BIR Ruling

August 15, 1997 Advertising Master's, Incorporated Suite 512 Doa Amparo Building Espaa corner Cataluna Street Sampaloc, Manila Attention: Mr . Romy A . Luna Gentlemen : This refers to your letter dated September 21, 1992 regarding your national internal revenue tax case involving the amounts of P59,168.59 and P3,225.17 excluding increments thereto, representing deficiency income and expanded withholding taxes, respectively, for the year 1986 under Assessment Notice No. 24-1-04A-001966-86. LLphil Records disclosed that pursuant to Letter of Authority OAS No. 157409 dated September 23, 1987 an investigation was conducted whereby the sum of P59,168.59 and P3,225.17 as deficiency income tax and expanded withholding tax, respectively, for the year 1986 were found to have been due as a result of disallowances of most of the expenses claimed as deductions from your gross income, as shown in Annex "A"; that the original copies of the said assessment notice sent was "Returned to Sender Unclaimed" and marked received by Revenue Region No. 4-A, Manila, on June 7, 1990; that a confirmation letter of the foregoing assessment dated October 29, 1990 was sent to you giving you fifteen (15) days within which to settle your tax obligation, which was duly received by you; that for failure and/or refusal to pay your obligation, Warrant of Distraint and/or Levy and Warrant of Garnishment dated April 27, 1992 were served and received on August 19, 1992 and May 13, 1992, respectively; that a letter dated September 21, 1992 was sent to us requesting for the cancellation and/or withdrawal of the Warrant of Distraint and/or Levy averring that our assessment has not yet become final and executory due to your failure to receive the said assessment notice; that further you invoked that the disallowances made on the claimed deductions were unfairly and arbitrarily made. In reply, please be informed that on October 22, 1992, we sent a letter requesting you to file a formal protest in case you disagree with our findings. On September 12, 1996, we reiterated the same request to give you the opportunity to contest our assessment. You, however, chose to remain silent up to the present. Such being the case, we have no option but to enforce the assessment premised on the quoted portions of Revenue Regulations No. 12-85 which read as follows: "If a taxpayer who receives an assessment from the BIR fails to file a protest within the period prescribed in Section 7 of these regulations, the said assessment shall become final and unappealable and the taxpayer is thereby precluded from disputing the assessment." Section 7 of the aforequoted Regulations provides for a 30-day period from the receipt of an assessment notice within which to file a formal protest. Since the 30-day period has long lapsed, there is no more reason why the said assessment should not become final and executory. LLjur It has to be stated here also, that the assessment by the Commissioner is presumed to be prima facie correct unless controverted (Collector of Internal Revenue vs. Bohol Land Transportation Company, L-13099, April 29, 1960). Since you failed and/or refused to dispute our assessment despite our demands for you to submit a formal protest, this Bureau finds no basis at all to disturb the finding that you are liable to the assessed deficiency income tax and expanded withholding tax as re-computed in Annex "B". PREMISES CONSIDERED, you are hereby requested to pay the respective amounts of P113,910.00 and P6,472.50 as deficiency income and expanded withholding taxes including increments thereto to the Revenue District Office nearest your place of business within fifteen (15) days from your receipt hereof. Otherwise, collection thereof will be effected through summary remedies prescribed by law. This constitutes the final decision of this Office on the matter. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue