By Euney Marie Mata-Perez on April 19, 2018

With the tax-filing season recently concluded, we are certain that the BIR will be stepping up on its audit and collection efforts. Thus, knowing the rules in assessments, including how the BIR validly serves notices, is crucial.

Due process dictates that every taxpayer should be informed of the facts and basis of any assessment against him, and be given the opportunity to defend himself. For taxpayers to be informed, they must receive the proper BIR notices, of course. In many cases in the past, our courts had invalidated assessments for having been served on persons who were not authorized to receive them. On the other hand, once a taxpayer receives an assessment, he should reply, protest or appeal, as the case may be, within the prescribed period; otherwise, it can be fatal. We have seen defensible assessments becoming final simply because they were not properly acted upon.

Revenue Regulations (RR) 18-2013 sets out the existing notice and service requirements for tax assessments. Issued five years ago, these rules significantly amended and expanded the old service process provided in RR 12-99. Thus, we believe it is important to revisit them.

Personal service (or personal delivery) used to be made at the taxpayer’s BIR-registered address only. Now, it can be made “wherever he may be found.” Thus, it can be served on a taxpayer while he is watching a basketball game.

Previously, service must be made to the taxpayer or his duly authorized representative. Thus, service made to a janitor or a security guard, for instance, was not valid. However, under RR 18-2013, when a taxpayer is not present at his or her registered or known address, notices may be left with the taxpayer’s clerk or with a person having charge of his place of business. This means that practically anyone in the taxpayer’s office may receive the notice.

Also, notices can be sent to the taxpayer’s “known address,” or a place other than the BIR-registered address where his business activities are conducted. It can also be served in his home or residence, by leaving a copy with a person of legal age residing therein. Thus, notices given to a taxpayer’s driver or house help may constitute valid service.

Service by mail, which used to be made through registered mail only, can now be effected through a “reputable professional courier service,” or even by ordinary mail, if no registry or reputable professional courier service is available in the locality of the addressee.

In case no person is found in the taxpayer’s registered or known address, BIR revenue officers concerned are permitted to leave the notice with a barangay (village) official, who, together with two disinterested witnesses, is made a witness to such absence.

The expanded mode of service is more favorable to the government since it provides revenue officers different options to send assessment notices or letters. However, this expanded mode is prone to irregularities, or even abuse. Also, we believe there is an increased risk or likelihood that taxpayers will not actually receive the notices.

For instance, in the substituted mode of service to a barangay official, there is no guarantee that the barangay official will actually hand the notice to the taxpayer immediately thereafter. What’s more, upon service of the notice to the barangay official, the prescribed periods to reply or protest the assessments or to appeal to the courts begin to run. Thus, if the barangay official delays the handing over of the relevant notice to the taxpayer, the period to reply, protest and appeal becomes shortened.

Further, persons authorized to receive notices by virtue of substituted service now cover a broader range. As mentioned, notices may just be served on a clerk or a person having charge in the taxpayer’s office, or even on anybody of legal age living in the taxpayer’s residence. These persons may include those who do not occupy positions of trust and confidence, or who may not be competent to determine the importance of the notices received. Thus, there is risk that these notices may be overlooked or worse, misplaced.

So, if the taxpayer failed to receive the notice because it fell into the hands of irresponsible but permitted persons under the expanded rules, could he still claim that he was not properly informed of the assessment or that due process was violated? We believe so, but that would seem to be an uphill battle under the expanded rules.
In view of the above, taxpayers should be careful in receiving BIR notices and make sure they are properly responded to. In any case though, we believe that the existing rules should be reviewed and revisited.

#taxnotice #service #dueprocess #RR18-2013 #subsitutedmodeofservice #personalservice

Euney Marie J. Mata-Perez is a CPA-lawyer and the managing partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, deal and tax lawyer. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com

From the The Manila Times Website  April 19, 2018

http://www.manilatimes.net/service-of-tax-notices-know-the-rules/393447/