BIR eases rules for waiving assessment period
THE BUREAU of Internal Revenue (BIR) has revised the guidelines for waiving the three-year maximum period for tax assessment and collection.
BIR Commissioner Kim S. Jacinto-Henares on April 4, issued Revenue Memorandum Order (RMO) No. 14-2016 to allow taxpayers to submit waivers not necessarily in the form earlier prescribed by the bureau, among other changes.
“[I]t has been a rampant practice by the taxpayers to contest the validity of their own waivers of the statute of limitations after having availed of the benefits thereof,” RMO 14-2016 read.
Sec. 203 of the National Internal Revenue Code (NIRC) requires the assessment of internal revenue taxes within the three years following the deadline of filing tax returns or the day the document was filed.
The provision implies that BIR loses the right to assess the liabilities of taxpayers past the three-year period, read an article by Tax and Accounting Center Philippines.
Sec. 222, however, allows the BIR commissioner and the taxpayer to schedule the assessment and collection of liabilities beyond the mandated three-year period through a written agreement.
In 1990, the BIR issued RMO 20-90 to prescribe a particular form for the waiver of the statute of limitations. A new form was issued in August 2001 through Revenue Delegation Authority Order (RDAO) No. 05-01.
Under the new guidelines, the BIR allowed taxpayers to execute waivers that “may be, but not necessarily” in the form prescribed by RMO No. 20-90 or RDAO 05-01.
A waiver will remain valid provided its execution falls within the three-year period prescribed for the assessment or collection of taxes.
RMO 14- 2016 requires taxpayers to specifically indicate the execution date and the assessment or collection date agreed upon. The waiver must bear the signature of the taxpayer, a duly authorized representative or responsible officials of corporations.
“Except for waiver of collection of taxes which shall indicate the particular taxes assessed, the waiver need not specify the particular taxes to be assessed nor the amount thereof,” the memorandum added.
The waiver may simply state “all internal revenue taxes” considering the BIR commissioner or representative is still in the process of examining and determining the tax liability during the assessment stage.
RMO 14-2016 further made the notarization of the waiver optional. “[I]t is sufficient that the waiver is in writing as specifically provided by the NIRC, as amended.”
Taxpayers carry the burden of ensuring their authorized representatives validly execute the waivers because the extension of the limitation period serves their interest by allowing them time to submit the required documents and accounting records.
“The authority of the taxpayer’s representative who participated in the conduct of audit or investigation shall not be thereafter contested to invalidate the waiver,” RMO 14-2016 read. —