CIR v Kudos Metal Corp.; G.R. No. 178087; 05 May 2010

in Legal Chyme by

Pursuant to a Letter of Authority dated 07 September 1999, a review and audit of respondent’s records for taxable year 1998 was conducted.

In connection thereto, petitioner’s accountant executed two waivers of the defense of prescription. The first was executed on 10 December 2001, notarized on 22 January 2002, received by the BIR Enforcement Service on 31 January 2002 and by the BIR Tax Fraud Division on 04 February 2002, and accepted by the Assistant Commissioner of the Enforcement Service. The second was executed on 18 February 2003, notarized on 19 February 2003, received by the BIR Tax Fraud Division on 28 February 2003, and accepted by the same Assistant Commissioner.

Whether or not the waivers executed properly extended the three-year prescriptive period.

NO. Section 222(b) of the NIRC provides that the period to assess and collect taxes may only be extended upon a written agreement between the CIR and the taxpayer executed before the expiration of the three-year period.

A perusal of the waivers executed by respondent’s accountant reveals the following infirmities:

  1. both were executed without the notarized written authority of the accountant to sign the waiver in behalf of respondent;
  2. both failed to indicate the date of acceptance;
  3. the fact of receipt by the respondent of its file copy was not indicated in the original copies of the waivers.

Due to the defects in the waivers, the period to assess or collect taxes was not extended. Consequently, the assessments were issued by the BIR beyond the three-year period and are void.

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