Tax Articles

180-Day Period on Tax Assessment

By Atty. Fulvio D. Dawilan

Among the due process requirements in a tax assessment process is the issuance of a formal letter of demand and assessment notice, with all the necessary information indicated in the said notice and properly issued to the taxpayer. A taxpayer who does not agree with the assessment may file a protest within 30 days following the receipt of the same. The protest may be in the form of request for reconsideration if the plea is based on existing records without the need of additional evidence. On the other hand, if the protest calls for the re-evaluation of the assessment on the basis of newly discovered or additional evidence that a taxpayer intends to present, the protest shall be in the form of a request for re-investigation. The supporting documents should also be submitted within 60 days from the filing of the request for re-investigation.

In case of a denial of the protest, the taxpayer may appeal to the Court of Tax Appeals (CTA) or file an appeal with the office of the Commissioner of Internal Revenue (CIR). Either remedy should be filed within 30 days from the receipt of the decision. Appeal to the CIR is available only if the denial is issued by an authorized representative of the Commissioner. If the denial is issued by the CIR, the remedy should be a direct appeal to the CTA.

There are instances, however, where the protest is not acted upon. If this happens, are there remedies available for the taxpayer other than awaiting the decision? If no action is made within one hundred eighty (180) days from the date of filing of the protest, in case of a request for reconsideration, or from the submission of complete documents, in case of request for re-investigation, the taxpayer can opt to already appeal to the CTA within 30 days from the lapse of the 180-day period.

There is only one 180-day period, that is, the period counted from the filing of the protest or the submission of the required documents. Accordingly, if an authorized representative of the CIR denies the protest within the 180-day period and the taxpayer appeals to the CIR, the CIR has the remaining of the 180 days within which to act. And if there is no action, the taxpayer may appeal to the CTA within 30 days after the lapse of the said remaining period. No new 180-day period is created when a taxpayer files and appeal to the CIR.

It follows that if the taxpayer waits for the decision of the CIR’s representative and the same is issued after the lapse of the 180-day period, the same may be appealed to the CTA or to the CIR. In case of the latter, the 180-day period is no longer a consideration and the only remedy for the taxpayer is to wait for the CIR’s decision before making an appeal, if the same is not favorable.

In essence, there is no new or separate 180-day period that will start to run when the taxpayer appeals to the CIR. A taxpayer does not have the option to appeal to the CTA, if no action is made by the CIR after the lapse of 180 days from the filing of the appeal. If the taxpayer considers that as a remedy, that should always be counted from the filing of the protest or submission of the documents in support of the protest. This was the pronouncement of the Supreme Court in G.R. No. 258101, affirming the decision of the CTA.

Incidentally, when a final decision on disputed assessment is elevated to the CIR, it does not become final, executory and demandable. Accordingly, the issuance of collection letters, final notice before seizure, warrant of distraint and levy and any enforcement action, pending the appeal before ethe CIR, are considered void. They do not emanate from demandable assessment and there are no delinquent taxes to speak of. This was the recent pronouncement of the Supreme Court in G.R. No. 231238, June 20, 2022.

Appeal to the CTA or the CIR does not necessarily require a decision on the protest or appeal. This can be done even if there is inaction on the part of the tax authority, as an option to awaiting the issuance of a decision. In the words of the Courts, this option is granted to empower the taxpayers who are usually held hostage by the CIR’s inaction on their protests. It should indeed empower taxpayers but only if the timing for its use is properly observed.