collection procedures and tax remedies

7/28/2019 Collection Procedures and Tax Remedies

1/25

General Course for Revenue Officers

TMDTB 290 Slide 1

COLLECTION

PROCEDURES &

TAX REMEDIES

Topic 290


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TMDTB 290 Slide 2

COLLECTION PROCEDURES & TAX REMEDIES

1. Statutory Basis

2. Prescriptive Rules Governing Assessment

& Collection

3. Exception as to Period of Limitation of Assessment& Collection

4. Accounts Receivable Management

5. Mode of Payment

6. Abatement / Cancellation of Tax Liability

7. Administrative Remedies Available toGovernment

8. Administrative Remedies Available to Taxpayers


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TMDTB 290 Slide 3

OBJECTIVES

1. Enumerate the powers of the Commissioner of InternalRevenue as to assessment and collection of taxes;

2. Know the prescriptive rules governing assessmentand collection;

3. Know the exceptions as to the period of limitation onassessment and collection;

4. Become familiar with accounts receivable; and

5. Identify the administrative remedies available togovernment and taxpayers.


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TMDTB 290 Slide 4

STATUTORYBASIS :

TITLE 1, VII & X , National Internal

Revenue Code, as amended

PRESCRIPTIVERULE:

Taxes shall be assessed within three (3)years after the last day prescribed by law

for the filing of the return, and noproceeding in court without assessmentfor the collection of such taxes shall be

begun after the expiration of such period.

In case a return is filed beyond the periodprescribed by law, the three year periodshall be counted from the day the return

was filed. A return filed before the lastday prescribed by law for the filing

thereof shall be considered as filed onsuch last day.

Prescriptive Rule


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TMDTB 290 Slide 5

EXCEPTION TO THE PERIOD OF LIMITATION

Assessment of false or fraudulent return shall be assessed at any time withinten (10) years after the discovery of the falsity, fraud or omission.

The period agreed upon by both the CIR and the taxpayer may be extended bysubsequent written agreement made before the expiration of the periodpreviously agreed upon.

Any internal revenue tax which has been assessed within the period of limitationmay be collected by distraint or levy or by proceeding in court within five (5) yearsfollowing the assessment of tax.

Any internal revenue tax, as provided in No. (2) may be collected by distraint orlevy or by proceeding in court within the period agreed upon in writing before theexpiration of the five (5) year period. The period so agreed upon may be extendedby subsequent written agreements made before the expiration of the periodpreviously agreed upon.

Nothing in the immediate paragraph shall be construed to authorize theexamination and investigation or inquiry into any tax return filed in accordance withthe provision of any tax amnesty law or decree.

1.

2.

3.

4.

5.


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TMDTB 290 Slide 6

It is any tax deficiency not settled within

thirty (30) days from the date ofassessment. Collection enforcementmust be initiated by the Revenue

Officer within five (5) year prescriptionperiod.

ACCOUNTS RECEIVABLES


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TMDTB 290 Slide 7

COLLECTION FIELD FUNCTION TECHNIQUE

If the taxpayer does not respondwithin the next ten (10) calendardays, enforce collection throughadministrative summary remedies

with the issuance of theWarrant of Distraint and / or Levy.


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TMDTB 290 Slide 8

Assignment of Dockets for Collection

Collection Unit Chief / Collection

Supervisor

index each docket receivedfrom RDO

enter each core in theGeneral Control Ledger

(GCL)-BIR Form No. 1253

Group Supervisor

assigns dockets to the fieldmen prepare amemorandum of assignment to the

fieldmen for verification and enforcementof summary remedies

RDO docket with memo ofassignment for RDOssignature

Group Supervisor

furnish a copy to theCollection Supervisor

Revenue Officer

sign the memorandum

include the docket ofthe case in his inventory

of tax cases

Administrative Division as listed in Form 40

shall:

microfilm

record in the logbook

index each docket in cards furnish the Collection Division for

monitoring purposes batch dockets of collectible

accounts in a maximum of ten (10)dockets per batch

DOCKETSAssessment

Division

RDO


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TMDTB 290 Slide 10

Requisites of a Request for Abatement

Tax Return and/or amended return with

copy of a previous return filed as basisfor comparison;

Evidence of payment of first installmentof tax due; and

Latest Certified Financial Statement.


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TMDTB 290 Slide 11

DEFINITION OF TERMS

DISTRAINT - refers to the seizure by the government ofpersonal property, tangible and intangible, to enforce the

payment of taxes.

LEVY - refers to the seizure by the government of realproperties and interest in or rights to such properties in

order to enforce the payment of taxes.

TAX LIEN - refers to the validated legal claim or charge bythe government on the property of the taxpayer eitherpersonal or real, as security for the payment of taxpayerstax liability filed by the RDO in the Register of Deed of Cityof Province where the property is located.


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TMDTB 290 Slide 12

NOTICE OF LEVY - refers to the written notice by the CIRof the act of seizure of real property addressed to the

Register of Deed of the City or Province where it issituated, for annotation at the back of the title, in orderenforce collection of delinquent taxes due from a taxpayer.

