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    Reply On PAN

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    Paul Casaje
    The taxpayer received a Preliminary Assessment Notice for deficiency income tax, VAT, and expanded withholding tax for tax year 2014. The taxpayer is submitting a response disagreeing with the assessment for the following reasons: 1. For deficiency income tax from disallowed expenses, the taxpayer should be allowed to pay the tax now to receive the deduction. 2. For unsupported creditable withholding tax, the lack of certificates was an oversight and the taxpayer can provide them. 3. For the VAT assessment, the PAN did not provide enough details on the facts and law to properly assess the deficiency. 4. For expanded withholding tax, the taxpayer does not believe it meets the requirements under the revenue

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    Reply On PAN

    Uploaded by

    Paul Casaje
    11K views6 pages
    The taxpayer received a Preliminary Assessment Notice for deficiency income tax, VAT, and expanded withholding tax for tax year 2014. The taxpayer is submitting a response disagreeing with the assessment for the following reasons: 1. For deficiency income tax from disallowed expenses, the taxpayer should be allowed to pay the tax now to receive the deduction. 2. For unsupported creditable withholding tax, the lack of certificates was an oversight and the taxpayer can provide them. 3. For the VAT assessment, the PAN did not provide enough details on the facts and law to properly assess the deficiency. 4. For expanded withholding tax, the taxpayer does not believe it meets the requirements under the revenue

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    Reply on PAN

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    The taxpayer received a Preliminary Assessment Notice for deficiency income tax, VAT, and expanded withholding tax for tax year 2014. The taxpayer is submitting a response disagreeing with the assessment for the following reasons: 1. For deficiency income tax from disallowed expenses, the taxpayer should be allowed to pay the tax now to receive the deduction. 2. For unsupported creditable withholding tax, the lack of certificates was an oversight and the taxpayer can provide them. 3. For the VAT assessment, the PAN did not provide enough details on the facts and law to properly assess the deficiency. 4. For expanded withholding tax, the taxpayer does not believe it meets the requirements under the revenue

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    11K views6 pages

    Reply On PAN

    Uploaded by

    Paul Casaje
    The taxpayer received a Preliminary Assessment Notice for deficiency income tax, VAT, and expanded withholding tax for tax year 2014. The taxpayer is submitting a response disagreeing with the assessment for the following reasons: 1. For deficiency income tax from disallowed expenses, the taxpayer should be allowed to pay the tax now to receive the deduction. 2. For unsupported creditable withholding tax, the lack of certificates was an oversight and the taxpayer can provide them. 3. For the VAT assessment, the PAN did not provide enough details on the facts and law to properly assess the deficiency. 4. For expanded withholding tax, the taxpayer does not believe it meets the requirements under the revenue

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    © All Rights Reserved
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    The taxpayer is disputing a preliminary assessment notice from the Bureau of Internal Revenue regarding alleged deficiencies in income tax, value added tax, and expanded withholding tax for the 2014 tax year.

    The taxpayer is disputing deficiency assessments for income tax, VAT, and expanded withholding tax.

    The taxpayer argues that under recent revenue regulations, disallowed expenses should be allowed if the taxes are paid during an audit or reinvestigation.

    Business Name

    Address

    REPLY

    February , 2018
    Regional Director
    Bureau of Internal Revenue
    Revenue Region

    Sir/Madame;

    This refers to the Preliminary Assessment Notice received by this


    Corporation on __________________, informing hereof of the deficiency
    Income tax, Value Added Tax, Expanded Withholding Tax for the
    Taxable Year 2014.

    Please be informed that the herein taxpayer is availing Section 228 of


    Republic Act 8424, as amended otherwise known as the National
    Internal Revenue Code of 1997, and Section 3.1.4 of Revenue
    Regulations 18-2013, herein quoted the applicable provisions, to wit:

    “SEC. 228. Protesting of Assessment. - When the


    Commissioner or his duly authorized representative finds that
    proper taxes should be assessed, he shall first notify the
    taxpayer of his findings x x x

    x x x Within a period to be prescribed by implementing rules


    and regulations, the taxpayer shall be required to respond to
    said notice. If the taxpayer fails to respond, the
    Commissioner or his duly authorized representative shall
    issue an assessment based on his findings. x x x”
    “SECTION 3. Due Process Requirement in the Issuance of
    a Deficiency Tax Assessment. -
    3.1 Mode of procedure in the issuance of a deficiency tax
    assessment:

    3.1.1 Preliminary Assessment Notice (PAN). — If after


    review and evaluation by the Commissioner or his duly
    authorized representative, as the case may be, it is
    determined that there exists sufficient basis to assess the
    taxpayer for any deficiency tax or taxes, the said Office
    shall issue to the taxpayer a Preliminary Assessment Notice
    (PAN) for the proposed assessment. It shall show in detail
    the facts and the law, rules and regulations, or
    jurisprudence on which the proposed assessment is based

    If the taxpayer fails to respond within fifteen (15) days from


    date of receipt of the PAN, he shall be considered in
    default, in which case, a Formal Letter of Demand and Final
    Assessment Notice (FLD/FAN) shall be issued calling for
    payment of the taxpayer's deficiency tax liability, inclusive
    of the applicable penalties.”

    by submitting its response and disagreement to the aforementioned


    Preliminary Assessment Notice, as follows:

    I. DEFICIENCY INCOME TAX

    Disallowed Expenses due to non-withholding

    Under Revenue Regulation No. 6-2018 re: Revenue Regulation No.


