Period to File Protest | Protesting an Assessment | Taxpayers Remedies | Tax Remedies | National Internal Revenue Code of 1997 (NIRC), as amended by R.A. No.… | TAXATION LAW

Protesting a Tax Assessment: Period to File Protest under the National Internal Revenue Code of 1997, as amended by the TRAIN Law and Ease of Paying Taxes Act

Under the Philippine taxation system, taxpayers are afforded the right to dispute assessments made by the Bureau of Internal Revenue (BIR). This process is vital for taxpayers who believe that the tax assessed is either erroneous or excessive. To ensure procedural fairness, specific timelines and requirements for filing a protest are set forth in the National Internal Revenue Code (NIRC) of 1997, as amended by the TRAIN Law and the Ease of Paying Taxes Act (R.A. No. 11976). Understanding these rules is essential to avoid forfeiture of the right to protest and prevent tax assessments from becoming final and executory.

1. Right to Protest an Assessment

Under the NIRC, a taxpayer has the right to file a protest against a deficiency tax assessment issued by the Commissioner of Internal Revenue or their duly authorized representative. The protest serves as a formal notice to the BIR that the taxpayer contests the validity, accuracy, or legality of the assessment.

2. Basis for Assessment and Period for Filing Protest

The BIR typically issues a tax assessment after conducting an audit and finding a deficiency in tax payments. Once the taxpayer receives the Final Assessment Notice (FAN) or Formal Letter of Demand (FLD) from the BIR, they have specific periods within which they can file a protest to challenge the assessment.

A. 60-Day Period to Submit Supporting Documents

Upon filing a protest, the taxpayer is required to submit any necessary supporting documents to substantiate their protest within 60 days from the filing date of the protest letter. Failure to provide these documents within the 60-day period may result in the outright denial of the protest by the BIR.

B. 180-Day Period for the BIR to Act on the Protest

Once the taxpayer files the protest and submits the supporting documents, the BIR has 180 days to act on the protest, counted from the date of the submission of complete supporting documents. This period is a crucial waiting period during which the BIR must resolve the protest by either granting or denying it.

C. 30-Day Period to Appeal to the Court of Tax Appeals (CTA)

If the BIR fails to act on the protest within the 180-day period, or if the taxpayer receives an adverse decision from the BIR, the taxpayer has the right to appeal to the Court of Tax Appeals (CTA). The taxpayer must file the appeal within 30 days from receipt of the decision or, if there is no decision, from the expiration of the 180-day period.

3. Modes of Protest: Administrative Protest and Judicial Protest

• Administrative Protest: An administrative protest is the initial stage of contesting an assessment with the BIR directly. It involves filing a protest with the BIR’s office that issued the assessment and typically includes both a request for reconsideration and supporting documents.

• Judicial Protest: If the administrative protest is denied or the BIR fails to act within the prescribed period, the taxpayer may elevate the matter to the CTA through a judicial protest. The CTA exercises exclusive appellate jurisdiction over tax cases and is the appropriate venue to seek judicial relief from an unfavorable decision or inaction by the BIR.

4. Requirements for a Valid Protest

For the BIR to consider a protest, the taxpayer must strictly comply with the requirements for a valid protest:

• Written Protest: The protest must be made in writing and must state the facts, the law, and the evidence supporting the taxpayer’s claim.

• Grounds for Protest: The protest must be based on specific grounds, such as over-assessment, double assessment, or an error in the application of tax laws.

• Supporting Documents: As previously mentioned, supporting documents must be submitted within 60 days from the filing of the protest to substantiate the taxpayer’s claims.

5. Failure to File a Timely Protest: Consequences

Failure to file a timely protest or comply with procedural requirements results in the assessment becoming final, executory, and demandable. This effectively means the taxpayer loses the right to contest the assessment, and the BIR may proceed with the collection of the assessed taxes.

6. Appeal to the Court of Tax Appeals (CTA)

If the BIR denies the protest or fails to act within the 180-day period, the taxpayer may file a petition for review with the CTA within 30 days from the lapse of the 180-day period or receipt of the BIR’s decision. This appeal process is subject to strict compliance with procedural rules. Any delay or failure to meet the 30-day deadline will prevent the taxpayer from further challenging the assessment in court.

7. Amendments under R.A. No. 11976 or the Ease of Paying Taxes Act

Recent legislative changes under R.A. No. 11976, known as the Ease of Paying Taxes Act, aim to streamline tax administration and reduce taxpayer burden. This act seeks to improve transparency, taxpayer rights, and the administrative process for tax assessments and protests. Key provisions include enhanced taxpayer rights, simplified processes for protest filing, and further clarification on deadlines and requirements, although specifics on adjustments to the protest process under this act will depend on subsequent implementing regulations issued by the BIR.

8. Summary of Key Deadlines for Protesting a Tax Assessment

• 60 Days from the filing of the protest letter to submit supporting documents to the BIR.
• 180 Days from the submission of complete documents for the BIR to act on the protest.
• 30 Days from receipt of the BIR’s decision (or lapse of 180-day period without a decision) to appeal to the CTA.

9. Conclusion

Taxpayers must closely monitor these timelines to preserve their right to contest tax assessments. By adhering to the deadlines and procedural requirements, taxpayers ensure they retain their right to protest and, if necessary, seek judicial recourse through the CTA. Taxpayers and their representatives should remain vigilant and meticulous in gathering supporting documents, understanding assessment grounds, and following up with the BIR to prevent adverse consequences arising from procedural lapses.