FORFEITURE - implies a divestiture of property without

compensation, in consequence of a default or offense.

GARNISHMENT - a proceeding in the nature of anattachment, by means of which credits, property, or effects

of the debtor in the hands of a third person may besubjected to the payment of claims of the creditor of suchdebtor.

DEFINITION OF TERMS


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TMDTB 290 Slide 13

CONSTRUCTIVE DISTRAINT - the distraining officer doesnot take actual possession of the properties distrained,leaves them with the taxpayer who shall be obligated topreserve the same intact and unaltered and not to disposethe same in any manner whatsover without the express

authority of the CIR.

SEIZURE - the distraining offices seizes and takes actualpossession of the property of the delinquent taxpayer.

DEFINITION OF TERMS


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TMDTB 290 Slide 14

Real Property

Warrant of Distraint and/or Levy

Under Section 207 of the NIRC:

a. Authority is given to the CIR or his dulyauthorized representative if the amountinvolved is in excess of P1, 000, 000

b. Authority is given to the RDO if the amountis P1, 000,000 or less

c. For computerized districts (ITS), the

Warrants of Distraints and/or Levy will begenerated automatically by the system


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TMDTB 290 Slide 15

REQUISITES OF A TAX LIEN

There must be a previous ascertainment of the

sum due by means of an assessment;

There must be a demand for payment of the taxliability, and

There must be a failure to pay the tax.


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TMDTB 290 Slide 16

SERVICE OF THE NOTICE OF LEVYThe Notice of Levy shall be sent thru registered mail or personally served upon:

The Register of Deeds orAssessors Office of theprovince or City where theproperty is located

The Delinquent taxpayeror his agent or managerof the business inrespect to which theliability arose

The occupant of theproperty in question, if theperson is outside thePhilippines, the facts ofthe Notice of Levy will beposted on the propertylevied upon and publishedin a newspaper once a

week for threeconsecutive weeks.


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TMDTB 290 Slide 17

ADVERTISEMENT

AND SALE


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TMDTB 290 Slide 18

CONTENTS OF THE NOTICE OF SALE

The amount of tax and penalty due;

The time and place of sale;

The name of the taxpayer against whom taxes are levied;

Exact location and short description of the property to

be sold;

The terms of payment to include cash or managerscheck; and

A Statement that reads The BIR may reject any or allbids.


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TMDTB 290 Slide 19

PUBLIC AUCTION / FORFEITURE

The sale shall be held eitherat the main entrance ofthe municipal building or cityhall or on the premises of

the property to be sold,as the officer conductingthe proceedings shalldetermine and as the noticeof sale shall specify.


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TMDTB 290 Slide 20

NEGOTIATED SALE

If there is an interested buyer on the real property absolutelyforfeited by the government, the levying officer shall:

Require thebuyer to makea written offeraddressed tothe CIR throughthe RegionalDirector /RDO.

Evaluate andanalyze if the

offer is to thebest interest ofthe government


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TMDTB 290 Slide 21

CONSTRUCTIVE DISTRAINT OF THE PROPERTY

OF A TAXPAYER

1. It is done when a person subject to tax, delinquent or not:

is retiring from any business subject to tax;intends to leave the Philippines;removes his property therefrom;hides or conceals his property; and

performs any act tending to obstruct the collection of tax.

2. Constructive Distraint is only a safeguard for and not ameans of collection of the tax. There is no definite taxdue in constructive distraint unlike in actual distraint.


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TMDTB 290 Slide 22

WARRANT OF GARNISHMENT

Bank Accounts or Salaries

Property or Rights to Property

Properties placed under

Constructive Distraint


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TMDTB 290 Slide 23

SALE OF PROPERTY DISTRAINED &

DISPOSITION OF PROCEEDS

Sell the goods, chattels, etc., including stocks and

other securities to the highest bidder for cash, orwith the approval of the Commissioner, thru theduly licensed produce or stock exchanges at thetime and place fixed in the notice.

If there is a winning bid, the Revenue Officerexecutes a Certificate of Sale of personalproperty.


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TMDTB 290 Slide 24

The Distraining Officer shall:

Require the buyer to make a written offer addressedto the CIR thru the Regional Director/RDO, indicatingthe amount offered and the mode of payment.

Prepare a memorandum, stating the background of the

case and the reasons for the negotiated sale to the RDOrequesting approval of the offer.

Prepare the Deed of Sale to be signed by the buyer, upon

receipt of the approval of the CIR. The Deed of Sale andthe entire docket will then be forwarded to the CIR.

PROCEDURES IN A NEGOTIATED SALE


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TMDTB 290 Slide 25

PROTEST ON THE ASSESSMENT

Procedures to be followed in cases of protest on assessments:

The Revenue Officer shall:

Stamp received on the letter of protest and attach the sameto the docket.

Determine if the letter of protest was filed by the taxpayerwithin the 30 day period from receipt of the assessmentnotice by the taxpayer (Sec. 228, NIRC).

Require the taxpayer to accomplish and sign a Waiver of theStatute of Limitation not later than six months.

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