Collection of the Deficiency Income Tax against Felipe Lorenzana Sons, Inc.

July 21, 1959 BIR RULING NO. 348-59 1st Indorsement Respectfully returned to the Regional Director, BIR Regional District No. 3, Manila, for immediate action. cdt It is desired that judicial action be immediately filed against Felipe Lorenzana Sons, Inc., 562 Juan Luna, Manila, for the collection of the deficiency income tax due from it for the year 1949, considering that, as shown by the facts stated in the basic communication, the right of the Government to file said judicial action will prescribe on September 10 , 1959 , the said tax having been assessed on September 10, 1954. Simultaneous action may also be taken to collect the said tax by distraint and levy, considering that the provisions of section 51(d) of the Tax Code limiting the right of the Government to collect income taxes by distraint and levy to three years from the filing of the return was repealed by Republic Act No. 2343, which was approved and took effect on June 20, 1959. By applying the provisions of section 332(c) of the Tax Code, the right of the Government to collect said income tax by distraint and levy will prescribed also on September 10, 1959. The provisions of sections 331 and 332 of the Tax Code which were not applicable to income taxes before June 20, 1959, shall now be applied to income taxes, irrespective of the date the tax accrued. This action is justified by the fact that the provisions of sections 331 and 332 of the Tax Code are remedial or procedural in nature and, therefore, may be given retroactive effect. (The Collector of Internal Revenue vs. Anna Harriet Clement & David Hooker, G.R. No. L-12194, Jan. 24, 1959). In the case of J. F. Stevens Engraving Co. v. U.S. (44 F. 2d 822, 823, 9 AFTR 443, 444), it was held that: "The law fixing limitations of time against the United States in the assessment and collection of taxes, and against taxpayers in claiming refunds, constitute a growing and often altered system not to be viewed as condition on the right to tax, but, like other limitation, laws, as affecting by their own force only the remedy . . . . The question of limitation in consequence is generally to be determined , not by the law of force when the tax accrued , but by that of force when collection is attempted ." (Emphasis supplied). With respect to the income tax due for the year 1950, as shown by the facts stated in the basic communication and considering that the assessment therefor was issued on July 10, 1952, it appears that the right of the Government to file judicial action for collection of the said tax prescribed on July 10, 1957, unless the doctrine in the case of the Collector of Internal Revenue vs. Suyoc Consolidated Mining Co., et al. (G.R. No. L-11527, Nov. 25, 1958) can be applied to the present case. The theory of the Bureau that the right of the Government to collect income taxes by means of judicial action is imprescriptible has already been repudiated by the Supreme Court, the latest decision on the matter being in the case of Alhambra Cigar & Cigarette Manufacturing Company (G.R. Nos. L-12026 & L-12131, May 29, 1959). (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue