CIR v Fitness by Design, Inc.; G.R. No. 215957; 09 Nov 2016

in Legal Chyme by

On 09 June 2004, respondent received a copy of the Final Assessment Notice (FAN) dated 17 March 2004 issued by petitioner. Said notice assessed that respondent had a tax deficiency, providing a tabular computation of the internal revenue tax liabilities of the year 1995. It also states:

The complete details covering the aforementioned discrepancies established during the investigation of this case are shown in the accompanying Annex 1 of this Notice. The 50% surcharge and 20% interest have been imposed pursuant of Sections 248 and 249(B) of the NIRC, as amended. Please note, however, that the interest and the total amount due will have to be adjusted if paid prior or beyond April 15, 2004.

Whether or not the FAN issued by CIR is a valid assessment.

NO. A final assessment is a notice “to the effect that the amount therein stated is due as tax and a demand for payment thereof.” This demand for payment signals the time “when penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies.” Thus, it must be “sent to and received by the taxpayer, and must demand payment of the t axes described therein within a specific period.”

The FAN in the case at bar lacks the definite amount of tax liability for which respondent is accountable. It does not purport to be a demand for payment of tax due. Although the disputed notice provides for the computations of respondent’s tax liability, the amount remains indefinite. It only provides that the tax due is still subject to modification depending on the date of payment. There are no due dates in the disputed notice, thus, negating the demand for payment.

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