Tax Articles

Request for Reconsideration or Reinvestigation?

By Atty. Irwin C. Nidea Jr.

Tax remedies have complexities that an ordinary taxpayer may find overwhelming. There are technical intricacies that should be considered when replying to a tax assessment, especially when it already involves a Final Assessment Notice (FAN) or a Formal Letter of Demand (FLD).

What should a taxpayer do, after absorbing the shock of receiving a bloated FAN or FLD? According to Revenue Regulations 18-2013, the taxpayer may protest administratively against the FAN or FLD within 30 days from date of receipt. The said protest must be written and may either be a request for reconsideration or reinvestigation. Request for reconsideration refers to a plea of re-evaluation of an assessment on the basis of existing records without need of additional evidence. Request for reinvestigation on the other hand refers to a plea of re-evaluation of an assessment on the basis of newly discovered or additional evidence.

In both motions for reconsideration and reinvestigation the taxpayer must state the following (i) the nature of protest whether reconsideration or reinvestigation, specifying newly discovered or additional evidence he intends to present if it is a request for reinvestigation, (ii) date of the assessment notice, and (iii) the applicable law, rules and regulations, or jurisprudence on which his protest is based, otherwise, his protest shall be considered void and without force and effect. These are very important details that must not be omitted in a protest. So, a one pager general denial of a tax liability will not fly. A protest must lay down the legal basis for it to be considered valid. If not, the taxpayer will be considered as not having filed a protest at all, making the tax assessment against him final and executory.

According to BIR regulations, in requests for reinvestigation, the taxpayer must submit all relevant supporting documents in support of his protest within 60 days from date of filing of his letter of protest, otherwise, the assessment shall become final. But in a recent case, the Supreme Court ruled that the submission of additional documents within 60 days refers to the Preliminary Assessment Notice (PAN) and not to the FAN or FLD. This SC ruling is contrary to the BIR’s interpretation on when the 60-day period to submit additional documents must be commenced. According to the BIR, it must be reckoned from the submission of the protest to the FAN but according to the SC, it must be counted from the filing of the protest to the PAN. So, effectively all tax assessments where the BIR immediately issued a FAN or FLD after the expiration of the 15 day period for the taxpayer to reply to the PAN, and the BIR did not wait for the taxpayer to submit additional documents within 60 days from the filing of the protest to the PAN, are void. This apparent contradiction between the BIR rules and the recent SC ruling, on when the counting of the 60-day period to submit additional documents must commence, have far reaching legal implications.

In a request for reconsideration on the other hand, the taxpayer cannot submit additional documents. He should only rely on the documents that he submitted when he filed his protest to the FAN or FLD.

In a motion for reinvestigation, the BIR must accept the request for reinvestigation. Some jurisprudence say that such acceptance may either be expressed or implied. What is the significance of the BIR’s acceptance to conduct a reinvestigation? It is only when a request for reinvestigation is accepted that the running of the 5-year prescriptive period for the BIR to collect is tolled. If there is no express or implied acceptance of the taxpayer’s request for reinvestigation, the BIR’s right to collect will be limited only to 5-years from the issuance of the FAN or FLD.

The running of the 5-year prescriptive period for the BIR to collect does not stop in a motion for reconsideration. So, after 5 years from the issuance of the FAN or FLD, taxpayers will have a sigh of relief because when this time comes, the BIR has lost it right to collect.

In filing a protest, the taxpayer must be conscious of the completeness of its content. Also, in choosing whether to file a motion for reconsideration or reinvestigation, the taxpayer must understand that in choosing the latter, he is effectively waiving the 5-year limit for the BIR to go after his properties.

Tax remedies are meant to protect taxpayers against unjust assessments. But taxpayers are expected to do their part and be aware of the consequences of their choices.