Headline MediaTitle Date Section Page No Language Journalist The guiding hand of due process in tax audit The Philippine Star 25 Mar 2014 Color Business Circulation B5 Readership English ArticleSize ARIANNE C. ARTUGUE Black/white 256,712 256,712 294 cm² TOP OF MIND By ARIANNE C. ARTUGUE The guiding hand of due process in tax audit The Bureau of Internal Revenue (BIR) has evidently illustrated zealousness in tax collection over the years. In fact, it has come out with numerous issuances aimed at the strict implementation of tax laws and rules and regulations. As equally important is the bureau's ardent collec tion of taxes with dispatch. Thus, the BIR ment of delinquent taxes may be considered as decision on a disputed assessment or disputed PAN. The requirements of due process are complied with so long as the parties are able to exercise their right to be heard. This reiteration in RMC 1114 is predicated on the various Supreme Court decisions. As introduced in RR 1813, an FLD/FAN shall be issued within 15 days from filing/submission of the taxpayer's re sponse to the PAN. To avoid an interpretation that an FLD/ has introduced amendments to Revenue FAN issued beyond the 15day period may be considered Regulations No. (RR) 1299, by issuing RR 1813, relative to the due process require ment in deficiency tax assessment. In this invalid, RMC 1114 explained that the nonconformity to the reglementary period for the issuance of the FAN should not effect its validity, however, the revenue officer who caused the delay should be subject to administrative sanctions. In addition, RMC .1114. made clear that the failure of the regarding the due process requirement in tax audit pursuant to taxpayer who requested for the reinvestigation to submit all RR 1299, as amended by RR 1813 through Revenue Memoran relevant supporting documents within the 60day period shall dum Circular No. (RMC) 1114 dated Feb. 18,2014. render the FLD/FAN final by operation of law. This effectively Under RR 1813, as further elucidated in RMC 3913, taxpay bars the taxpayer from disputing the correctness of the FLD / ers should file their responses to PAN and protests or request FAN by the introduction of newly discovered evidence. for reconsideration/ reinvestigation to the FLD/ FAN with the Finally, RMC 1114 explicated that the PAN/FLD/FAN/ duly authorized representatives of the commissioner. RMC 11 FDDA should be served first to the taxpayer's registered ad 14 has identified the "duly authorized representatives" of the dress before the same may be served to the taxpayer's known commissioner of Internal Revenue refers to the revenue regional address, or in the alternative, may be served to the taxpayer's directors, assistant commissioner Large Taxpayers Service, and assistant commissioner Enforcement and Advocacy Service, registered address and known address simultaneously. It is an oft repeated dictum that "The power to tax is the as the case may be. Consequently, the taxpayers must submit power to destroy." As equally wellrecognized is the aphorism their responses to Preliminary Assessment Notice (PAN) and protests or request for reconsideration/reinvestigation to the that "The power to tax shall not be the power to destroy" for Final Letter of Demand/Final Assessment Notice (FLD/FAN) as long as the court sits. Accordingly, the government could and Final Decision on Disputed Assessment (FDDA) with not exercise its taxing power any which way it wants if the the duly authorized representative of the commissioner who same will run afoul of the guarantee of substantive and pro issued the PAN and FLD/FAN. Considering the foregoing, cedural due process of law. Arianne C. Artugue is a supervisor from the tax group ofR.G. the response or protest filed with the wrong office or person is Manabat & Co. (RGM&Co.), the Philippine member firm ofKPMG considered not filed at all, resulting in the issuance of FAN, or International. nonappealable assessment. This article is for general information purposes only and should Another point stressed in RMC 1114 is that the issuance of not be considered as professional advice to a specific issue or entity. FLD/FAN reiterating the immediate payment of deficiency The view and opinions expressed herein are those of the author connection, the BIR clarified some issues taxes and penalties previously made in the PAN or is a denial and do not necessarily represent the views and opinions ofKPMG of the response to a PAN. In the same vein, an FLD for pay International or RGM&Co. For comments or inquiries, please email ph[email protected] or [email protected]. For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.
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