Tax Articles

Update on Availment of TAD

By Atty. Rodel C. Unciano

Pursuant to Section 19 of Republic Act 11213 or the Tax Amnesty Act of 2019, taxpayers who have delinquent accounts for taxable year 2017 and prior years may avail themselves of the tax amnesty on delinquencies (TAD) within one year from the effectivity of the implementing rules and regulations of the Act. As Revenue Regulations (RR) 4-2019, the implementing rules and regulations of the law, became effective on April 24, 2019, the availment thereof would therefore be until April 23, 2020, which is barely over two months from today.

As to what constitutes delinquent accounts, Revenue Memorandum Circular (RMC) 57-2019 previously clarified that tax liabilities covered by a Final Assessment Notice (FAN) which was timely protested yet withdrawn on or before April 24, 2019, are considered delinquent accounts from the lapse of the period to file a protest. Being delinquent, the accounts qualify for tax amnesty. If the protest was withdrawn on or before April 24, 2019, the tax liabilities shall be considered delinquent since it is treated as if no protest was ever filed. Thus, the taxpayer may avail himself of TAD provided that the delinquent accounts pertain to taxable year 2017 and prior years, and the period to file protests lapsed on or before April 24, 2019.

Can the taxpayer avail himself of TAD if the withdrawal of the protest was made only after the effectivity of RR 4-2019 on April 24, 2019? We may recall that the Bureau of Internal Revenue (BIR), under RMC 57-2019, previously clarified that the tax liabilities stated in the FAN cannot be considered delinquent account as of April 24, 2019, if the withdrawal of the protest was only made after April 24, 2019. The account cannot be considered delinquent as of April 24, 2019, since the FAN was duly protested and the protest was still in effect as of that period. Thus, the taxpayer is not qualified to avail himself of the TAD.

Following the rationale of RMC 57-2019, TAD may no longer be availed of by the taxpayer if the withdrawal of the protest was only made after the effectivity of RR 4-2019.

In a more recent turn of event, under RMC 11-2020, the BIR now clarified that even if the withdrawal of the protest was only made after the effectivity of RR 4-2019, the taxpayer may avail himself of TAD provided that the withdrawal is made on or before April 23, 2020, the last day of the one-year availment period of TAD, pursuant to the provisions of RA 11213 in relation to RR 4-2019.

According to RMC 11-2020, the effect of the withdrawal of the protest to the FAN is that, as if no protest was ever filed. Thus, the assessment contained therein became final and executory upon the lapse of the 30-day period within which to file a protest. Being so, tax liabilities contained in the FAN, whose protest was subsequently withdrawn, are considered delinquent upon the effectivity of RR 4-2019. This is notwithstanding that the withdrawal of the protest was only made subsequent to the effectivity of RR 4-2019. Thus, the taxpayer may avail himself of the TAD.

Therefore, taxpayers who validly protested a FAN prior to the effectivity of RR 4-2019 on April 24, 2019, may now opt to withdraw the protest filed therein until April 23, 2020, and avail themselves of TAD accordingly. Note, however, that the FAN must have been received at the latest on March 25, 2019, to be considered delinquent as of April 24, 2019.

This rule equally applies to Final Decision on Disputed Assessment duly appealed to the Commissioner of Internal Revenue before the effectivity of RR 4-2019. Pursuant to RMC 11-2020, the appeal may be withdrawn and the taxpayer may avail himself of TAD anytime until the expiry of the one-year availment period on April 23, 2020.