Philippines: Administrative Appeal Time Limit
Introduction
In Commissioner of Internal Revenue v Ruben U Yu,(1) the Court of Tax Appeals (CTA) en banc clarified that the 180-day period referred to in section 228 of the Tax Code, as amended, applies only to the period within which the Commissioner of Internal Revenue (CIR), or their duly authorised representative, may act on a protest against a tax assessment.
Thus, if a taxpayer files an administrative appeal to request the reconsideration of the decision of the CIR's duly authorised representative on a protest, the CIR is not given a fresh or separate 180-day period to decide the administrative appeal.
The taxpayer filed a protest on 3 December 2015, disputing the correctness and validity of the tax assessment issued against him and requesting a reinvestigation. The taxpayer had 60 days from that date, or until 1 February 2016, to submit the required supporting documents. Thereafter, the CIR's duly authorised representative (in this case, the regional director (RD)), had 180 days from 1 February 2016 (ie, until 30 July 2016) to act on the taxpayer's protest. The taxpayer opted to wait for the RD's decision instead of filing an appeal with the CTA within 30 days from 30 July 2016, which was the end of the 180-day period. On 22 August 2016, the RD issued a revised tax assessment, demanding the immediate payment of the taxpayer's deficiency taxes.
Upon receipt of the RD's decision, the taxpayer had the option of:
- appealing the RD's decision to the CTA; or
- elevating his protest through a request for reconsideration of the RD decision to the CIR (ie, filing an administrative appeal).
Both had to be done within 30 days from receipt of the decision. The taxpayer opted to file an administrative appeal with the CIR on 20 September 2016.
In view of the CIR's inaction on the administrative appeal, the taxpayer filed a petition for review with the CTA on 17 April 2017. The taxpayer was under the impression that the CIR had a fresh or separate 180-day period to act on the administrative appeal and thus filed his petition for review with the CTA within 30 days from the lapse of the 180-day period.
In ruling that the petition for review filed by the taxpayer was premature, the CTA en banc explained that:
in case of the inaction of the CIR on the protested assessment, the taxpayer has two options, either: (1) file a petition for review with the CTA within thirty (30) days after the expiration of the one hundred eighty (180)-day period; or (2) await the final decision of the CIR on the disputed assessment and appeal such final decision to the CTA within thirty (30) days after the receipt of a copy of such decision.
Here, the taxpayer filed his petition for review beyond the 180+30-day period since he erroneously believed that filing the administrative appeal gave the CIR a fresh or separate 180-day period to resolve the appeal. The CTA ruled that since the 180+30-day period had already expired, the petition for review was prematurely filed and the only option for the taxpayer was to wait for the CIR's decision on the administrative appeal before he could file an appeal to the CTA within 30 days from receipt of that decision.
This case emphasises the importance of the 180-day period in the filing of protests to an assessment. If the CIR or their authorised representative fails to act within the 180-day period from the filing of the protest, or – in the case of a request for reinvestigation – from the submission of documents, the taxpayer has 30 days from the expiration of the 180-day period to file an appeal with the CTA. However, if the taxpayer decides to wait for the final decision of the CIR's authorised representative and appeals such decision to the CIR, there is no fresh or separate 180-day period for the CIR to decide the administrative appeal. In such a case, the taxpayer has no choice but to wait for the CIR's decision on the administrative appeal before elevating the case to the CTA within 30 days of receipt of the CIR's decision.
It is difficult to predict when the CIR will resolve an administrative appeal, as the resolution may be delayed because of the workload of the CIR, among other reasons. It may therefore seem more practical for the taxpayer to elevate the case to the CTA within 30 days from receipt of the decision on the protest or the lapse of the 180-day period to resolve the protest. This approach would expedite the final determination of the issues raised by the taxpayer, which may result in the cancellation of the tax assessment and the refund of the taxes that may have been paid by the taxpayer. It must be noted that in the case of an assessment, interest on the deficiency taxes continues to run until the tax is paid, unless the assessment is cancelled.
For further information on this topic please contact John Christian Joy A Regalado at SyCip Salazar Hernandez & Gatmaitan (SyCipLaw) by telephone (+632 8982 3500, +632 8982 3600, +632 8982 3700) or email (jcaregalado@syciplaw.com). The SyCipLaw website can be accessed at www.syciplaw.com.
Carina C Laforteza, partner and head of the tax department, assisted in the preparation of this article.
Endnotes
(1) CTA EB No. 2352 (CTA Case No. 9595) dated 16 August 2022.
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