Income Taxation: Tax Remedies, Filing, and Penalties

Vocabulary flashcards reviewing filing rules, administrative and judicial tax remedies, penalties, assessment timelines, and legal doctrines based on the CPAR income taxation test bank.

Substituted Filing of Income Tax Return

An income tax filing scheme applicable to individual taxpayers receiving pure compensation income derived from a single employer in the Philippines, whose income tax has been correctly withheld.

Surcharge for False or Fraudulent Return

An administrative penalty rate of $50\%$ imposed on the tax or tax deficiency in cases of willful neglect to file a return or when a false or fraudulent return is filed.

Minimum Compromise Rate (Financial Incapacity)

A minimum payment rate of $10\%$ of the basic assessed tax required when compromising a tax liability on the ground of the taxpayer's financial incapacity to pay.

Minimum Compromise Rate (General Grounds)

A minimum payment rate of $40\%$ of the basic assessed tax required for tax liability compromises on grounds other than financial incapacity.

Prescriptive Period for Assessment (General Rule)

The period within $3\text{ years}$ after the date the tax return was due or filed, whichever is later, within which the BIR must assess national internal revenue taxes.

Prescriptive Period for Assessment (Fraud or Omission)

The extended period of $10\text{ years}$ after the discovery of falsity, fraud, or failure to file a return, within which the BIR may assess or file a court proceeding for collection without assessment.

Administrative Protest Period

The period within $30\text{ days}$ from receipt of the Final Assessment Notice (FAN) within which a taxpayer must file a protest with the BIR, failing which the assessment becomes final and executory.

Submission Period for Supporting Documents

The period within $60\text{ days}$ from the filing of an administrative protest requesting reinvestigation, within which the taxpayer must submit all relevant supporting documents.

Inaction Period on Administrative Protest

The period of $180\text{ days}$ given to the BIR to act on a protest from the date of submission of complete supporting documents, after which the taxpayer may appeal to the Court of Tax Appeals (CTA) if no decision is rendered.

Preliminary Assessment Notice (PAN)

A communication issued by the BIR informing the taxpayer of the factual and legal bases of a tax deficiency prior to the issuance of a Final Assessment Notice (FAN).

Letter of Authority (LOA)

An official authorization document issued by the BIR empowering designated Revenue Officers to examine a taxpayer's books of accounts and accounting records.

Referral Memorandum

An internal administrative notice for re-assigning audit tasks that does not constitute a valid legal substitute for a Letter of Authority (LOA).

Irrevocability Option Rule

The tax rule stating that once a taxpayer elects to carry over excess creditable withholding tax in its annual income tax return, that option becomes irrevocable for that taxable period and no refund or Tax Credit Certificate (TCC) may be claimed.

Validity Requirement for Final Assessment Notice

The mandatory legal requirement that a Final Assessment Notice (FAN) and Final Letter of Demand (FLD) must explicitly state the factual and legal bases, a computation of tax liabilities, and a specific demand for payment on or before a definite due date.

Notice of Tax Levy (NTL)

An administrative tax collection enforcement notice annotated on property titles representing a tax lien, which cannot be removed via tax amnesty by a transferee who is not the delinquent taxpayer.