessment was made by the Commissioner until paid, with interests, penalties and costs that may accrue in addition thereto upon all property belonging to the taxpayer
The lien shall NOT be valid against any mortgagee, purchaser or judgment creditor until NOTICE of such lien shall be filed by the Commissioner in the office of the Register of Deeds of the province or city where the property of the taxpayer is situated or located. (Sec. 219)
2) Levy and sale of real property
After the expiration of the time required to pay the delinquent tax or delinquent revenue, real property may be levied upon, before, simultaneously, or after the distraint of personal property belonging to the delinquent. (Sec. 207(B))
3) Forfeiture of real property to the government for want of bidder
In case there is no bidder for real property or if the highest bid is for an amount insufficient to pay the taxes, penalties and costs, the Internal Revenue Officer shall declare the property forfeited to the Government in satisfaction of the claim.
- A return of the proceedings must be made within two (2) days.
- The Register of Deeds, upon registration of declaration of forfeiture, shall transfer the title of the property forfeited to the Government without the necessity of an order from a competent court. (Sec. 215)
4) Further distraint and levy
The remedy by distraint of personal property and levy on realty may be repeated if necessary until the full amount
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is due, including all expenses, is collected.
(Sec. 217)
5) Suspension of business operation
The Commissioner or his authorized representative is empowered to suspend the business operations and temporarily close the business establishment of any person for any of the following violations:
(a) In the case of a VAT-registered Person.
- (1) Failure to issue receipts or invoices;
(2) Failure to file a value-added tax return as required under Section 114; or
(3) Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct taxable sales or receipts for the taxable quarter.
(b) Failure of any Person to Register as Required under Section 236. -
The temporary closure of the establishment shall be for the duration of not less than five (5) days and shall be lifted only upon compliance with whatever requirements prescribed by the Commissioner in the closure order. (Sec. 115, NIRC)
6) Non-availability of injunction to restrain collection of tax
No court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by the National Internal Revenue Code. (Sec. 218)
B. JUDICIAL REMEDIES
Civil and criminal actions and proceedings instituted in behalf of the Government shall be brought in the name of the Government of the Philippines and shall be conducted by legal officers of the Bureau of Internal Revenue but no civil or criminal action for the recovery of taxes or the enforcement of any fine, penalty or forfeiture shall be filed without the approval of the Commissioner. (Sec. 220, NIRC) CIVIL ACTION
There are two ways by which the civil tax liability of a taxpayer is enforced by the government through civil actions. These are: (1) by filing a civil case for the collection of sum of money with the proper regular court; and (2) by filing an answer to the petition for review filed by the taxpayer with the Court of Tax Appeals.
When the Commissioner files a civil action for the collection of taxes, it is the Republic of the Philippines that is the party plaintiff and not the Commissioner. But when it is the taxpayer that files a petition for review in the Court of Tax Appeals, the respondent is the Commissioner, not the Republic. (Mamalateo, 2008)
CRIMINAL ACTION 1. General Provisions
Any person convicted of a crime under the Code shall:
- be liable for the payment of the tax, - be subject to the penalties imposed under
the Code.
Note: Payment of the tax due after a case has been filed shall not constitute a valid defense in any prosecution for violation of the provisions under the Code.
Any person who wilfully aids or abets in the commission of a crime penalized under the Code or who causes the commission of any such offense by another shall be liable in the same manner as the principal.
If the offender is:
OFFENDER PENALTY Not a citizen of
the Philippines he shall be deported immediately after serving the sentence
A public officer
or employee the maximum penalty prescribed for the offense shall be imposed on him shall be dismissed from public office, and perpetually disqualified from holding any public office, to vote, and to participate in any election
CPA his license shall be
automatically revoked or cancelled once he is convicted
Corporations, associations, partnerships etc.
imposed on the partner, president, general manager, branch manager, treasurer, officer-in-charge and employees responsible for the violation
MINIMUM AMOUNT: The fines imposed for any violation of the Code shall not be lower than the fines imposed herein or twice the amount of taxes, interests and surcharges due from the taxpayer, whichever is higher. (§253)
All violations of any provision of the Code shall prescribe after five (5) years.
o Criminal Offenses Sec. Offense Who is liable Penalty 254 Willful
attempt to evade or defeat tax.
