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There are nine types of different letters that may be issued by the BIR: mission orders, benchmarking notices, letters of authority (LOA), subpoena duces tecum (SDT), Notice of Discrepancy (NOD), Preliminary Assessment Notice (PAN), Final Assessment Notice (FAN) and Formal Letter of Demand (FLD), Final Decision on Disputed Assessment (FDDA), and the Warrant of Distraint and/or Levy (WDL).
The final part of this three-part series will cover the Final Decision on Disputed Assessment (FDDA) and the Warrant of Distraint and/or Levy (WDL).
Final Decision on Disputed Assessment (FDDA)
The Final Decision on Disputed Assessment (FDDA) is what the BIR (specifically, the Assistant Commissioner/Regional Director or Authorized Higher Revenue Official) issues in response to the taxpayer’s protest.
The FDDA will contain the following:
- Facts, the applicable law, rules and regulations, or jurisprudence on which the decision is based, and
- that the same is his final decision.
A void FDDA does not render the assessment void. A “decision” differs from an “assessment” and failure of the FDDA to state the facts and law on which it is based renders the decision void, but not the assessment. (CIR v. Liquigaz Philippines Corp., GR No. 215534, 2016).
From this point, the taxpayer can simply pay the assessment and this will end the entire audit proceedings.
However, if the taxpayer does not agree with the decision of the aforesaid Revenue Official as contained in the FDDA, they may file a request for reconsideration with the Office of the Commissioner (CIR). The taxpayer may also opt to appeal to the Court of Tax Appeals within 30 days from receipt of the FDDA. Failure to appeal within the 30-day reglementary period shall render the FDDA final, executory, and demandable.
A final demand letter from the BIR, reiterating to the taxpayer the immediate payment of a tax deficiency assessment previously made, is tantamount to a denial of the taxpayer’s request for reconsideration. Such letter amounts to an FDDA and is thus, appealable to the CTA. (CIR v. Isabela Cultural Corporation, G.R. No. 135210, 2001).
Warrant of Distraint and/or Levy (WDL)
When FDDA has already prescribed it boils down to delinquency tax that can be collected administratively by distraint or levy or by judicial action. Under Section 205(a) of NIRC, distraint is a remedy in which the collection of tax is enforced on the goods, chattels, or effects, and other personal property of whatever character, including stocks and other securities, debts, credits, bank accounts, and interest in and rights to personal property. A report shall be submitted by the distraining officer to the Revenue District Officer, and to the Revenue Regional Director within 10 days from receipt of the warrant. Further under Section 207 (A) of the NIRC, the CIR or his duly authorized representative may, in his discretion, allow the lifting of the order of distraint.
Further, under Revenue Memorandum 39-2007,revenue officers are instructed to start enforcement proceedings in the following instances:
- Disputed assessments finally decided by the Commissioner or Regional Director, as the case may be, against the taxpayer;
- Assessments upheld by the CTA in Division whether or not appealed to the CTA En Banc, or upheld by the CTA En Banc whether or not appealed to the Supreme Court. Based on this RMO, upon issuance by the Commissioner or Regional Director of the final decision on the disputed assessment (FDDA) against the taxpayer or upon issuance by the CTA in Division or En Banc of its decision upholding the assessment, Warrants of Distraint and Garnishment, and/or Levy shall be immediately issued and served. This was reiterated in RMO No. 42-2010.
Thus, the BIR may enforce collection proceedings only when the Commissioner or the Regional Director has issued the FDDA or when the CTA has promulgated a decision. Revenue officers are only authorized to issue WDL when an assessment is “unappealed” or the decision of the CTA becomes “final and executory”. As long the assessment is under protest or still in appeal, BIR cannot enforce collection. Only CTA can stop the execution of WDL, as long there is no appeal for the suspension from the decision of CIR, the payment, levy, distraint, and/or sale of any property of the taxpayer will be valid and enforceable.
To curtail the different BIR Letters in relation to BIR Audit investigations, it is a matter of awareness on the following replying period to be recollected in order certain letters are just in time. It is pivotal that when receiving a Letter of Authority, substantiation by means of collecting/gathering all necessary and important documents are the foremost aspect of BIR Audit in order to support the BIR findings/discrepancies. Ultimately, the proper coordination of the taxpayers with the BIR-Revenue Officers will lead to a harmonious and collaborative relationship with each other. – Rappler.com