On 15 September 2020, the Bureau of Internal Revenue (“BIR”) released Revenue Regulations (“RR”) No. 22-2020 which amends RR No. 12-1999 as further amended by RR No. 18-2013 and RR No. 7-The amendment relates to the due process requirement in the issuance of a Deficiency Tax Assessment.
The regulation provides that in lieu of a Notice of Informal Conference, a Notice of Discrepancy shall now be issued. A Notice of Discrepancy shall be issued if, during the course of an investigation conducted by a Revenue Officer, the taxpayer is found to be liable for deficiency taxes. The Notice aims to provide the taxpayer with an opportunity to present his position regarding the discrepancies identified.
The Revenue Officer who conducted the investigation shall state in the initial report his findings of discrepancies. Based on the initial report, the taxpayer shall be informed in writing by the Revenue District Office or Assessment Division/Regional Investigation Division, or the Chief of the Division concerned, if conducted by the BIR National Office, of the discrepancies in his internal revenue taxes. There shall then be a “Discussion of Discrepancy”.
This Discussion of Discrepancy shall not extend beyond thirty (30) days from the receipt of the Notice of Discrepancy. It is during this period that the taxpayer is given the opportunity to explain the discrepancy and to submit supporting documents, if necessary. The documents may be submitted during the discussion, or after, should the taxpayer need more time to collate and present the documents. The taxpayer must submit all the necessary supporting documents within thirty (30) days after the receipt of the Notice of Discrepancy.
If after the Discussion of Discrepancy, the taxpayer is still found to be liable for deficiency taxes, and the taxpayer does not pay the tax or does not agree with the findings, the investigating office and official shall endorse the case to the reviewing office and approving official in the National Office or Revenue Regional Office for the issuance of the Preliminary Assessment Notice (“PAN”). The PAN shall be issued within ten (10) days from the conclusion of the Discussion.
Partner, Ocampo & Suralvo Law Offices
Senior Associate, Ocampo & Suralvo Law Offices
The information provided here is for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations