A taxpayer who was issued a Final Assessment Notice (FAN) by a Regional Office/LTS/NID may file a written administrative protest requesting for reconsideration or reinvestigation as to legal and factual basis of the assessment within thirty (30) days from receipt thereof.[1] The request for reconsideration or reinvestigation shall be accompanied by a Waiver of Statute of Limitation issued by the taxpayer and approved by an authorized internal revenue officer.[2]
All letters of protest involving questions of facts and requests for re-investigation/reconsideration shall be referred to the Assessment Division of the Regional Office/Enforcement Service (ES)/LTS, for proper recording and appropriate action on the protest. If the protest involves a question of law, it shall be referred to the Legal Division of the Regional Office/Legal Service for appropriate resolution. It is the responsibility of the concerned division/office that resolved the protest to inform the taxpayer on the result thereof.
Upon receipt of any letter from the taxpayer (e.g. protest, request for compromise, abatement or any other communications and documents), the concerned Revenue Officer/Legal Officer at the Administrative Division (AD)/Enforcement Service (ES)/LTS/Regional Legal Division/Legal Service is required to take prompt action thereon within fifteen (15) days from receipt of the communication.[3] The Revenue Officer shall send at least a letter to the taxpayer acknowledging the receipt of its/his/her letter.
Requests for reinvestigation or reconsideration for tax assessments that have already become final and executory due to the failure of the taxpayer to file a protest within the prescribed reglementary period shall no longer be entertained by any concerned office. Accordingly, any office that has jurisdiction over such requests for reinvestigation/reconsideration shall immediately advise the taxpayers in writing that the said requests could no longer be granted; that the tax assessments are already considered final, executory and demandable; and that collection enforcement proceedings shall be instituted by the Bureau.[4]
The taxpayer’s request for reinvestigation or reconsideration must state the facts, the applicable laws, rules and regulations, or jurisprudence on which his protest is based; otherwise, his protest is considered void and without force and effect. If there are several issues involved in the disputed assessment and the taxpayer fails to state the facts, the applicable laws, rules and regulations, or jurisprudence in support of his protest against some of the several issues on which the assessment is made, the same shall be considered undisputed issue or issues in which case, the taxpayer shall be required to pay the corresponding deficiency tax or taxes attributable thereto.[5]
Procedures in Handling Letter of Protest:
- Receipt and Initial Evaluation of the Protest
Regional Assessment Division/Enforcement Service/Large Taxpayers Service
- The receiving officer shall stamp “Received” on the letter of protest and attach the same to the case docket. The name of the receiving personnel as well as the date of receipt of the request for reinvestigation/reconsideration should be clearly indicated on the face of the protest letter.
- The AD/ES/LTS Chief shall assign the letter of protest, together with the case docket, to a Revenue Officer.
- The Revenue Officer shall:
3.1. Analyze the issues being protested by the taxpayer and submit the appropriate recommendation thereon.
3.1.1. Check the date of filing of the request for re-investigation/reconsideration to determine if the protest was filed within the prescribed 30-day period; and
3.1.2. Evaluate the contents of and attachments to the protest letter making particular attention to the following:
- There must be an itemized statement of the findings to which the taxpayer agrees as a basis for computing the tax due, which amount should be paid immediately upon the filing of the protest. The protest shall not be deemed validly filed unless payment of the agreed portion of the tax is paid first.
- There must be itemized schedule of the adjustments with which the taxpayer does not agree;
- There must be a statement of facts and or law in support of the protest; and
- The request for reconsideration/reinvestigation of an assessment shall be accompanied by a duly notarized Waiver of Statute of Limitations of the National Internal Revenue Code (Annex 300-1.12) signed by the taxpayer himself in favor of the Government. The said waiver must have a validity period of at least six (6) months.
A representative may also accomplish and sign the same document, provided that he/she has a duly notarized letter of authorization from the taxpayer. In order to be valid/binding, the waiver shall be mutually agreed upon and signed by the taxpayer and the concerned RDO/Chiefs of LTDO/LT Regular Audit Division (LTRAD)/LT – Excise Audit Division (LTEAD) and other investigating offices. The taxpayer must be furnished with a copy of the same must likewise be clearly indicated on the original copy of the duly signed waiver.
3.1.3. Analyze and evaluate case docket to determine the basis for the approval/denial of the request for re-investigation;
3.2. Prepare a memorandum (Annex 300-1.13) addressed to the RDO/LTDO/LTRAD/LTEAD/ NID/other investigating offices Chiefs, for signature of the Regional Director/ACIR-LTS/ES, informing the former that the taxpayer’s request for reinvestigation/reconsideration has been granted/denied;
3.3. Prepare a letter addressed to the taxpayer with information that his/her/its request for reinvestigation/reconsideration has been granted/denied and citing therein the reasons or bases for such decision, for signature of the Regional Director/ACIR-LTS/ACIR-ES/ ACIR-Legal Service (LS) [Annexes 300-1.14/15];
3.4. Forward the docket to the concerned office for the conduct of necessary reinvestigation/reconsideration or enforcement of collection, whichever is applicable; and
