Publishing Batas Pambansa Blg. 700 Amending Sections 318 and 319 of the National Internal Revenue Code, as Amended, Reducing the Period of Limitation for Assessment and Collection of Internal Revenue Taxes from Five to Three Years

November 12, 1984 REVENUE MEMORANDUM CIRCULAR NO. 33-84 SUBJECT : Publishing Batas Pambansa Blg. 700 Amending Sections 318 and 319 of the National Internal Revenue Code, as Amended, Reducing the Period of Limitation for Assessment and Collection of Internal Revenue Taxes from Five to Three Years TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, published hereunder is the full text of Batas Pambansa Blg. 700. BATAS PAMBANSA BLG. 700 AN ACT AMENDING SECTIONS 318 AND 319 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, SO AS TO REDUCE THE PERIOD OF LIMITATION FOR ASSESSMENT/COLLECTION OF INTERNAL REVENUE TAXES FROM FIVE TO THREE (3) YEARS. Sec. 1. Section 318 of the National Internal Revenue Code, as amended, is hereby amended to read as follows: "Sec. 318. Period of limitation upon assessment and collection . Except as provided in the succeeding sections, internal revenue taxes shall be assessed within three years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided , That in a case where a return is filed beyond the period prescribed by law, the three-year period shall be counted from the day the return was filed. For the purposes of this section, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day." cd Sec. 2. Section 319 of the same Code is hereby amended to read as follows: "Sec. 319. Exception as to period of limitation of assessment and collection taxes . (a) In the case of a false or fraudulent return with intent to evade tax or of failure to file a return, the tax may be assessed, or a proceeding in court after the collection of such tax may be begun without assessment, at any time within ten years after the discovery of the falsity, fraud, or omission: Provided , That in a fraud assessment which has become final and executory, the fact of fraud shall be judicially taken cognizance of in the civil or criminal action for the collection thereof, "(b) If before the expiration of the time prescribed in the preceding section for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon. The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon. "(c) Any internal revenue tax which has been assessed within the period of limitation above prescribed may be collected by distraint or levy or by a proceeding in court within three years following the assessment of the tax. cd "(d) any internal revenue tax which has been assessed within the period agreed upon as provided in paragraph (b) hereinabove may be collected by distraint or levy or by a proceeding in court within the period agreed upon in writing before the expiration of the three year period. The period so agreed upon may be extended by subsequent written agreements made before the expiration of the period previously agreed upon. "(e) Provided, however , That nothing in the immediately preceding section and paragraph (a) hereof shall be construed to authorize the examination and investigation or inquiry into any tax returns filed in accordance with the provisions of any tax amnesty law or decree. Sec. 3. The period of limitation herein prescribed shall apply to assessments of internal revenue taxes beginning taxable year 1984. Approved. (Sgd.) QUERUBE C. MAKALINTAL Speaker This Act was passed by the Batasang Pambansa on February 22, 1984. (Sgd.) ANTONIO M. DE GUZMAN Secretary General Approved: April 5, 1984 (Sgd.) Ferdinand E. Marcos President of the Philippines" Salient Features of Batas Pambansa Blg. 700 : A. Prescriptive Period of Assessment and collection . 1. The prescriptive period of assessment of internal revenue taxes has been reduced from five (5) to three (3) years, except (a) where false or fraudulent returns are filed or omission to file return in which case the tax may be assessed within ten (10) years after discovery of the falsity, fraud, or omission, and (b) when there is a Waiver of the Statute of Limitations signed by the taxpayer, and accepted by the Commissioner before the lapse of the three-year period. 2. The three-year period for assessment commences to run "after the last day prescribed by law for the filing of the return" which means that if the return is filed before such due date, the prescriptive period begins to run only after said due date. It is also provided that "where a return is filed beyond the period prescribed by law, the three-year period shall be counted from the day the return was filed." Briefly, stated therefore, the rule on the commencement of the prescriptive period to assess is, in effect, the same as in the old law where the general rule was that the tax shall be assessed within five (5) years from date of filing of return or the deadline for filing return, whichever is later. 3. The prescriptive period for collection has also been reduced from five (5) to three (3) years, to be counted from date of assessment. The exception to this three-year period of collection is a Waiver of Statute of Limitations signed by the taxpayer and accepted by the Commissioner before the lapse of the three-year period. B. Effectivity of the Prescriptive Periods of Assessment and Collection . 1. Assessment made on or after April 5, 1984 (date of the approval of BP 700) will still be governed by the original five-year period if the taxes assessed thereby cover taxable years prior to January 1, 1984. aisa dc Corollarily, assessments made before April 5, 1984 shall still be governed by the original five-year period. However, assessments made on or April 5, 1984 covering taxable years beginning January 1, 1984 shall be under the new three-year period. 2. As regards collection, the institution of collection remedies either by judicial action or distraint and levy, if begun on or after April 5, 1984, shall still be governed by the five-year period if the taxes being collected are for taxable years prior to January 1, 1984. The collection of the three-year period shall apply to the collection of taxes for taxable years beginning January 1, 1984. In this connection, collection by judicial action is concerned instituted upon filing of the corresponding complaint in the court of competent jurisdiction, and in the case of summary remedies, upon service of the distraint and levy on the taxpayer or persons or entity authorized to receive the same. (See Clara Diluangco Palangca vs. Commissioner, 4 SCRA 253). cdt C. Immunity from Examination or Investigation . The amendatory law also removes the possibility of any examination, investigation or inquiry into any tax returns filed in accordance with any tax amnesty law should an examination or investigation be pursued in connection with the assessment of taxes. All internal revenue officials, employees, and others concerned are hereby enjoined to give this Revenue Memorandum Circular the widest publicity possible. RUBEN B. ANCHETA Acting Commissioner