BIR open cases letter of authority assessment notice registration retirement access letter
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In 2002, I opened a small business – miniscule really – that my father funded. An Internet shop along Katipunan Avenue that I managed with a friend. We were right beside another Internet shop, and down the street there were two more Internet cafes. Which is to say we barely broke even every month.
In 2004, we closed shop. I was too young, too careless, to know that I needed to close the shop’s books with the BIR, or else they would continued to charge me for not filing taxes every month.
You got it: every month.
Fast forward to 2015, a little over a decade since. I get work that will pay me P60k, a major feat really for a freelancer. Before this, I was never asked for a receipt by the places I write for, and they’d tell me they were filing my taxes for me. Withholding tax, my payslips said. I had no reason to disbelieve it.
In the past, I wouldn’t even earn enough to be required to file my taxes. In the past, which is to say before this version of the BIR.
Getting back into the grid didn’t seem like a big deal to me – even as I believe it to be an injustice for freelancers like me who were being treated as “self-employed.”
When we checked if I could get myself those receipts, the BIR revealed that I had open cases from that old business, and since 2005, they have been charging me monthly for failing to close my books with their office.
Which means they are charging me now, for a business that closed down 11 years ago. They are charging me for a business that has been closed down since 2004, which has a business address that has ceased to exist – the building was sold and destroyed in 2006.
The BIR is charging me P60 thousand pesos as of June 2015. Exactly the same amount I’m supposed to get if and when I finally get my BIR receipt for this rare editing gig.
It’s like I’m earning this much for the first time, after a decade of blood sweat tears as freelancer, and all of it will go the BIR.
To set the context, let’s revisit the Philippine tax audit process. It starts with the issuance of a Letter of Authority (LoA), allowing the BIR to conduct the audit. After the examination of the taxpayer’s records, the BIR will issue a Notice for Informal Conference (NIC), containing preliminary findings and the schedule for the conference with the revenue officers.
If the BIR does not find the explanations or documents submitted at the conference satisfactory, a Preliminary Assessment Notice (PAN) will be issued. The taxpayer will have 15 days to reply. If the findings remain unresolved, the BIR will issue a Formal Assessment Notice and a Formal Letter of Demand (FAN/FLD). Within 30 days, the taxpayer must file for reconsideration or reinvestigation as a form of protest. Otherwise, the assessment shall become final and executory. In case of a request for reinvestigation, the taxpayer is given an additional 60 days from the filing of the protest to submit supporting documents.
The BIR then has 180 days to decide on the protest and issue a Final Decision on Disputed Assessment (FDDA). If the taxpayer disagrees with the FDDA, an appeal may be filed with the Commissioner of Internal Revenue (CIR) or the Court of Tax Appeals (CTA) within 30 days.
Under RR 11-2020, the deadline for filing of the following documents or correspondences which fall due within the quarantine period starting 16 March 2020 until 30 days from the lifting of the ECQ, shall be extended for “30 days from the date of the lifting of the quarantine:”
protests/replies to the NIC, PAN, and FAN/FLD;
submission of relevant supporting documents for requests for reinvestigation;
appeal to the CIR on assessments which have reached the FDDA stage; and
other similar letters and correspondences with due dates.
While not explicitly mentioned, the deadline for submission of documents in response to an LoA may also be extended under Item No. 4 above. Effectively, all tax investigation deadlines at the BIR are extended — from replying to the LoA to appeals to the CIR.
Initially, the BIR under RMC 31-2020 only extended the deadlines to filings/responses falling due within the ECQ. However, RR 11-2020 has expanded this to cover taxpayers whose deadline to respond falls due within 30 days from the date of the lifting of the ECQ.