3.5. Release the notice of approval/denial to the taxpayer relative to its request for reinvestigation/reconsideration.
- Conduct of Reinvestigation/Reconsideration of the Tax Case
- Revenue District Office/LTRAD/LTEAD/LTDO/National Investigation Division/Other Investigating Office
1.1. The RDO/LTRAD/LTEAD/LTDO/NID/other Investigating Office Chief shall assign the case for re-investigation to a Revenue Officer pursuant to existing rules, policies, and guidelines.[6]
1.2. The Revenue Officer shall:
1.2.1. Receive the Memorandum of Assignment for re-investigation of the case docket from the RDO/Chief, LTDO/Chief, LTCED;
1.2.2. Require the taxpayer to submit additional documentary requirements, if needed;
1.2.3. Evaluate/Verify the additional documents submitted by the taxpayer to determine the factual and/or legal basis of the protest; and
1.2.4. Prepare a memorandum report on the results of the investigation made, for approval of the RDO/LTDO Chief/LTCED Chief.
1.3. The RDO/LTRAD/LTEAD/LTDO/NID/other Investigating Office Chief shall:
1.3.1. Review and evaluate the results of re-investigation made by the Revenue Officer on the factual and/or legal basis of the taxpayer’s protest; and
1.3.2. Transmit the memorandum/indorsement (Annex 300-1.16) and the entire docket of the case to the Regional Director/ACIR LTS/ACIR-ES, through the Regional Assessment Division/LTCED/LTDO/NID, if the protest involves question of facts, and/or to the Regional Director/ACIR-Legal Service through the Regional Legal Division/Law Division, whenever deemed appropriate, if the protest involves question of law, for further review, evaluation, or approval, as the case may be.
- The Regional Director/Concerned ACIR-LTS/ES/LS shall:
2.1. Receive the docket bearing on the results of the reinvestigation/reconsideration of the case from the investigating/evaluating office; and
2.2. Evaluate the recommendations made on the case by the investigating/evaluating office:
2.2.1. In case of favorable recommendation, approve the report and return the docket to the RDO/LTDO/LTCED for appropriate action.
In case the recommendation is for the cancellation or reduction of the assessment, the same shall require the issuance of Authority to Cancel Assessment (ATCA) for the original assessment and the issuance of the revised Final Assessment Notice (FAN) for the reduced deficiency tax assessment (Refer to CM 302- Management/Handling of AR/DA- Issuance of ATCA).
2.2.2. In case the recommendation is for the reiteration of the assessment, approve the report and return the docket to the RDO/LTDO/LTCED for enforcement of collection. (Refer to CM 305.1-WDL).
2.2.3. Inform the taxpayer in writing of the result of the reinvestigation conducted.
- Cancellation/Revision of the Original Assessment
In case the reinvestigation or reconsideration of the tax case resulted to cancellation of the entire assessment, an ATCA must be issued for purposes of closing the accounts receivable in the General Control Ledger (GCL) and the Updates of Delinquent Account Report. However, in the case the said reinvestigation or reconsideration only resulted to reduction of the original assessment, a revised Final Assessment Notice (FAN) on the reduced amount of assessment must be issued and the ATCA must likewise be issued for the assessment covered by the original FAN, pursuant to the existing rules and policies. This is required to be undertaken in order to close the previously recorded receivable (Refer to CM 302- Management/Handling of AR/DA- Issuance of ATCA) and create a new receivable for the revised assessment in the GCL and the Updates of Delinquent Accounts Report. (Refer to CM 301- Assignment of Dockets for Collection Enforcement)
As a general rule and unless authorized by the Regional/LTS Evaluation Board (REB/LTSEB) and the National Evaluation Board, under meritorious circumstances, cases that have already undergone reinvestigation/reconsideration shall no longer be subject matter of any application for compromise settlement on the ground of doubtful validity of assessment when a protested case has been resolved, except for reasons of financial incapacity.[7] However, the taxpayer can still avail of the benefits of abatement of penalties.[8] (Refer to CM 304.3 Payments by Compromise Settlement/CM 304.4 Abatement of Penalties)
[1] Section 228 of the NIRC of 1997, as amended, provides: “Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as ay be prescribed by implementing rules and regulations. Within sixty (60)days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final.” See also Revenue Regulations (RR) No. 12-85
[2] RDAO No. 4-2007.
[3] Republic Act No. 6713, otherwise known as the “Code of Conduct and Ethical Standards for Public Officials and Employees”.
[4] Memorandum of CIR Joel Tan-Torres dated 4 May 2010 reiterating the prohibition from conducting reinvestigation/reconsideration of DA cases where the assessment has already become final, executory and demandable.
[5] Section 3.1.5. Rr No. 12-99.
[6] RMO No. 62-2010 on Policies on Re-Investigation of Assessments.
[7] Section 2 of RR No. 30-2002.
[8] RR No. 13-2001.
