Period to Act Upon or Decide on Protest Filed | Decision of the Commissioner on the Protest | Taxpayers Remedies | Tax Remedies | National Internal Revenue Code of 1997 (NIRC) | TAXATION LAW

Under Philippine taxation law, the period for the Commissioner of Internal Revenue (CIR) to act upon or decide on a protest filed by a taxpayer is crucial in determining the validity of assessments and the taxpayer’s right to further remedies. This discussion will focus on the legal framework governing the period to act upon or decide on a protest, particularly under the National Internal Revenue Code (NIRC) of 1997, as amended by the TRAIN Law (Republic Act No. 10963) and the Ease of Paying Taxes Act (Republic Act No. 11976).

1. The Legal Framework for Protest of Tax Assessments

The taxpayer’s right to file a protest against an assessment and the CIR’s obligation to act upon such protest are grounded in Sections 228 and 229 of the NIRC, as amended. These sections outline the procedural requirements and deadlines for both the taxpayer and the Bureau of Internal Revenue (BIR) in handling tax assessments and protests.

Section 228 of the NIRC

Section 228 mandates that, when a taxpayer disputes an assessment, the taxpayer must file a written protest against the assessment with the CIR within 30 days from the date of receipt of the assessment notice. This protest may take the form of either a request for reconsideration or a request for reinvestigation.

1. Request for Reconsideration: This is a protest based on the existing records without the presentation of new evidence.
2. Request for Reinvestigation: This is a protest based on newly presented evidence and requires a re-evaluation of the facts of the case.

Upon receiving the protest, the CIR is required to act upon it within a specified period, failing which may allow the taxpayer certain remedies under the law.

2. Period to Act on or Decide the Protest Filed by the Taxpayer

The CIR is obligated to decide on the taxpayer’s protest within 180 days from the date of submission of the complete documents supporting the protest. This 180-day period is critical because it governs the timelines for further actions or appeals by the taxpayer.

• Submission of Complete Documents: The 180-day period commences not from the filing of the initial protest but from the date the taxpayer submits all the necessary supporting documents required by the BIR to substantiate the protest.

2.1 Non-Action by the CIR within 180 Days (Deemed Denial)

If the CIR fails to act upon or decide on the protest within the 180-day period, the protest is deemed denied. The taxpayer, therefore, has the following remedies:

1. Filing an Appeal with the Court of Tax Appeals (CTA): The taxpayer may file an appeal with the CTA within 30 days from the lapse of the 180-day period. This is considered a protective remedy against inaction by the BIR, allowing the taxpayer to bring the matter before the CTA for judicial resolution.
2. Waiting for the CIR's Decision Beyond the 180 Days: The taxpayer also has the option to wait until the CIR issues a decision, even if it is beyond the 180-day period, and file an appeal within 30 days of receiving the CIR's final decision. This choice, however, exposes the taxpayer to risks associated with delays in resolution.

3. Decision of the CIR on the Protest

The CIR must issue a formal decision on the protest, known as a Final Decision on Disputed Assessment (FDDA). The FDDA explicitly states the CIR's ruling on the protest, and it serves as the basis for the taxpayer's subsequent remedies if they disagree with the outcome.

3.1 Filing an Appeal with the CTA

Once the FDDA is issued, the taxpayer has 30 days to file an appeal with the CTA. This 30-day period is non-extendible, and failure to comply with this deadline results in the FDDA becoming final and executory, rendering the taxpayer’s assessment liability due and demandable.

4. Impact of the Ease of Paying Taxes Act (Republic Act No. 11976)

The recently enacted Ease of Paying Taxes Act (R.A. No. 11976) seeks to streamline tax procedures and make compliance easier for taxpayers. While it primarily addresses procedural improvements, it also emphasizes the rights of taxpayers to fair and timely action on protests. This law reinforces the importance of the CIR’s compliance with the 180-day period and encourages the BIR to uphold efficiency in responding to taxpayer disputes, thus ensuring a fair administrative process.

Under R.A. No. 11976, any administrative barriers or delays in acting upon taxpayer protests should be minimized, supporting the broader goal of taxpayer-friendly processes. Although specific implementing rules and regulations (IRR) may further refine its impact, the act signifies a positive development for the taxpayer’s right to timely remedies.

5. Consequences of CIR’s Failure to Act Within the Specified Period

Failure of the CIR to issue a decision within the 180-day period essentially allows the taxpayer to escalate the dispute to the judicial level, ensuring that their right to due process is protected. Not acting within the prescribed period reflects a “deemed denial,” preserving the taxpayer’s right to seek relief without being bound indefinitely by the CIR’s inaction.

Summary of Key Points

1. 180-Day Period to Decide on the Protest: The CIR must decide on the taxpayer’s protest within 180 days from the submission of complete documents.
2. Deemed Denial for Non-Action: The protest is deemed denied if the CIR fails to decide within 180 days, allowing the taxpayer to appeal to the CTA.
3. Appeal Period: The taxpayer has 30 days to appeal to the CTA upon receipt of the FDDA or upon the lapse of the 180-day period.
4. Ease of Paying Taxes Act: Emphasizes timely administrative action, promoting efficient handling of tax disputes.

In summary, the NIRC, as amended by the TRAIN Law and the Ease of Paying Taxes Act, enforces a structured and fair process for taxpayers’ protests against assessments, balancing the BIR’s authority with the taxpayer’s right to due process and timely resolution.