False - Distraint is for personal property, while levy is for real property.. False – Redemption of property should be made within one year from the date of sale.. It was filed within 2
Trang 1CHAPTER 2
TAX ADMINISTRATION
Problem 2 – 1 TRUE OR FALSE
1 True
2 False - Department of Finance
3 False - Exclusive and original power to interpret tax laws Final power to interpret tax laws belongs to the Supreme Court
4 False - Review by the Court of Justice/Court of Appeals
5 False - Cooperatives are exempted from income tax and annual registration fee
6 False - In all cases, the authority to print is required
7 False - Not required to register again, just file an information update
8 False - Tax assessment is needed to enforce payment of unpaid tax liability
9 True
10 True
11 False - Levy or imposition of tax
12 True
13 False – executive branch of the government
14 False – the description refers to administrative feasibility
Problem 2 – 2 TRUE OR FALSE
1 True
2 False – submit to the BIR
3 False - Distraint is for personal property, while levy is for real property
4 True
5 False - Exceptions are those already filed in court of those involving fraud
6 True
7 True
8 True
9 True
10 False - value of property
11 False – Redemption of property should be made within one year from the date of sale
12 True
13 True
Problem 2 – 3 TRUE OR FALSE
1 True
2 True
3 False – P100,000
4 False – 10% final withholding tax
5 True – If authorized by the BIR Commissioner
6 True
7 False – All properties of a delinquent taxpayer may be subject to tax lien
8 True
9 False – Seizure
10 False – Forfeiture
11 True
12 False – Criminal violations already filed in court are not subject to compromise Collection of taxes is not a criminal violation
13 True
Problem 2 – 4 TRUE OR FALSE
1 True
2 False – Without letter of authority, the taxpayer could refuse access to his books
3 False – Civil action could also be judiciary pursued
4 True
5 False – the appeal must first be made to Court of Tax Appeals
6 False – It could also be done if no tax return is filed
7 False – Ten years prescription period starts at date of discovery that tax return was not filed
8 False – It should be 5 years
9 False – Levy could also be done before or simultaneous with distraint
10 False – Residual value should be returned to taxpayer
11 True
12 False – It is also applicable to importation
13 True
Trang 21 B 1 D
11 D
12 C
13 B
Problem 2 – 7
Situation 1 – No need to appeal The prescribed period of filing for the refund is already
expired The filing of refund should have been made within two years after the payment of tax or penalty It was filed within 2 years, one month, and 5 days after the date of erroneous payment, hence, not appealable anymore
Situation 2 – May 5, 2010 The filing of refund was appropriately made within the 2 year
prescribed period The denial was received on April 5, 2010 The filing of appeal to CTA should be made within 30 days from the receipt of denial from the BIR
Situation 3 – August 2, 2014 The date of grant for refund was received on August 1,
2009 The refund check (dated July 15, 2009) should be encashed within 5 years from the date the grant for refund was received (August 1, 2009) The check should be encashed from August 1, 2009 to August 1, 2014 It will be forfeited on August 2, 2014
Situation 4 – August 22, 2014 The date of grant for refund was received on August 21,
2009 The refund check (dated July 30, 2009) should be utilized within 5 years from the date the grant for refund was received (August 21, 2009) The tax credit certificate should be utilized from August 21, 2009 to August 21, 2014 It will be forfeited on August 22, 2014, unless otherwise revalidated
Situation 5 – August 20, 2009 If the BIR has no response after the submission of
supporting documents to serve as evidence for the protest, the last day to appeal to the CTA should be made within 30 days from the lapse of the 180 day period from the submission of the supporting documents
Computation of days:
After January 22, 2009 Days
Total number of days as of July 21 180
Plus 30 days after the 180 days
Total day on August 20 30
Situation 6 – May 4, 2009 The last day to appeal to the CTA should be made within 30
days from the receipt of the denial of the BIR The 30 days is determined as follows:
Days First denial of the BIR – March 22, 2009
to 2nd request for reconsideration – March 30, 2009 8
2nd denial of the BIR – April 12, 2009
to May 4, 2009 to complete the 30 day period 22
Total days as of May 4, 2009 30
Situation 7 – June 25, 2009 The appeal to CA should be made within 15 days from date of
unfavorable decision from CTA was received (June 10 plus 15 days)
Trang 3Situation 9 – July 10, 2009 The appeal to SC should be made within 15 days from date of
unfavorable decision from CA was received (June 25 plus 15 days)
Situation 10 – March 1, 2010 Within 1 year from the date of sale.
