Tax notes: Demand letter as final decision on disputed assessment-A A +A
Monday, September 23, 2013
A DEMAND letter for payment of delinquent taxes may be considered a Final Decision on Disputed Assessment (FDDA) that is appealable, within 30 days from receipt, with the Court of Tax Appeals (CTA), depending on the tenor sent to the taxpayer. If the tenor of the letter shows the firm stand of the Bureau of Internal Revenue (BIR) against the reconsideration of the disputed assessment, the letter should be considered the final decision on the taxpayer’s administrative protest.
In a CTA case, a company engaged in the business of purchasing agricultural products received an assessment notice from the BIR assessing it for deficiency withholding tax. Within 30 days from receipt of assessment, it filed with the office of the regional director its protest against the final assessment notice (FAN). The regional director, in response to its protest, sent a letter reiterating his demand for payment of the deficiency tax.
However, instead of appealing before the CTA or with the Commissioner of Internal Revenue (CIR), the company filed another letter with the regional director requesting the cancellation of the assessment. The regional director again issued a reply, which the company appealed before the office of the CIR by filing a motion for reconsideration. In its decision, the CIR dismissed the company’s appeal on grounds that it was filed out of time. Hence, an appeal was made to the CTA to reverse the company’s deficiency tax assessment.
The CTA held that the company should have filed its appeal before the CTA within 30 days from receipt of the demand letter issued by the BIR Regional Director. The demand letter may be considered the FDDA, considering the language or tenor of the letter, which reiterated the demand for settlement of the assessment. Hence, the letter should be considered the final decision on the taxpayer’s administrative protest or the FDDA, which is appealable before the CTA within 30 days from receipt thereof pursuant to Section 228 of the Tax Code. For failure to appeal within the 30-day period, the disputed assessment of the company became final and executory (Cagayan Corn Products Corporation v. Commissioner of Internal Revenue, CTA Case No. 8491 dated July 8, 2013).
Published in the Sun.Star Cebu newspaper on September 24, 2013.