Prescription Begins to Run from the Day of the Commission of the Violation of Law or the Discovery Thereof

May 7, 1968 BIR RULING NO. 004-68 The Director Revenue Region No. 3 Dagupan City S i r : This refers to your request for a ruling on a query stated as follows: cdtech "A filed his income tax return on April 15, 1962 for the taxable year 1961 with the Collection Agent of one of the towns of Pangasinan. The Collection Agent discovered on the date of filing that the return was incomplete for A's failure to attach thereto a balance sheet and such failure was duly indicated in the return by the agent. The said tax return was later on transmitted to the Assessment Branch of this Region. "Upon examination of the same, a compromise penalty of P10.00 was imposed by the Assessment Branch for violation of the Bookkeeping Regulations. A letter of demand dated May 10, 1963 was sent to A demanding the payment of P10.00. For one reason or another the taxpayer refused or ignored the said letter and even subsequent follow-up letters. "For purposes of filing criminal action against A for failure to attach a balance sheet, with what date will the 5-year period provided under Section 354 of the Tax Code be reckoned? Is it from April 15, 1962, the date of filing of the return or from May 10, 1963, the date of the letter of demand? Can we consider the date of filing of the return as the date of the discovery of the violation, or the date when the Assessment Branch imposed the compromise penalty contained in the letter of demand?" In reply thereto, you are informed that, in accordance with Section 354 of the Tax Code, prescription shall for all violations of the Tax Code begin to run from the day of the commission of the violation of the law, and if the same be not known at the time, from the discovery thereof and the institution of judicial proceedings for its investigation and punishment. As the balance sheet is required to be filed with the income tax return, the violation is deemed committed on the day of the return was filed. As the return was filed on April 15, 1962 , prescription began to run on April 16 and expired on April 15, 1967. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue