Assessment, Administration and Enforcement Powers of the Tax Commissioner. - R.A. 8424


(A) Examination of Returns and Determination of Tax Due - After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided, however; That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer.

Any return, statement of declaration filed in any office authorized to receive the same shall not be withdrawn: Provided, That within three (3) years from the date of such filing, the same may be modified, changed, or amended: Provided, further, That no notice for audit or investigation of such return, statement or declaration has in the meantime been actually served upon the taxpayer.

NOTE: File your tax return. BIR will examine. Even if you do not file, BIR can still examine. Your cannot withdraw your declaration. However, within 3 years from filing, you can modify, change or amend. If an audit or investigation notice has already been served upon you, you can no longer modify, change or amend.

(B) MOTU PROPRIO ASSESSMENT BASED ON BEST EVIDENCE. Failure to Submit Required Returns, Statements, Reports and other Documents - When a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by laws or rules and regulations or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax on the best evidence obtainable.

POWER TO MAKE OR AMEND RETURN ON BEHALF OF A NON-FILING TAXPAYER. In case a person fails to file a required return or other document at the time prescribed by law, or willfully or otherwise files a false or fraudulent return or other document, the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise, which shall be prima facie correct and sufficient for all legal purposes.

(C) POWER TO ORDER INVENTORY AND POWER TO PLACE TAXPAYER'S OPERATIONS UNDER SURVEILLANCE. Authority to Conduct Inventory-taking, surveillance and to Prescribe Presumptive Gross Sales and Receipts - The Commissioner may, at any time during the taxable year, order inventory-taking of goods of any taxpayer as a basis for determining his internal revenue tax liabilities, or may place the business operations of any person, natural or juridical, under observation or surveillance if there is reason to believe that such person is not declaring his correct income, sales or receipts for internal revenue tax purposes.

PRIMA FACIE CORRECTNESS OF FINDINGS AND USE THEREOF IN ANY QUARTER OR YEAR. The findings may be used as the basis for assessing the taxes for the other months or quarters of the same or different taxable years and such assessment shall be deemed prima facie correct.

PRIMA FACIE CORRECTNESS OF PRESCRIBED MINIMUM AMOUNT OF SALES OR TAXABLE BASE BASED ON SIMILAR BUSINESS OPERATIONS DUE TO FAILURE TO ISSUE RECEIPTS. When it is found that a person has failed to issue receipts and invoices in violation of the requirements of Sections 113 and 237 of this Code, or when there is reason to believe that the books of accounts or other records do not correctly reflect the declarations made or to be made in a return required to be filed under the provisions of this Code, the Commissioner, after taking into account the sales, receipts, income or other taxable base of other persons engaged in similar businesses under similar situations or circumstances or after considering other relevant information may prescribe a minimum amount of such gross receipts, sales and taxable base, and such amount so prescribed shall be prima facie correct for purposes of determining the internal revenue tax liabilities of such person.

(D) POWER TO TERMINATE TAXABLE PERIOD DUE TO TAXPAYER'S RETIREMENT FROM BUSINESS OR ATTEMPT TO OBSTRUCT TAX COLLECTION. Authority to Terminate Taxable Period - When it shall come to the knowledge of the Commissioner that a taxpayer is retiring from business subject to tax, or is intending to leave the Philippines or to remove his property therefrom or to hide or conceal his property, or is performing any act tending to obstruct the proceedings for the collection of the tax for the past or current quarter or year or to render the same totally or partly ineffective unless such proceedings are begun immediately, the Commissioner shall declare the tax period of such taxpayer terminated at any time and shall send the taxpayer a notice of such decision, together with a request for the immediate payment of the tax for the period so declared terminated and the tax for the preceding year or quarter, or such portion thereof as may be unpaid, and said taxes shall be due and payable immediately and shall be subject to all the penalties hereafter prescribed, unless paid within the time fixed in the demand made by the Commissioner.

NOTE: Termination by the Commissioner of a taxpayer's taxable period may result in the issuance of tax assessment and notice to pay tax.
(E) POWER TO DIVIDE THE COUNTRY INTO ZONES AND SET FMV OF REALTY IN EACH. Authority of the Commissioner to Prescribe Real Property Values - The Commissioner is hereby authorized to divide the Philippines into different zones or areas and shall, upon consultation with competent appraisers both from the private and public sectors, determine the fair market value of real properties located in each zone or area.

For purposes of computing any internal revenue tax, the value of the property shall be, whichever is the higher of: 

(1) the fair market value as determined by the Commissioner, or
(2) the fair market value as shown in the schedule of values of the Provincial and City Assessors.

(F) POWER TO INQUIRE INTO BANK DEPOSITS OF DECEDENTS OR TAXPAYERS APPLYING FOR COMPROMISE. Authority of the Commissioner to inquire into Bank Deposit Accounts - Notwithstanding any contrary provision of Republic Act No. 1405 and other general or special laws, the Commissioner is hereby authorized to inquire into the bank deposits of: (1) a decedent to determine his gross estate; and (2) any taxpayer who has filed an application for compromise of his tax liability under Sec. 204 (A) (2) of this Code by reason of financial incapacity to pay his tax liability.

REQUIREMENT OF BANK WAIVER PRIOR TO ACTION ON TAXPAYER'S REQUEST FOR COMPROMISE DUE TO INABILITY TO PAY. In case a taxpayer files an application to compromise the payment of his tax liabilities on his claim that his financial position demonstrates a clear inability to pay the tax assessed, his application shall not be considered unless and until he waives in writing his privilege under Republic Act No. 1405 or under other general or special laws, and such waiver shall constitute the authority of the Commissioner to inquire into the bank deposits of the taxpayer.

(G) POWER TO ISSUE AUTHORITY TO TAX AGENTS. Authority to Accredit and Register Tax Agents - The Commissioner shall accredit and register, based on their professional competence, integrity and moral fitness, individuals and general professional partnerships and their representatives who prepare and file tax returns, statements, reports, protests, and other papers with or who appear before, the Bureau for taxpayers.

NATIONAL AND REGIONAL ACCREDITATION BOARDS. Within one hundred twenty (120) days from January 1, 1998, the Commissioner shall create national and regional accreditation boards, the members of which shall serve for three (3) years, and shall designate from among the senior officials of the Bureau, one (1) chairman and two (2) members for each board, subject to such rules and regulations as the Secretary of Finance shall promulgate upon the recommendation of the Commissioner.

APPEAL TO THE SECRETARY IN CASE OF DENIAL OF ACCREDITATION. Individuals and general professional partnerships and their representatives who are denied accreditation by the Commissioner and/or the national and regional accreditation boards may appeal such denial to the Secretary of Finance, who shall rule on the appeal within sixty (60) days from receipt of such appeal.

FAILURE TO ACT ON APPEAL DEEMED AS APPROVAL. Failure of the Secretary of Finance to rule on the Appeal within the prescribed period shall be deemed as approval of the application for accreditation of the appellant.

(H) POWER TO PRESCRIBE DOCUMENTARY AND REMEDIAL REQUIREMENTS. Authority of the Commissioner to Prescribe Additional Procedural or Documentary Requirements - The Commissioner may prescribe the manner of compliance with any documentary or procedural requirement in connection with the submission or preparation of financial statements accompanying the tax returns. (Section 6 of Tax Reform Act of 1997; R.A. 8424)

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