Tax due per return
Late filing and payment – simple neglect (P100,000 x 25%)
Interest (P100,000 x 20% x 2.5/ 12)
Total amount due and payable
P100,000 25,000 4,167 P129,167
Amount due – surcharge (P100,000 x 25%) P25,000
Tax due per return
Late filing and payment – willful neglect (P100,000 x 50%)
Interest (P100,000 x 20% x 14.5/12)
Total amount due and payable
P100,000 50,000 24,167 P174,167
Deficiency income tax (P120,000 – P100,000)
Interest (P20,000 x 20% 435/ 360 days)
Amount still due
P20,000 4,833 P24,833
Statutory fine (P250,000 x 2) P500,000
Minimum statutory fine P 5,000
Problem 2 – 14
Yes, because the prescriptive period of filing the written protest is within 30 days from receipt
of assessment
Mr Lang is obligated to pay the P500,000 assessed against him
Problem 2 – 15
Basic delinquency tax P 1,000,000 Surcharges – willful (P1,000,000 x 50%)* 500,000 Interest (P1,000,000 x 20% x 2) 400,000 Amount collected from the highest bidder P 1,900,000 Add: Interest for real property redemption (P1,900,000 x
Total redemption amount P 2,185,000
*The nonpayment of taxes is already 2 years it becomes habitual; hence, willful neglect
Problem 2 – 16
Proceeds from the highest bidder (P30,000/6%)* P 500,000 Less: Basic tax assessed P 300,000
Advertisement 10,000
Transfer of title 15,000
Capital gain tax 30,000 355,000 Remittance to Mr Santiago P 145,000
*The capital gains tax is based on the selling price of the real property sold The rate of capital gains tax is 6%; hence, the proceeds from the highest bidder is P500,000 or
(P30,000/6%)
Problem 2 – 17
Corrected sales (P7,000,000/70%) P10,000,000 Less: Operating expenses 6,500,000 Corrected net taxable income P 3,500,000 Multiplied by corporate tax rate 30% Corrected total income tax due P 1,050,000 Less: Income tax paid 150,000
Trang 4Surcharge (P900,000 x 25%) 225,000 Interest (P900,000 x 20%) 180,000
Problem 2 – 18
Amount of tax liability P190,000 Surcharges and interest 20,000 Bidding expenses 10,000 Price for the government P220,000
Problem 2 – 19
Sales proceeds (P400,000 + P50,000 + P20,000)/94% P500,000 Multiplied by capital gains tax rate 6%
Add: Interest (P500,000 x 15% x 8/12) 50,000
Problem 2 – 20
a The cash reward of Miss Wan as tax informer would be P1,000,000, the maximum amount
of reward
b The informer’s reward remains payable, hence, Miss Wan will received the maximum reward of P1,000,000
c The final income tax to be withheld from the reward of Miss Wan would be 10% of P1,000,000 or P100,000
Problem 2 – 21
a The tax violations of Miss San Tago are the following:
1 Unregistered business (Sec 236 [A], NIRC.)
2 Non-issuance of commercial invoice (Sec 237, NIRC.)
3 Ignoring the summon (Sec 5, NIRC.)
b Miss San Tago’s minimum financial penalties if convicted:
1 For operating an unregistered business
2 For not issuing commercial invoices
3 Failure to obey summon
Total minimum
P 5,000 1,000 5,000 P11,000
Problem 2 – 22
None There is no surcharge to be imposed to Orville Corporation because the error was corrected before payment and the payment was made on time
The income tax due is computed as follows:
Corrected gross receipts (P2,000,000/75%)
Corrected allowable deductions (P1,500,000/1.35)
Taxable income per audit
Multiply by percent of tax for 2009
Income tax due
P 2,666,667
1,111,111
P 1,555,556 30% 466,667
Problem 2 – 23
Branches (P500 x 30) 15,000 Total annual registration fee – January 31, 2010 P20,000
2 Total annual registration fee – January 31, 2010 P20,000 Surcharges (20,000 x 25%) 5,000 Interest (P20,000 x 20% x 6/12) 2,000 Total amount due – July 30, 2005 P27,000
Problem 2 – 24
Amount of tax liability P100,000
Advertising cost 5,000
Trang 5Price if purchase by the Government P150,000
Problem 2 – 25
None Forfeited property belongs to the government, hence, excess amount over tax liability
is not refundable to the taxpayer
Problem 2 – 26
Tax violation involving fraud is not allowed with tax comprise (Sec 204A, NIRC)
Problem 2 – 27
1 Compromise (P10,000,000 x 10%) P 1,000,000
2 Compromise (P10,000,000 x 40%) P 4,000,000
Problem 2 – 28
Case 1 – Financial incapability due to corporate insolvency.
Delinquent accounts P 500,000 Pending cases under administrative protest 900,000 Criminal violation not filed in courts 1,000,000
Multiplied by applicable compromise rate 20% Amount of compromise P 480,000
Case 2 – Financial incapability due to surplus deficit resulting to impairment in original
capital by at least 50%
Delinquent accounts P 500,000 Pending cases under administrative protest 900,000 Criminal violation not filed in courts 1,000,000
Multiplied by applicable compromise rate 40% Amount of compromise P 960,000
Case 3 – Doubtful validity of assessment.
Delinquent accounts P 500,000 Pending cases under administrative protest 900,000 Criminal violation not filed in courts 1,000,000
Multiplied by applicable compromise rate 40% Amount of compromise P 960,000
Problem 2 -29
a Yes, because the offered compromise amount of P100,000 exceeds the required minimum amount of P25,000, (P250,000 x 10%)
b Since distraint is imposed only on personal property, the personal property with a value
of P100,000 shall be subjected to distraint
c Yes, levy of real property and distraint of personal property can be done simultaneously (Sec 207B of the Tax Code) See also Section 205 of NIRC
d No, the unpaid portion will remain as tax liability of Lugui because Miss Lugui did not avail
of the compromise tax settlement The remedy by distraint of personal property and levy
on realty may be repeated if necessary until the full amount due, including all expenses,
is collected (Sec 217, NIRC)