    12-2013, Thereby Reinstating the Provisions of Section 2.58.5 of RR No. 14-
    2002, as Amended by RR No. 17-2003, in which relevant provision are
    quoted as follows:

    “Sec. 2.58.5. Requirements for Deductibility. - An


    income payment which is otherwise deductible under the
    Code shall be allowed as a deduction from the payor's gross
    income only if it is shown that the income tax required to be
    withheld has been paid to the Bureau in accordance with
    Secs. 57 and 58 of the Code.

    A deduction will also be allowed in the following cases


    where no withholding of tax as made:

    (B) The recipient/payee failed to report the income on


    the due date thereof, but the withholding agent/taxpayer
    pays the tax, including the interest incident to the failure to
    withhold the tax and surcharges if applicable, at the time of
    audit/investigation or reinvestigation/reconsideration.”

    By the provision of the recent Revenue Regulation, assuming


    arguendo that the Corporation has failed to remit the income tax from its
    purchases which ultimately led to its disallowance, the latter should be
    given the benefit of the disallowance of expenses through payment of
    which during audit or reinvestigation.

    Unsupported Creditable Wittholding Tax, P436,000.00

    The non-inclusion of the withholding tax certificates (BIR Form 2307)


    which resulted to the assessment to the amount of P436,000.00 was due to
    a mere oversight with no intention to conceal nor misrepresent any amount
    tax due. The mere error may be corrected by presenting the same if and
    when ordered to be submitted.

    II. VALUE ADDED TAX

    Other income not subjected to VAT, P480,000.00

    The aforementioned Value Added Tax out of the line in the


    Preliminary Assessment Pan as merely “Other Income Not Subjected to VAT
    - P480,000.00, is in contravention of Section 228 of the National Internal
    Revenue Code quoted as follows:

    “SEC. 228. Protesting of Assessment. x x x

    x x xThe taxpayers shall be informed in writing of the law and


    the facts on which the assessment is made; otherwise, the
    assessment shall be void.”

    It is clear in the foregoing that the assessment is without legal nor


    factual justification, as the Preliminary Assessment Notice merely included
    the account “Other Income Not Subjected to VAT”, with no explanation to
    fully appraise the undersigned of the facts and circumstances regarding the
    alleged deficiency.

    In the case of Commissioner of Internal Revenue vs. Enron Subic


    Power Corporation, Gr No. 166387, the Supreme Court stated:

    “We note that the old law merely required that the
    taxpayer be notified of the assessment made by the CIR. This
    was changed in 1998 and the taxpayer must now be informed
    not only of the law but also of the facts on which the
    assessment is made. Such amendment is in keeping with the
    constitutional principle that no person shall be deprived of
    property without due process. In view of the absence of a fair
    opportunity for Enron to be informed of the legal and factual
    bases of the assessment against it, the assessment in question
    was void. We reiterate our ruling in Reyes v. Almanzor, et
    al.:

    Verily, taxes are the lifeblood of the Government and so


    should be collected without unnecessary hindrance.
    However, such collection should be made in accordance
    with law as any arbitrariness will negate the very reason for
    the Government itself.”
    At any rate, the undersigned wishes to clear and correct the above
    mentioned discrepancy if proven to be correct and true.

    III. EXPANDED WITHHOLDING TAX

    Basic Expanded withholding tax due, P1,605,989.62

    The undersigned believes that the assessment of deficient Expanded


    Withholding Tax is not in accordance with Revenue Regulation 17-2003 in
    which the pertinent provision is quoted as follows:

    xxx (M) Income payments made by the top ten thousand


    (10,000) private corporations to their local/resident
    supplier of goods and local/resident supplier of services
    other than the covered by other rates of withholding tax -
    Income payments made by any of the top ten thousand
    (10,000) private corporations, as determined by the
    Commissioner, to their local/resident supplier of goods and
    local/resident supplier of services, including non-resident
    alien engaged in trade or business in the Philippines x x x

    x x x Top ten thousand (10,000) private corporations shall


    include a corporate taxpayer who has been determined and
    notified by the Bureau of Internal Revenue (BIR) x x x

    As per the provision of the said Revenue Regulation, Income


    payments being made by the undersigned with its expenses need not be
    withheld and remitted with the Bureau of Internal Revenue from time to
    time as the former believes that it is not one of the Top Ten Thousand
    (10,000) Taxpayers being described by the said Revenue Regulation.
    Furthermore, even if the undersigned is one of the said Top Ten Thousand
    (10,000) Taxpayer, the requirement that it is determined and notified by
    the Bureau of Internal Revenue is lacking as far as the undersigned believes
    in good faith.

    Lastly, to assess and demand from the undersigned deficient


    Expanded Withholding Tax which was already reported and paid by the
    supplier would tantamount to Direct Double Taxation, as the same taxable
    article is being subjected to the same kind of tax, within the same taxable
    year, in the same taxing authority within the same jurisdiction, which is
    highly disfavoured being obnoxious.

    At any rate, the undersigned wishes to clear and correct the


    foregoing discrepancy if proven to be correct and true.

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