When is a pre-assessment notice required under the following cases? (1%)
(A) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return.
(B) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent.
(C) When the excise tax due on excisable articles has been paid.
(D) When an article locally purchased or imported by an exempt person, such as, but not limited to vehicles, capital equipment, machineries and spare parts, has been sold, traded or transferred to non-exempt persons.
Suggested answer only. Not an official answer and not legal advice.
(C) A pre-assessment notice is required when the excise tax due on excisable articles has been paid. Under Section 228 of the NIRC, a pre-assessment notice (PAN) is mandatory as part of due process before
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Quick check
In which scenario is a Pre-Assessment Notice mandatory before the BIR can issue a final deficiency tax assessment?
A Pre-Assessment Notice is required when excise tax has been paid, as unpaid excise tax is the statutory exception.
Which statutory provision enumerates the instances where the issuance of a Pre-Assessment Notice is not required?
Section 228 of the NIRC provides the general rule and statutory exceptions for Pre-Assessment Notice issuance.
Under Section 228 of the NIRC, how many days does a taxpayer have to respond to a Pre-Assessment Notice?
Taxpayers are granted thirty days from receipt of a Pre-Assessment Notice to file a written reply.
Why is a Pre-Assessment Notice NOT required when a mathematical error appears on the face of a tax return?
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What is the legal consequence if the BIR issues a Final Assessment Notice without a PAN when no statutory exception applies?
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Learn more about these topics
1. Mandatory PAN Rule
Under Section 228 of the National Internal Revenue Code, the Bureau of Internal Revenue is generally required to issue a Pre-Assessment Notice to the taxpayer prior to issuing a Final Assessment Notice. The issuance of a Pre-Assessment Notice forms an indispensable part of administrative due process in tax assessments, affording taxpayers the right to be informed of the factual and legal bases of the deficiency assessment and allowing them thirty days to respond.
2. Statutory PAN Exceptions
Section 228 of the Tax Code explicitly enumerates specific instances where a Pre-Assessment Notice is not required before issuing a deficiency tax assessment. These exceptions include mathematical errors on the face of the return, discrepancies in tax withheld versus remitted, unpaid excise taxes on excisable articles, transfers of tax-exempt articles to non-exempt persons, and articles imported by exempt persons transferred to non-exempt entities. In these cases, the BIR may proceed directly to issuing a Final Assessment Notice.
3. Paid Excise Tax
While unpaid excise tax on excisable articles is an express statutory exception allowing the BIR to dispense with a Pre-Assessment Notice, the prior payment of excise tax removes the case from this exception. Where excise tax has been paid, any subsequent deficiency assessment levied by the Bureau of Internal Revenue requires the mandatory issuance of a Pre-Assessment Notice to satisfy statutory due process requirements.