Jan. 8 marked the end of the Bureau of Internal Revenue’s suspension of audit and field operations. Taxpayers must now face the sad reality of once more dealing with tax assessments.
By Ma. Lourdes Politado-Aclan
The BIR’s tax assessment process starts with the issuance of a Letter of Authority . Revenue Memorandum Circular No. 075-18 requires an LoA for a tax assessment to be valid. No assessments can be issued, and no assessment functions or proceedings can be carried out without the prior approval and authorization of the Commissioner of Internal Revenue or his duly authorized representative, through an LoA.
If the taxpayer is still found to liable for deficiency taxes, the investigating officer may endorse the case for review and approval for the issuance of a Preliminary Assessment Notice . Upon receipt of the PAN, the taxpayer has 15 days to reply. Based on the BIR’s evaluation of the reply to the PAN, it may proceed to issue a Final Assessment Notice /Formal Letter of Demand if the taxpayer is still found to be liable for deficiency taxes.
Arguments and evidence submitted in the reply to the PAN must be carefully evaluated by the BIR. An explanation of how the bureau considered or appreciated the taxpayer’s arguments and evidence must be included in the FAN/FLD. Thus, in several court cases, it has been ruled that the issuance of the FAN, without consideration and evaluation of the defenses contained in the reply to the PAN, violates the taxpayer’s right to due process. Also, in the recent CTA Case No. 10063, dated Nov.
Second, I wish that our Tax Code specifically prohibits the issuance of FANs with findings that are exactly the same as those in the PAN, except when the taxpayer fails to provide a reply to the PAN, or when
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