Do you know that a BIR audit legally prescribes? What is even better is that when it happens, BIR has a specific committee to ensure that prescribing cases are monitored and checked.
To briefly discuss the prescription of an audit, Section 203 of the National Internal Revenue Code of 1997 as amended (Tax Code) must be revisited. It provides that the BIR has three (3) years from the date of filing a return to assess tax and another three (3) years from the date of assessment to collect such taxes. If BIR fails to do so within the period set forth by the law, the case is already prescribed. Simply put, the BIR loses their legal right to assess and collect taxes against the taxpayer.
BIR audit is not a forever bout. It has a prescription and your audit might be considered a prescribed one if you did not receive assessment notices within three (3) years from the date you filed your return. In Revenue Memorandum Order 33-2018, taxpayers are informed that such scenario befits the issuance of an Authority to Cancel Assessment (ATCA), through the recommendation of the National Committee on Prescribed Cases for the approval of the Commissioner.
The rule of prescription is created so that taxpayers would have a feeling of security against unscrupulous tax agents who will always try to find an excuse to inspect the books of taxpayers, not to determine the latter’s real liability, but to take advantage of a possible opportunity to harass even law-abiding businessmen, without such legal defense, taxpayers would be open season to harassment by unscrupulous tax agents (Systems Technology Institute, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 7984).
It is best to utilize the committee created for such purpose, especially now that taxpayers are made aware of its existence through a 2018 memorandum. If your case is prescribed, it is best to inform the National Committee on Prescribed Cases, and request for the issuance of ATCA.
In case of uncertainties regarding prescription, let ETMTAO help you. ETMTAO now offers an ETMTAO PLUS MEMBERSHIP PROGRAMME which includes FREE CONSULTATION with us. If you are interested, please feel free to contact Rostle David at 0922-801-0922