Following the issuance of the Implementing Rules and Regulations (IRR) of the Tax Amnesty Act [i.e., Revenue Regulations (RR) No. 4-2019], the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 57-2019 to address frequently-asked questions concerning the Tax Amnesty Application on Tax Delinquencies.
Under the IRR, tax amnesty may be availed of by taxpayers with assessments that have become final and executory on or before April 24, 2019, due to the following instances:
1. Failure to pay the tax due on the prescribed due date provided in the Final Assessment Notice (FAN)/Formal Letter of Demand (FLD) and for which no valid protest, whether a request for reconsideration or reinvestigation, has been filed within 30 days from receipt of the FAN/FLD;
2. Failure to file an appeal to the Court of Tax Appeal (CTA) or an administrative appeal before the Commissioner of Internal Revenue (CIR) within 30 days from receipt of the decision denying the request for reinvestigation or reconsideration; or
3. Failure to file an appeal to the CTA within 30 days from receipt of the Decision of the CIR denying the taxpayer’s administrative appeal to the Final Decision on Disputed Assessment (FDDA).
Additionally, it was clarified in RMC No. 57-2019 that, among other scenarios, failure of the taxpayer to submit the necessary documents to the BIR within 60 days as directed by the BIR could not be considered as a valid protest. Hence, the assessment becomes final, executory, and demandable despite the absence of an issued FDDA. It is noteworthy, however, that the period of 60 days under the RMC is reckoned from the date of receipt of the FAN instead from the date of filing of the protest as provided under the Tax Code.
At any rate, the finality of the assessment for failure to submit the supporting documents is consistent with Section 228 of the Tax Code and the BIR’s regulations on assessments (RR No. 18-2013), provided that the assessment shall become final if the taxpayer fails to submit all relevant supporting documents within 60 days. According to RR No. 18-2013, the phrase “the assessment shall become final” means that the taxpayer is barred from disputing the correctness of the assessment by introducing newly-discovered or additional evidence, and, accordingly, the BIR shall issue the FDDA in due course.
Perhaps the clarification in the RMC needs further clarification. It is likely that the intention was to cover situations where the taxpayer’s protest is a request for reinvestigation which warrants the submission of relevant supporting documents within 60 days from the filing of the protest. It may not apply to cases where the taxpayer merely filed a request for reconsideration and therefore had no intention to submit additional documents within the 60-day period.
The taxpayer’s right to determine how it wants to protest, whether additional documents are necessary and what types of documents it deems necessary to present, should be preserved. Otherwise, we would have a scenario that goes against existing jurisprudence.
In G.R. Nos. 172045-46 dated June 16, 2009, the Supreme Court (SC) had occasion to rule in favor of a taxpayer on a tax assessment case, particularly on the required documentary support. The taxpayer initially submitted its protest letter with supporting documents but later failed to comply with the BIR’s request for additional documents. Consequently, the BIR claimed that the assessment had become final, executory, and demandable. The SC held that the term relevant supporting documents should be understood as those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. The BIR can only require the submission of additional documents, but it cannot demand what type of supporting documents should be submitted. Otherwise, the taxpayer is at the mercy of the BIR, which may require the production of documents that a taxpayer cannot submit.
In any case, by clarifying that tax liabilities are considered delinquent for failure to submit the required documents and are thus eligible to avail of the tax amnesty program, both the government and taxpayers benefit from a win-win situation. For taxpayers, this means starting on a clean tax slate, and for the government, collecting more taxes without having to go through with the tedious process of a tax assessment case.
However, at this point, eligible taxpayers must waste no time since barely eight months are left (or until April 24, 2020) to avail of the amnesty program. Only upon full compliance with all the conditions laid down by the regulations within the effectivity period of one year will tax-delinquent accounts be considered settled. Thus, time is of the essence to those who seek clemency from their tax liability.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Rose Anne Abiera is a senior consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
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