BIR Ruling No. 381-61

1961 BIR RULING NO. 381-61 MEMORANDUM FOR: The Revenue Operations Head (Assessment) Attached is the docket (consisting of 14 pages) bearing on the franchise tax case of . . . in the amount of . . . covering the period from July 1, 1952 to December 31, 1955, with the following observation and comment on the legal issues involved. The records show that the taxpayer herein is a holder of a municipal franchise granted by the Municipality of Libmanan, Camarines Sur, in accordance with the provisions of Act No. 667, as amended. It is now settled that holders of municipal franchises, such as in the instant case, are liable to the rate of 5% franchise tax in accordance with Section 259 of the Tax Code, as amended. (BIR Rulings Nos. 171 & 248, s. of 1961) It has been observed, however, that the period covered by our assessment is from July 1, 1952 to December 31, 1955. Unless we have concrete proof that the taxpayer failed to file returns for said period, or unless the returns filed were false or fraudulent, it is our opinion that our right to assess and collect the deficiency franchise tax, from July 1, 1952 to December 31, 1955, has already prescribed in accordance with Sections 331 and 332 of the Tax Code (See BIR Ruling No. 305, s. of 1961). This is so because we assessed the deficiency tax for the period in question only on April 4, 1961 (p. 4, rec.). With respect to the amount of . . . erroneously refunded to the taxpayer, as evidenced by Treasury Warrant No. . . ., it is our stand that the period (6 years from the date the sum was refunded) within which to recover the same has, likewise, prescribed (BIR Ruling No. 595, supra). Premises considered, it is desired that the General Auditing Office be consulted as to whether or not the taxpayer filed the corresponding returns for the period in question, and if returns were filed, whether or not tax returns were false or fraudulent. This course of action is made to enable us, if possible, to apply the 10-year prescriptive period contemplated under Section 332 of the Tax Code. Otherwise, we will have to consider this case closed and terminated. It is further desired that immediate steps be taken to collect all deficiency franchise tax and income tax from the same taxpayer, if there is any, covering the period from 1955 up to the present.