RR No. 18-2013: Amends certain sections of RR No. 12-99 relative to the due process requirement in the issuance of a deficiency tax assessment

Summary

RR No. 18-2013 amends certain sections of RR No. 12-99 on the due process requirement in issuing a deficiency tax assessment, including the stages from the Preliminary Assessment Notice to appeal to the Court of Tax Appeals.

Key points

1. Preliminary Assessment Notice. Section 3.1.1 of RR No. 12-99, on the Notice of Informal Conference, is deleted. If there is sufficient basis to assess a deficiency, a Preliminary Assessment Notice (PAN) is issued showing the facts and the law, rules and regulations, or jurisprudence of the proposed assessment. A taxpayer who does not respond within 15 days from receipt is in default and receives a Formal Letter of Demand and Final Assessment Notice (FLD/FAN). If the taxpayer disagrees within 15 days, the FLD/FAN is issued within 15 days from the response.
2. No PAN required. Under Section 228 of the Tax Code, the FLD/FAN is issued outright in these cases: mathematical error on the face of the return, discrepancy between tax withheld and tax remitted, excess creditable withholding tax carried over and also claimed as refund or credit, unpaid Excise Tax on excisable articles, and sale or transfer to non-exempt persons of an article bought or imported by an exempt person. An FLD/FAN that does not state the facts and law or jurisprudence is void.
3. Protest. The taxpayer may protest the FLD/FAN within 30 days from receipt, by request for reconsideration or reinvestigation. The protest must state its nature, the date of the assessment notice, and the applicable law, rules or jurisprudence, otherwise it is void. Issues not disputed or not supported become final, executory and demandable, and a collection letter is issued for them.
4. Supporting documents. For requests for reinvestigation, all relevant supporting documents are due within 60 days from filing of the protest, otherwise the assessment becomes final. This 60-day period does not apply to requests for reconsideration. No request is granted on an assessment that is already final, executory and demandable.
5. Appeal and inaction. If the Commissioner’s authorized representative denies the protest, the taxpayer may appeal to the CTA or ask the Commissioner for reconsideration within 30 days from receipt. If no action is taken within 180 days, the taxpayer may appeal to the CTA within 30 days after the 180-day period or await the final decision. These two options are mutually exclusive, and a motion for reconsideration does not toll the 30-day period to appeal to the CTA.
6. Late payment. Section 5.5 of RR No. 12-99 is amended. Deficiency tax must be paid within the time stated in the notice and demand, otherwise delinquency interest applies under Section 249 (C)(3) of the 1997 NIRC, as amended.

Who is affected

• Taxpayers assessed for deficiency taxes
• Commissioner and authorized representatives

Deadlines and effectivity

• Response to PAN: 15 days from receipt
• Protest of FLD/FAN: 30 days from receipt
• Reinvestigation documents: 60 days from filing of the protest
• Appeal to CTA: 30 days; Commissioner inaction period: 180 days

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.