Any person who willfully attempts in any manner to evade or defeat any tax or the
Fine -
P30,000 or 100,000;
and Imprisonme nt - 2 to 4 years; Plus
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137
138
139
Sec. Offense Who is liable Penalty inheritance
of any
taxpayer, knowledge of which was acquired by him in the discharge of his official duties, and which it is unlawful for
him to
reveal, and any person who
publishes or prints in any manner whatever, not provided by law, any income, profit, loss or expenditure appearing in any income tax return
2. Penalties Imposed on Public Officers
The law imposes a fine of not less than P50,000 nor more than P100,000 or imprisonment for not less than 10 years nor more than fifteen years on every official, agent or employee of the BIR or of any agency or employee of the Government charged with the enforcement of the Tax Code, who shall:
(CONED- FRAP)
a) Extort or willfully oppress under color of law;
b) knowingly Demand other or greater sums than are authorized by law or receive any fee, compensation or reward, except as by law prescribed, for the performance of any duty;
c) willfully Neglect to give receipts, as by law required, for any sums collected in the performance of duty, or who willfully neglect to perform any of the duties enjoined by law;
d) Conspire or collude with another or others to defraud the revenues or otherwise violate the law;
e) willfully make Opportunity for any person to defraud the revenues, or who do or omit to do any act with intent to enable any other person to defraud the revenues;
f) negligently or by design Permit the violation of the law by any other person;
g) make or sign any False certificate or return in any case where the law requires the
making by them of such entry, certificate or return;
h) having knowledge or information of a violation of any provision of the Code or of any fraud committed on the revenues collectible by the BIR, fail to Report such knowledge or information to their superior officer, or to report as otherwise required by law; or
i) without the authority of law, demand or Accept or attempt to collect, directly or indirectly, as payment or otherwise, any sum of money or other thing of value for the compromise, adjustment or settlement of any charge or complaint for any violation or alleged violation of law. (§235)
Informer’s Reward (Sec. 282, NIRC)
To whom given: persons instrumental in the discovery of violations of the NIRC and in discovery and seizure of smuggled goods.
Conditions to qualify for the reward:
1. Person is not an internal revenue official or employee, public official, or employee or relative within 6th degree of consanguinity 2. Voluntarily gives definite and sworn
information:
a) Not yet in the possession of BIR b) Leading to discovery of frauds c) Resulting in:
i. the recovery of revenues, surcharges and fees and/or
ii. conviction of the guilty party.
d) Not refer to a case already pending or previously investigated or examined by the Commissioner or his agents or the SOF or his agents.
Amount of reward: 10% of the revenues, surcharges or fees recovered and/or fine/penalty imposed, or P1,000,000, whichever is LOWER.
- The same amount shall be given if the offender offered to compromise and such offer has been accepted and collected by the Commissioner.
- If no revenue, surcharge or fees be actually collected, such person is not entitled to a reward
- For discovery and seizure of SMUGGLED GOODS: The cash reward is 10% of the FMV of the smuggled and confiscated goods, or P1,000,000, whichever is LOWER.
The cash rewards shall be subject to income TAX at the rate of 10%.
Rule of construction: Statutes offering rewards must be liberally construed in favor of informers and with regard to the purpose for which they are intended, with mere technicality yielding to the substantive purpose of the law.[Penid v.
Virata]
III. Statutory Offenses and Penalties
A. CIVIL PENALTIES
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1) Surcharge Susrcharge
A civil penalty imposed by law as an addition to the basic tax required to be paid.
It is a civil administrative sanction provided as a safeguard for the protection of the State revenue and to reimburse the government for the expenses of investigation and the loss resulting from the taxpayer‘s fraud.
A surcharge added to the main tax is subject to interest.
Rates of Surcharge:
There shall be imposed a penalty equivalent to twenty-five percent (25%) of the amount due, in the following cases:
- FAILURE TO FILE ANY RETURN and PAY THE TAX DUE THEREON on the date prescribed; or
- Filing a return with an internal revenue officer than those with whom the return is required to be filed (except when authorized by the Commissioner);
or
- FAILURE TO PAY THE DEFICIENCY TAX within the time prescribed for its payment in the notice of assessment - FAILURE TO PAY THE FULL OR PART of
the amount of tax shown on any return required to be filed, or the full amount of tax due for which no return is required to be filed, on or before the date prescribed for its payment. (Sec.
248A, NIRC)
The penalty shall be fifty percent (50%) of the tax or of the deficiency tax, in the following cases:
- WILLFUL NEGLECT to FILE THE RETURN within the period prescribed
- A FALSE OR FRAUDULENT RETURN is wilfully made (§248B)
o Prima-facie evidence of false or fraudulent return:
substantial under declaration of taxable sales, receipts or income (failure to report sales, receipts or income in an amount exceeding 30% of that declared per return)
substantial overstatement of deductions (a claim of deduction in an amount exceeding 30% of actual deductions)
2) Interest a) In General
There shall be assessed and collected on any unpaid amount of tax, interest at the rate of twenty percent (20%) per annum, or such higher rate as may be
prescribed by rules and regulations, from the date prescribed for payment until the amount is fully paid. (Sec.
249(A), NIRC)
b) Deficiency interest
Any deficiency in the tax due shall be subject to twenty percent (20%) per annum which shall be assessed and collected from the date prescribed for its payment until the full payment thereof. (Sec. 249(B))
c) Delinquency interest
In case of failure to pay (1) The amount of the tax due on any return required to be filed; (2) The amount of the tax due for which no return is required; or (3) A deficiency tax, or any surcharge or interest thereon on the due date appearing in the letter of demand and assessment notice, there shall be assessed and collected on the unpaid amount a twenty percent (20%) per annum until the amount is fully paid, which interest shall form part of the tax. (Sec. 249(C))
d) Interest on extended payment
If any person required to pay the tax is:
o Qualified and elects to pay the tax on installment but fails to pay the tax or any installment or any part of such amount or installment or before the date prescribed for its payment, OR o Where the Commissioner has authorized an extension of time within which to pay a tax or a deficiency tax or any part thereof
There shall be assessed and collected interest at twenty percent (20%) per annum on the tax or deficiency tax or any part thereof unpaid from the date of notice and demand until it is paid.
(249(D))