Amnesty and abatement in 2008
Amnesty and abatement in 2008
by Deo D. Saludario
As the revelries and festivities for the New Year finally come to an end, everyone is now faced with the challenge of starting the year right.
Perhaps, as a new year provides us an opportunity to start anew, we look back and reassess our lives in the year that passed, and plan and resolve to change and improve it this time around.
The same goes for taxpayers and businesses alike. The start of a new year promises new hope for sound compliance with tax laws and regulations.
At this time of the year, taxpayers are bombarded with reminders relative to their tax obligations. These reminders are primarily directed to prevent the occurrence or recurrence of similar tax problems in the New Year.
Starting anew, however, does not consist of doing just the right thing this time, but also of correcting mistakes and making up for lapses that may have been committed in the previous years.
There are actually tax programs aimed towards helping taxpayers attain this objective. Aside from the ongoing Tax Amnesty Program which will be in effect only until this March 6, taxpayers who desire to correct and finally settle their pending tax assessments are given another opportunity under the newly commenced Abatement Program.
The Abatement Program under Revenue Regulations (RR) 15-2007 (Dec. 28, 2007) will be in effect only until this Feb. 29, unless extended by the Bureau of Internal Revenue (BIR) Commissioner. The program pertains to the abatement of penalties/surcharges and interest imposed on disputed/protested assessments, either administratively or judicially, which was previously excluded from the coverage of an earlier BIR regulations on abatement or cancellation of tax liabilities (RR 13-2001).
RR 15-2007 was issued pursuant to Section 204(B) of the 1997 Tax Code which authorizes the Commissioner to abate or cancel tax liability and/or the penalties thereon on the ground that
the tax or any portion thereof appears to be unjustly or excessively assessed; or
the administration and collection costs involved do not justify the collection of the amount due.
RR 15-2007 presupposes that the tax liabilities arising from assessments which have not reached finality are still uncertain and, therefore, such assessments could be excessive and any penalty imposed at that point could be unjust. Accordingly, taxpayers may take advantage of this qualification and avail of the abatement of the penalties/interest on disputed assessments and, instead, pay only the basic tax assessed.
This program allows taxpayers to finally put an end to assessments which may have been dragging for quite some time and, thus, avoid further delay in its resolution.
On the part of tax authorities, this would help reduce receivables and convert the same into much-needed revenue.
The Abatement Program is applicable to those assessment cases with duly issued Assessment Notices as of Nov. 29, 2007 for taxable year ending Dec. 31, 2005 and prior years, including:
cases under administrative protest pending in the Regional Office, Revenue District Office (RDO), Legal Service, Large Taxpayer’s Service (LTS), Collection Service, Enforcement Service and other offices in the National Office; and
civil tax cases being disputed before the Department of Justice and the courts, including cases with decision which are not yet final and executory.
On the other hand, the following cases are excluded from its coverage:
cases involving issues decided by the Supreme Court with finality, unless the issues involve difficult questions of law or issues without established precedent ruling or Supreme Court decision at the time of the transaction;
cases where the Presidential Commission on Good Government (PCGG) has an interest and/or there is a need to coordinate with the PCGG; and
withholding tax cases.
Taxpayers who intend to avail of the Abatement Program are required to pay 100% of the basic tax assessed. The availing taxpayers shall then file their Application for Abatement together with the copy of the subject Preliminary Assessment Notice (PAN) or Final Assessment Notice (FAN) and the duly validated payment form with the concerned revenue district office, or RDO, for Regional Offices cases or with the Concerned Group of the LTS for the Large Taxpayers cases.
All applications for abatement are still subject to review and evaluation by the appropriate BIR Officials (and approval by the Management Committee for LTS assessments), whose recommendation shall then be the basis of the eventual approval or disapproval of the application by the Commissioner.
Once approved by the Commissioner, the tax case shall be deemed terminated upon the issuance of the Termination Letter and the Authority to Cancel Assessment pertinent to the penalties/interest abated.
The Abatement Program and Tax Amnesty that are already in effect provide a window of opportunity to finally break free from our tax concerns. Qualified taxpayers who may avail of any of these programs will finally be able to start the New Year on a clean slate and face the future with confidence.
(The author is a tax manager at Punongbayan & Araullo, member of Grant Thornton International. For comments and inquiries, please e-mail the author or call 886-5511. Previous issues may be accessed from this site.)